Aldebaran announces Strategic Investment by South32

0:08 Hello everyone and welcome to Aldebaran Resources Live Summit today hosted by 6. I'm very pleased to introduce CEO and Director John E. Black. John's going to take us through the company's latest news and following we'll have a live Q&A session. So you can submit your questions at any time using the Q&A panel on the right hand side of the screen. And we'll try to get to as many as possible following the presentation. And as always, this is being recorded and available to watch afterwards on six.com but without any further ado I'm gonna hand it over to John to kick it off. Okay great thanks Dasha and thanks everybody for tuning in

0:40 or picking this up on a repeat on this. We're very excited to be able to present the summary of the news that we put out yesterday that we will be having a strategic investment by South 32 into Aldebaran. This kind of explains some of the radio silence we've had over the past few weeks as everybody's been anticipating results and wondering why there's there's been a little bit of a delay on those. In the background we were working pretty hard on concluding an opportunity that we think will will really set us up well to continue to explore this this fascinating district that we're working on right now. So today what I'd like to do is is really just go through the details of the agreement, a few additional twists to it that don't don't fit into a simple press release so people can can realize what's coming up on this, and then more importantly, open it up to questions. And I'd really like to thank Dasha and Romeo and Cameron and the team at 6 for providing us with this format, we find this a pretty good way to be able to communicate a little more in depth about news like this so that people see a little bit more about what's going on.

1:48 I'd also like to particularly acknowledge the rest of my team. There's been a lot of hard work going on in the background as we've determined how we can best finance this project as we move forward And we've encountered kind of challenging market times and conditions on this. And so we had to get a little bit creative on this and we were quite fortunate to make the connection with South 32 on this. They've been a wonderful group for us to work with, to put together an agreement that we think will be beneficial for both ourselves and South 32, but more importantly, all of the rest of our stakeholders, keep in mind, we have 2 other very important strategic partners in Savannah Stillwater and Route 1 financing. So we essentially have 3 really strong legs to the stool to move this project forward with 3 key strategic partners.

2:38 And of course, ourselves as senior management and our shareholders that have been following us for quite some time. So quite excited to be able to announce this and how it will go forward. Much of this work was put together by Adam Greening, our Vice President of Corporate Development. He really worked diligently with his peers at South32 to put this together. But also Kevin Heathers, our Chief Geologic Officer, Mark Wayne, our CFO, Meg Cameron Jones is our corporate secretary. Everybody's put a lot of work into putting this together. And sometimes we understand shareholders have frustration waiting to see what's going on. Trust me, there's been quite a bit of work going on in the background with this. We of course are a publicly traded company, so forward-looking statements apply to what we're gonna say, but let's just jump right into to what the agreement that we announced yesterday is.

3:32 So in essence, what we've announced is that South 32 will be making a strategic investment into Aldebaran by acquiring 13.2 million shares at 78 cents a share. So that's equivalent to a little over about 10.3 million Canadian as a strategic investment into the company. And that provides them with a 9.9% shareholding for the outstanding shares of Aldebaran. In exchange for this investment into the company, they receive certain rights as we go forward. One is that they'll have the right to maintain their equity position. These are anti-dilution rights. That means as long as they maintain more than 9% interest in the company, anytime that we finance, they have the ability to finance under the same terms and maintain their percentage interest in the company.

4:26 This is also true for other 2 significant strategic partners in Sabania Stillwater and Route 1 as well. They also have the option to nominate 1 board member if their interest in the company exceeds 12.5%. So upon announcement of this deal, they won't be putting in a board member into the company. But if they were to increase their position in the company to more than 12.5%, then they would have the option to if they choose to on that. They don't automatically have to do that, but if they would like to, they can. And that's really designed for them to, if they think that that's an important thing for them to do, they can do that. But by doing so, they'll have to be picking up shares in the open market, which I think as shareholders, all of us would be pleased to have them do that. It would, with a tightly held company like ourselves that would undoubtedly reflect an increased value in the company for them to move to that point.

5:27 We will also form a joint advisory committee. This is really a technical committee where it's designed that they can provide input into what our exploration program is doing, their thoughts on what we do. We remain in control of determining what the exploration plans will be and how the program will be executed. But we will have quarterly opportunities to hear advice and ideas from them and that's welcome input for us. They're an experienced exploration group and could very well have some additional insights that would be good for us. When we seek an agreement like this, there are obviously benefits to us in terms of having an injection of funds, the funds that we need to be able to go forward in a project like this.

