Echelon Capital Markets’ analyst Ryan Walker on Clean Air Metals

Mar 31, 2021

Echelon Capital Markets’ analyst Ryan Walker on Clean Air Metals gives a “Speculative Buy” and $0.80 price target (implied 140% upside from Friday’s close).

The Globe and Mail also picked up on the coverage: “Seeing the potential for higher-grade Norilsk-style massive sulphide mineralization as “a potential game changer”.

We are happy to see the AIR story gain more following, which as a company formed just last year, is still unknown to many. In the past 12 months, management has delivered an updated 43-101 on it’s 100% owned Thunder Bay North (TBN) Project, completed an expanded 30,000m drill campaign and closed an $11.5M financing. The company also recently announced the discovery of Norilsk-style massive sulphides, following-up on the similarities between the magma conduit chonolith system and structural and stratigraphic controls on mineralization at Thunder Bay North with the Talnakh complex at Norilsk.

Why we find Clean Air Metals compelling:

Strong and experienced management – this is an accomplished group that can both meaningfully advance projects and sell them. Jim Gallagher (Exec. Chairman) was the former CEO of nearby North American Palladium until the sale to Impala for ~$1B. Abraham Drost (CEO) was most recently CEO and Director of Carlisle Goldfields until its sale to Alamos Gold. Management owns ~5.3% and has been buying shares in the market and in the last deal.
Location – the 100% owned TBN project is only 50km northeast of Thunder Bay, Ontario and 60km southeast of the Lac des Iles palladium mine.
Resource – the January 2021 updated resource outlined a global resource of ~2.4M oz Pdeq @ 2.8 gpt, which included the maiden resource for Escape Lake. Escape Lake is still wide open with lots of exploration upside from the >1.5 km of known strike extent still to be tested.
Massive Sulfide Potential – The recently announced discovery, while narrow and still early, underscores the potential for a Norilsk style. This is all upside given the current valuation.
Strong Balance Sheet – ~$18M cash ($13M flow through).
Catalysts:
- 2021 exploration program of 45,000m, including at least 5,000 targeting massive sulphides. This will provide a consistent flow of news throughout the year.
- Results from ongoing metallurgical work.
- Third-party ESG study currently underway.
Valuation – ~$15 EV/PdEq oz vs the peer group in the Echelon report at over $50 EV/PdEq oz

For more details on Clean Air and Echelon’s research coverage, please see The Globe and Mail article:

https://www.theglobeandmail.com/investing/markets/inside-the-market/article-mondays-analyst-upgrades-and-downgrades-138/

Clean Air Metals Inc. (AIR-X) is “chasing lightning” at its Thunder Bay North project, according to Echelon Capital Markets analyst Ryan Walker.

Seeing the potential for higher-grade Norilsk-style massive sulphide mineralization as “a potential game changer,” he initiated coverage with a “speculative buy” rating on Monday.

“An investment in AIR affords exposure to a growing high-grade Pt-Pd-Cu-Ni [platinum, palladium, copper and nickel] resource 50 kilometres northeast of Thunder Bay, Ontario,” said Mr. Walker. “Indeed, a recently updated resource estimate at the TBN project saw global contained Pt and Pd more than double to 1.82 million ounces from 732,000 ounces under a historic resource estimate (we note here that both the Current Lake and Escape deposits have a Pt:Pd ratio of 1:1). Importantly, the updated resource also includes a maiden estimate of the adjacent Escape Lake deposit, which contains another 441,000 ounces of Pt and Pd. The latter deposit remains open and will be subject to extensive systematic drilling as part of a 45,000m drill campaign in 2021.”

Calling the Thunder Bay-based company “well funded” for its 2021 exploration program, he also emphasized its ESG attributes, noting: “We highlight here TBN’s “green” characteristics, which include the project’s metals mix — Pt-Pd-Cu-Ni. Most palladium is used in catalytic converters for gasoline automobiles to convert up to 90 per cent of the harmful gas emissions into less noxious substances. Pt is a key component of fuel cells and platinum is an important component of catalytic converters for diesel-fuelled vehicles, and acts as a catalyst in hydrogen-powered fuel cell electric vehicles (FCEVs). Copper and nickel both play important roles in the increasing electrification of the world, both in transmission and battery applications. We also highlight that AIR envisages TBN solely as an underground mine giving it a smaller environmental footprint, compared with historic plans that included an open-pit component. Additionally, AIR recently signed a Memorandum of Agreement (MOA) with the Fort William First Nation, Red Rock Indian Band, and Biinjitiwaabik Zaaging Anishinaabek First Nations confirming a framework for a mutually beneficial relationship regarding the project. Peter Collins, Chief of Fort William First Nation recently stated: ‘Clean Air Metals is the type of company we can get behind and we look forward to a productive working relationship with them.’”

He called Clean Air’s management , and emphasized both Executive Chairman Jim Gallagher and CEO Abraham Drost are recent buyer of the company’s shares “thereby further aligning them with the interests of shareholders.”

He set an 80-cent target for Clean Air shares, which sits 20 cents below the consensus.

https://www.cleanairmetals.ca/