CBLT Inc. (TSXV: CBLT): Natural Resource Company, Targeting Cobalt and Investigating Acquisition of Silver Properties in North America; Interview with Peter Clausi, CEO
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By Dr. Allen Alper, PhD Economic Geology and Petrology, Columbia University, NYC, USA
on 6/16/2020
CBLT Inc. (TSXV: CBLT) is a natural resource company, targeting cobalt in ethical traceable mining jurisdictions. We learned from Peter Clausi, CEO of CBLT, that they were able to finance the Company on a non-dilutive basis, by selling off some of their cobalt assets for very high profits. Near term plans include acquiring silver properties in North America, either past producers or grassroots greenfields, in anticipation of the silver prices run. According to Mr. Clausi, the cobalt price has been artificially held down and is expected to run up, and CBLT has drill ready cobalt properties in Quebec, and Sudbury, Ontario.
Peter Clausi, CEO of CBLT
Dr. Allen Alper: This is Dr. Allen Alper, Editor-in-Chief of Metals News, interviewing Peter Clausi, who is CEO of CBLT Incorporated. Peter, could you give our readers/investors an overview of CBLT?
Peter Clausi: That'd be great, and thank you for having me back. I really did enjoy our chat last time. CBLT is a Canadian listed mining exploration company. We focused on cobalt properties in 2016. We looked at the fundamentals for cobalt and could not see why the price would not run. We made aggressive buys of properties in Northern Ontario and in Quebec. Then we went to Australia, marketed some of those properties and what cost us roughly $168,000 we sold for over a million dollars. We were thus able to finance the Company on a non-dilutive basis.
CBLT has been around since 2011. It has only 70 million shares out and it has never done a consolidation of its stock. We take a lot of pride in that. It means we're pretty good with the Company's money, means we're terrifically cheap with the shareholder's money and we deploy the capital effectively. That leads us to the end of the story. Then we can come back to the middle. What are we going to do next? What we're seeing now is silver. Now, I've never been much of a silver bug. I like gold. I like uranium. I understand cobalt and copper. I could bore you to death talking about the rare earths, but silver wasn't, until recently, something I knew much about. A friend pointed it out to me and I did my own research, and I think silver is now where cobalt was in 2016. The fundamentals are in place. The demand is there. The need is there and I think you're going to see silver have a spectacular run over the next couple of years.
Dr. Allen Alper: Well, that sounds great. Could you tell our readers/investors what that's based on, why you feel that way?
Peter Clausi: There are a lot of factors that go into it. One, you always start with the historic gold to silver ratio. Now, gold and silver has done a dance for the past 100 years, within a certain tight ratio. When that ratio gets out of whack, one or the other of the commodities brings it back so the ratio comes back together again. Right now, that ratio is at an all-time high to the detriment of silver. That's because we've had such a huge run in gold and silver hasn't moved. Currently it's about 99 to one and usually trades around 35 or 40 to one.
The other reason is we see increased consumption of silver. There have been two years of industrial use that have declined and all the reports that I've read indicate that industrial use will increase this year, even with COVID-19. Infrastructure continues and silver is necessary for that. We use silver every day in a lot of things. In health care to treat warts, which is a funny one, and radiology. It's used in a lot of bandages because it seems to have antibacterial properties. Fillings in your teeth have silver in them, with other things. Hips, silver is a part of hip replacements. List goes on and on.
Silver is used every day and all things revert to the norm, even during COVID. The gold-silver index, is going to revert back to the historical ratio. I don't see gold falling to, say $800 over the next couple of years. The only way for the ratio to readjust itself is for silver to have a haul and it's a lot easier to see silver doubling from here than gold.
Dr. Allen Alper: Oh, I think that's a very excellent analysis! What are your plans for the rest of 2020 going into 2021?
Peter Clausi: Well, we are looking at a variety of silver properties right now, actual mining properties. Typically, I like to focus on one of two things, either past producers or grassroots greenfields. Past producers have a bit more certainty of mineralization, which means a shorter time frame to get the mine back into production, shorter time frame to cashflow. I liked the greenfields ones because they could be acquired relatively cheaply, a minimum amount of work could be done on them to prove up value, and then you can either exploit it yourself or you can sell it and make a considerable amount of profit on the resale. So those are the kinds of projects we're looking at now. We're limiting it to North America, mainly because I can drive anywhere in North America. I'm not looking at projects in Australia or anywhere I have to take an airplane.