6:13 But when it comes in as a strategic investment like this, what we have to be careful is that we still are able to execute our business strategy. And just to remind everybody on that, our business strategy is to identify an opportunity like Baltar and then drill it out, understand fully what we have, de-risk it and demonstrate the value of it. And then ideally monetize that by selling it to a major mining company to go forward. And so we have to be careful that when we have strategic partners like this, that we're not locked into just 1 pathway going forward. So we structure this in manners that we still maintain flexibility moving forward. Obviously our strategic partners have a certain benefit of additional knowledge of what's going on with the projects and more proximity to us, But we've carefully structured this so that we still have flexibility to be able to move forward and execute our business plan in the manner in which we want. And so as a part of that, South 32 has agreed to not dispose of any of their shares that they acquire in Aldebaran for 1 year, and to not acquire greater than a 19.9% interest in the company for 18 months. And of course that's subject to certain exceptions. If there were to be an aggressive move to acquire us then that takes the handcuffs off and parties is able to move forward. So fairly standard terms for an agreement like this.

7:34 We're really pleased with how this worked out and how we can move forward. So if we take a look then as why this is important, what are the benefits to the Aldebaran shareholders for ending into agreement? Obviously it's a sizable investment by a major diversified miner. So we've been exploring aggressively on the project. We have spent most of our funds to get to the point where we're at. And we've encountered ourselves in a difficult challenging market that with metal prices falling and just things tightening up in the market. So it eliminated some or made more difficult some of our traditional opportunities on how we could finance moving forward.

8:19 So having that large investment right now is very important for us and it sets us up well to move forward on the program that we have beginning to be laid out for the next field season. And having that come from a major diversified miner is a strong technical endorsement of the project. When we work on projects like this, both within Aldebaran and our sister company Regulus, We were intentionally putting our hands on large copper or copper gold projects that have potential to be of interest for the majors to acquire. It means that we always have a large number of companies that are reviewing us and monitoring us, some from afar, some very close under confidentiality agreements and reviewing what we're doing. And to have them endorse that what we're doing is of interest to them is I think one of the better indications to the market that we're on the right pathway moving forward.

9:16 Another very important thing about this is that this financing was done at a premium to market. A traditional private placement, the type of way that most companies like ourselves raise funds, usually is done at a discount to the market. So it's commonly a 10 or 15% discount to the market, often has warrants associated with it and finder's fees or broker fees associated with this. This agreement was done at a nice premium to the market. It involves no broker fees or finder's fees to it, and there are no warrants to it. So what we're trying to do with this style of agreement is to minimize the dilution. We're at a point where the valuation of our company is significantly lower than we think is appropriate for the asset that we have. And when we raise money at these levels, we're trying to avoid dilution, but we need cash to move the project forward. And so this type of a financing is much more attractive to us in this type of a market that we're in particularly.

10:14 We'll also have the ability to have shared technical knowledge between Aldebaran and South32. For those of you that don't know South32, South32 is a group that really formed as a spin-out company from BHP. It has all the pedigree and background history of a large major international multi-metal miner on this, just in a smaller, more agile group moving forward. So there's an opportunity for us to learn things from them or hear things from them and particularly not just technically but also just where the markets are going. And this carries over into ESG and other activities. We get a strong feedback loop from what the major miners are looking for, what they want us to be delivering as we go forward.

11:01 And then of course this sets us up for an aggressive drill program moving forward. We, I won't go into a lot of this today. I'll make reference to 2 previous webinars we've had in the last couple of months where We've laid out, particularly Kevin in the most recent webinar, have laid out the targets that we have emerging and what we see coming up on the project. But we clearly have a lot of work to do, a lot of opportunity to continue to increase the size of the deposit, improve the character of the deposit going forward. But to do that, we needed to be well financed. And this is the key step for us to be able to do that. And then an important thing that wasn't really touched on in the news yesterday, but is something that is a key takeaway to take from this conversation today. And we're more than happy to field questions on this as we go forward, is that there's potential for this financing to be upsized.

11:55 We've announced amount on this is the $10.3 million that will be coming into us, but both Route 1 and Sabaniye Stillwater, our significant other strategic shareholders, partners on this, have rights to maintain their interest, their percentage interest in the company. And so with the announcement of this agreement, they've been notified that they now can make a decision on whether they want to maintain their interest moving forward. We're in those discussions with them. We obviously have close contact with them. I'm not an officiation just yet to say what their decisions will be on this. But it is important to point out that if they were to uptake all of their interest, currently Savinia Stillwaters at an approximately 20% interest and Route 1 is just a little bit less than 50% interest, it would result in a very large financing on this. Although it would be nice to have all of that cash moving forward and there's a lot to go on moving a project like this forward, it would be diluted for us at these levels. And so what I can say is that I'm confident in our discussions right now that there will likely be an upsizing of it, but

13:15 it will be at a level that is quite reasonable for us and we avoid having a significant blowout of additional shares. So we'll be able to have additional news on that within the next 10 business days on what that upsize amount will be. And then if Route 1 and or Savania Stillwater choose to take up a portion of their upsizing, then of course, cell 32 will be able to adjust to maintain their 9.9. So I think you can anticipate an increase in this financing, but not 1 that's going to substantially cause dilution concerns for us. It'll set us up. I'm quite confident that the end of this process will be with an amount of money that's quite appropriate for our next field campaign, which will kick off here in about September.

14:02 Just a few words on Argentina overall right now. Argentina is really emerging as quite a hotbed for exploration, both for copper and for lithium at the moment. Forward-facing metals or metals will be important for the shift of how we generate and transport energy going forward in the future on this. And this is just a list of some of the recent, these are just in the last year or 2 of major investments that have been announced coming into Argentina. We see the top 3 are all investments into major lithium plays. These are Rio Tinto, a couple of Chinese groups coming into major lithium plays in the Northern part, in the Salta, Hauhaui, Cajamarca, or Catamarca parts of the country on this.

14:54 Quite substantial price tags on these coming in. And these are projects that move very quickly to market. So these are projects that don't have particularly intimidating capital costs to bring them into production. And just by the nature of how lithium brines are produced, they can be constructed quite quickly. This is very important because not only is it an announcement of an acquisition of an asset in Argentina, but these quickly moved to the point where the local communities and the local governments can see a lot of direct benefits in terms of employment, increased tax revenue, and it makes very evident the contribution that mining can make to improve economies in challenging financial times, both locally for Argentina and worldwide that we're all experiencing right now. We've seen BHP come in with a very substantial investment into the exciting FILO project as early stage on this. We've seen Lundin Mining purchase Jose Maria recently, and now we're announcing that South32 on a smaller deal, of course, but one that we think might be the tip of the iceberg moving towards this pathway of making an investment into us.

16:08 Argentina historically has been a country that has had difficulty attracting foreign investment for a number of reasons, but they've made a dedicated effort over the last few years, decade or so to really try to improve the investment environment and attract mining in. It's not consistent everywhere in the country. It is a federation of states. So certain provinces are much more attractive to have investment occur in. San Juan and Salta, where our principal assets are located, are 2 of the more favorable provinces, and you can see most of these investments are clustering in those areas. It's not restricted just to this. There have also been some pretty exciting announcements recently of large green hydrogen projects going into the South.

16:55 Fortescue has made an announcement of a program that if it came to fruition, could be up to $8.4 billion of investment to generate green hydrogen, utilizing wind resources in the southern part of the country. US companies also announced an agreement with Tierra del Fuego to pursue the same idea. So we're seeing major international companies comfortable announcing very sizable investments into Argentina, which is quite encouraging. Just as an aside, there was a note out this morning that Rio Teno has just announced an alliance with Ford Motor Company. Ford is seeking to establish a link with Rio Tinto to be a preferred provider of metals that they need to move forward. So they're looking for low carbon copper, low carbon aluminum, and particularly lithium. And so that specifically singled out the possibility that Ford would be interested in an offtake agreement for production coming from the Rincón Lithium Project. So these are all exciting developments and Argentina is really standing out compared to a lot of countries right now in terms of attracting mining investment and trying to encourage an environment where these will go forward. And then as we've discussed in our previous webinars in San Juan, we're 1 of 5 major copper projects right now that are in the exploration to early development stage, all of which have potential to become major mines. So the opportunity for Argentina to really open up a significant mining industry is there and becoming well-recognized.

18:28 Also important to point out that This is not South 32's first foray into this region by any means at all. They actually have 2 other agreements for earn-in agreements to earn into specific projects from some of our peers in San Juan. They have a presence already established in San Juan and are familiar with how things work in Argentina. And clearly, as those agreements have evolved, they've become interested in extending their reach and evaluating groups like ourself to move forward. And not too long ago, they acquired a 45% interest in the producing Sierra Gorda copper mine in Chile. So they're well established in the area. They know how to work in the area and they're clearly trying to increase their footprint into copper deposits and move forward in that space, which is a common theme we see for a lot of major mining companies.