Dr. Allen Alper: That sounds like a very good approach for the Company. Could you talk a little bit more about what particular properties you're looking at? Or would you like to wait off on that?
Peter Clausi: Yeah, unfortunately I can't. We've signed non-disclosure agreements, with some of these targets and it would certainly breach them to talk about them. Also, I don't want anybody else swooping in and making a better offer on things that we're looking at. So let's just tuck that one away and follow up when we have the properties. We also think that cobalt will likely have another run. It's obvious, if you follow the pricing on the London Metal Exchange, that the price is being manipulated and artificially held down. Like many things, it's easy to blame China, but in this case, I think that blame is accurate. China is the processor of roughly 65% of the world's cobalt, and once it leaves the Congo and goes over the Big Red Wall, we don't know what happens to it. Even with all the events since January of 2019, think of everything has happened since then, the price of cobalt has not traded outside of its narrow band, around $30,000 a ton. As recently as 2017, cobalt had hit $94,000 a ton. Then it fell back to around $24,000. Now it's around $30, around $31,000. We do think cobalt is going to have another run and we're well-positioned to benefit from that.
Dr. Allen Alper: Could you tell our readers/investors a little bit more about how you're positioned if there is a rebound in cobalt?
Peter Clausi: Sure. We have a property in Quebec that is drill-ready. We've flown it, three different aerial surveys. We trenched it. We did surface sampling. We know where the hot spots are, where the nickel, copper and cobalt are located. We had drill pads ready. I'm not sure if they're still ready. We were completely ready to drill a year ago. Some events intervened and we had to put off the drill program. Drill results from that property, as always we're optimists, but they should be good. And if we do drill it, that should show the cobalt that's there in a very friendly mining jurisdiction. We also have good cobalt properties in Northern Ontario and good cobalt properties in world-famous Sudbury, Ontario.
Dr. Allen Alper: Sounds excellent! Could you tell us a little bit more about the Sudbury property?
Peter Clausi: Sure. The Sudbury property is called Copper Prince, because historically prior owners have explored it for copper. Because the mining world is a funny place, we all know a lot of people and they're all characters. It doesn't seem like there's anybody quote "normal" in the mining industry. So one of these characters called me up to talk about a property he had worked on 20-some years ago. And because he didn't get paid for the work he did, he hung onto the report. Because it's patented lands, as opposed to mining claims owned by the Crown, there was no requirement of him to submit that report. He liked me, so he gave me the report, which showed some really strong numbers.
I showed it to a geologist, who consults for us, and we figured out where the samples had come from on the property, did some geologic work from historical records and discovered there was a cobalt-rich vein at the south end of the property. We went out, we bought that property from the then owners, who did not have the prior report, and we went drilling. We found gold. We found cobalt and we're fairly sure that there's a lot of copper at the north end of the property.
This is a part of the Huronian sediments, with the Nipissing diabase. So the land was laid down 2.4, 2.2 billion years ago and the diabase somehow intersected and pushed through the host rock. Then, of course, we had that great asteroid hit 1.8 billion years ago. And although the asteroid itself did not bring any base metals to earth, the impact from that must have been astonishing because it built the Sudbury Basin, that world-famous mining jurisdiction that still produces to this day, that built Noranda and Inco and it just continues to push out raw material.
So we're on patented lands. We have proven mineralization. We have all kinds of mining wisdom and infrastructure available to us if we need it. An easy property to get to, you can literally drive onto the northeast corner of it and then walk to where the mineralization is. Also, to the east of us is a deposit owned by another company. They have a 43-101 resource estimate on it, so we know we're in the right jurisdiction. It's a very, very attractive property. And that's called Copper Prince because that's the historic name they had on it.
Dr. Allen Alper: That sounds very good. So what are your plans in the future with that property?
Peter Clausi: Right now, we are selling another one of our assets called Northshore. Northshore was of a portfolio we bought a year ago. We paid a little over $1 million for four mining assets. We are selling one of those four assets for $1.5 million in a combination of cash and stock. So again, we're generating real value for the shareholders through mergers and acquisition activity, not with the drill bit. That was deliberate. We don't see many mining companies get rewarded for exploration success right now, at least not in the public markets. Where we do see success and we do see value is in working a property. Don't expect the stock market to respond, but you make the property more attractive so it can be sold at a great profit. That happened here with Northshore, which is the property being sold.