19:23 So we're quite pleased that we've attracted this. It fits well within an exciting environment that we're seeing emerging in Argentina right now with a lot of new activity, a lot of moving forward. We're onto a very large project that will require funds. One of the challenges of our business model is that we don't scrape by on a few million dollars a year to properly drill out and de-risk and address DESG opportunities and issues and set a project like this up to be of interest to a major company requires funding. So this agreement goes a long ways towards setting us up, not just for this immediate campaign, but we'll be stronger than ever as we continue to move the project forward. I won't go into the details of the specific targets on this today. What I'd like to do is make reference to the recent webinar that Kevin just presented last month, that goes into the excitement we have on the new geophysical data that we received. And he provided a good summary for the drilling that's been completed and the news flow that will be to come from this.

20:31 We have as part of this agreement, when we're into it, it means that there's a freeze on news flow while we get this concluded. So once this agreement is closed, which we anticipate will be by August 9th, then we'll see the resumption of the news flow for the pending drill holes from last campaign. And then we'll also be in a position by about the end of August, early September to be announcing what the full extent and nature of the drill program will be for next field season. So keep your eyes open for a similar webinar to this probably in early September when we lay out the program. Our plan is to begin to open up the camp in September and be drilling ideally in October. We have been experiencing a rather unusually high snowfall the last few weeks in the Andes.

21:21 It's good news in that we all need every country in the crest of the Andes needs additional water right now but we'll monitor that to see how quickly we can get into the camps. But we're in close coordination with our neighbors and everybody's preparing to have the equipment to be able to open things up as quickly as possible. So until further notice, we still anticipate that we'll be into our camp in September and drilling by October to move forward. Just as a quick tease on this, some of the next holes coming up, particularly hole 221, which will be drilling just behind this section that we're looking at right now into a large geophysical anomaly where every time we've intercepted this with previous drilling, we've encountered good results. And there's a big obvious portion of this remaining to be drilling. So a lot of the funds that are raised now will be dedicated to the drill out of this and other targets that we've developed in the area. And of course, continue drilling on the exciting radio target over to the West, which provides the opportunity for higher grade copper gold mineralization in that area. So a lot of good news flow to come over the next 2 months as we get set up for the field season. And then we'll be kicking into a more aggressive field season as we move forward this year.

22:39 So that's really, I think, a good overview of what the agreement was about. Just a quick snapshot on the end is that we're now, can return to calling ourselves a well-financed company. We've got an address of drill program coming up with multiple new targets to be tested on this. Very high profile location in Argentina right now. And one of the things for those of you that are watching the market right now is it's tough when we get into a market like this, when we've seen copper prices drop. And then of course, the prices of exploration companies like ourselves, and even major producers drop very significantly. There's often almost an overreaction in the market when we get into these situations. Having been through a number of these cycles, there's often a common pattern on this. There's a bit of a panic, we see things come in deep.

23:31 There are so many opportunities for copper companies right now for investment. We all are probably watching to see where the bottom is and when you come in. I can't tell you when that will happen, but I do have supreme confidence that at some point we'll come out of this and we're likely to see companies that produce copper or that are sitting on attractive copper assets for acquisition in the future, we'll probably see a very substantial correction very quickly. So you can be patient and watch and pick away right now, but be ready because things in my experience commonly take off pretty quickly once they get moving. So, thanks everybody and we'll open it up for questions. Great, thank you so much, John. There's a few questions here, but if you have any questions, feel free to submit them now.

24:19 John, what do you think attracts large producers like Savannier and South 32 to Altar?

24:29 Really what it, What probably is right now is really the scale of the project. And there's just a scarcity of assets like this right now. Our group is specialized in trying to find these now for 20 years or so that we've been working in the junior space. And ourselves and a number of other groups like Ross Beatty's Lumen Copper Group and others have been pretty good at finding these, drilling them out and selling them to majors. But we're not finding many more new ones. A lot of these are recycled projects. They're becoming more scarce. And so the few that are out there draw attention from groups. And then when people start looking at them, they have to put a filter of which country they're in and what the situation is. And right now, Argentina does stand out.