We are going to continue to do work that we think highlights the value in a property. And then we can M&A that to profitability on that particular transaction. We still have 11 assets, within the company, that we can work with. COVID has made everything so uncertain that I don't want to put work people out in the field. I don't want to have anybody exposed to any kind of risk. So we're making money with the pen rather than with the drill bit.
Dr. Allen Alper: That sounds like an excellent approach and model for going forward. Could you tell our readers/investors about your background and your team, Peter?
Peter Clausi: Sure. I'm originally from Northern Ontario, the great mining town of Timmins, also home to many hockey players and, of course, my friend Shania. I'm a lawyer, investment banker, shareholder, activist, and a member of several public companies. Now, our team is lucky because we have a good mix of ages and experience, with a very diverse Board. We have Dr. Tom McCandless, who is a PhD, very famous man in Canadian mining circles. Jessica Daniel, who is currently living in California. I think she is a P.Eng? Anyway, she is qualified as a qualified person. I think she has her Master's in Engineering, if I'm not mistaken. Brian Crawford is our financial genius. Brian's been around public companies for the past 30 years and has been the CFO for many, many companies.
Lastly, there's Ed Stringer. Ed lives just outside Sudbury in a small town. Ed's been in mining since forever. I think he got his prospector's license when he was 17 and Ed is now 73, I believe. If there is any property in Canada you want to know anything about, you call Ed. He's probably worked it, walked it, seen the report on it. Ed is a fantastic resource for the shareholders to draw upon.
Dr. Allen Alper: Oh, that sounds like an excellent team and you have a great background. It's good to have financial knowledge, and knowledge of mergers and acquisition, and experience in the mining district so you know what you're doing. That's kind of key in moving forward and getting the right properties.
Peter Clausi: It's a fairly active board, too. The people that I like to get involved in companies are active. They don't sit back and wait for the quarterly Board meeting to ask a question. They work hard. They work between the Board meetings. They email. They call. They challenge and it's great. And this Board is particularly good.
Dr. Allen Alper: Well, that sounds great. Could you say a few more words about your share and capital structure, and where your stock is listed, et cetera?
Peter Clausi: Sure. We're trading around three and a half cents, with 70 million shares out, which is funny when you think about it in this environment. We have a contract in place to sell one asset for $1.5 million and the market cap in the Company is only 2.1. We still have 11 mining properties to go. But that's the mining market we find ourselves in today, which is why we're doing the M&A. We trade on the Toronto, the TSX Venture Exchange, as it's now called, reporting issuer in good standing. All the public documents are available at the Company's website or at SEDAR, the Canadian equivalent of EDGAR.
Dr. Allen Alper: That's very good. Could you tell our readers/investors the primary reasons they should consider investing in CBLT?
Peter Clausi: Well, like many companies, we think we're undervalued, and as the exercise I just walked you through would demonstrate, that's probably true. We have exposure to a variety of metals; nickel, gold, copper, molybdenum, possibly silver in our British Columbia property, which we're discussing doing some more exploration on. It provides a one-stop shop for variety of the metals in a rather economic fashion. Management is always committed to making money for the shareholders and it offers a potential fulsome return from where we are now.
Those are particularly compelling, Dr. Al. When I start talking about the stock, I tend to get less enthusiastic than when I talk about the Company. Your stock trades on a daily basis. It goes up, it goes down. I try not to worry too much about that. I try to focus on building the Company, so I would rather have people invest in the company than buy shares, if you know what I mean.
Dr. Allen Alper: Yes. Well, those sound like good reasons to invest in the Company. Is there anything else you'd like to add, Peter?
Peter Clausi: The impact of COVID is immeasurable, undefinable for a protracted period of time. Until a vaccine is generally available to the public, this is the new new. So if we can find ways to make money for shareholders, while minimizing risk to employees, staff members and contractors, that's what we're going to do. So we are continuing to be in the market to buy good properties, as I defined earlier, and we continue to be in the market to sell our properties. We have a couple properties, Burnt Pond in Newfoundland and Big Duck Lake in Ontario, two beautiful properties that are available for sale option and joint venture. So that's how we're going to work our way out of this COVID crisis.
Dr. Allen Alper: Oh, that sounds like an excellent approach. Very, very good! We’ll publish your press releases as they come out so our readers/investors can follow your progress.
https://www.cbltinc.com/
Peter M. Clausi
President, CEO and Director
416.890.1232
pclausi@cbltinc.com
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