25:16 There are other assets in other countries that are attractive to people, but they might be a little bit more worried about the tendency of which direction the country is going. And there is we've seen recent concerns about acquiring assets in Chile, for example. So It's a combination of an attractive asset. It has a lot of upside. It certainly has the scale to be a very major mine moving forward. And it's in a country that wants to have mines right now. So those are the type things that attract companies into projects like this. Great, Thank you. And are you working on a similar type of deal to finance Regulus? Good question. For those of you that may not be familiar, our group manages 2 sister companies. We have Regulus, which focuses on the Antiquary project in Northern Peru, a very exciting copper-gold opportunity there, and Aldebaran, which focuses on the Altar project that we're talking about today on this. And both companies have been in similar situations, whereas we aggressively explore on this, We have to continue to fund these. I think it's safe to say that we are running parallel tracks on this and we can't go into any details on this, but our concerns with Regulus are very similar to this of how we best finance the project going forward, but being careful to avoid dilution for our shareholders.

26:38 Thank you. You mentioned there's going to be a more aggressive drill program. Mike is asking, does this mean more than 4 rigs or more competent drillers than previously utilized? All of the above and better supply chain too. We're to do what we're we'd like to do is we're currently working to secure 4 to 6 rigs at this moment, depending on how an upsizing goes on this and availability of rigs, it could possibly go more than that, but we'll have at least 4, we'd prefer to have 6 and we'll see what we land here.

27:14 Great. Cole is asking, what is the estimated amount of drilling in the 2022 2023 drill program? I can't quite do that just yet. We're, we're just processing all of the drilling from this past year and the geophysical data, which is identified a number of new targets. So over the course of the next 6 weeks there'll be a pretty intense effort on our behalf of our team to to lay all that out and put it forward. Our agreement with Subani Stillwater, the owner of the project, the group that we're earning into the project from, is at the end of August every year, we present our work program to them and our budget for the year going forward. And they have an opportunity to review that and provide commentary on it and make suggestions to go forward.

28:00 We'll have a similar feedback loop from South 32 now as well. So we anticipate at the end of August, we'll be working with our partners to lay that out. And we'll be in a position in early September to announce the details. It'd be a bit premature for me to start talking about that until we've had all input on it. Sure, thank you. How will you avoid shareholder dilution if Sabani and Route 1 are upsized the financing?

28:26 That's a great question as well on this. As I mentioned, If both of our other significant stakeholders and strategic partners in the project chose to maintain their interest on this, it would result, it'd be manageable for us, but it would result in more investment into the company than we need for the immediate future. And at a price that's, that's for strategic partners, that's fine because they come in to maintain a certain interest in the, in the company, but it's not the most beneficial for the rest of us as shareholders in the company. It dilutes us as we move forward. So obviously we're in close coordination with those companies and in discussions on this. And we wouldn't have announced this if we felt that their participation would blow this out too much. So I can't say what that amount will be. We'll know in the next couple of weeks on what it is, but I'm quite confident that it will be an amount that does not result in over dilution to us moving forward.

29:26 Okay, thank you. About the upside potential, Mark is asking, did Route 1 or Sabanier have any input or comment on South 32 strategic investment when it was proposed?

29:41 We are in coordination with those groups to do it, but it's our decision as we move forward. But of course when we have strategic partners, you are not likely to make a decision unless you are making some type of consultation. But they don't make a decision. They don't vet who comes in on this. It is very important for us to maintain our ability to manage our strategy on how we move forward. And so having additional partners can be beneficial. It can also be perhaps a little bit of competition on there too as well. So, but I think all of our partners understand the nature of moving forward. And keep in mind, our strategic partners are also shareholders too. So what's best for the company is important.

30:31 An alternative is if the other partners decided they wanted to block or express extreme disinterest in this, we can choose not to raise money and not move the project forward. That's not anybody's benefit either. So there is coordination with this, but the end decision is ours. Thank you. I have a question about Argentina. Argentina recently appointed leftist Silvina Batacas as Minister of the Economy, And we saw that that made the currency weaken. Are you worried that such moves like this would threaten the business climate in the country?

31:10 Argentina is a complex country and is often faced kind of financial challenges that are a bit more extreme or even unique to Argentina compared to the rest of the world. So Argentina, as all countries right now, are kind of struggling with how do they manage difficult financial times. And the recent changes at ministerial levels, this is just my opinion on this, is that they've largely been due to the pressure between those that wanna maintain a lot of rigor and discipline and try to do the right things to particularly keep the World Bank happy and move forward. But the problem with that is that comes with a lot of pain to the general population and makes conditions difficult and moving forward. And so there are other voices that want to, that sometimes are categorized as more populist, that want to provide benefits and provide help for people and relieve some of that. But the problem is that comes at a cost which digs them more deeply into a financial hole. So there's a bit of a battle back and forth right now on what the best pathway forward is. It's not unique to Argentina. I think many countries are going through this to

32:24 different degrees. Argentina just sometimes takes it to a little more extreme. But one of the things that's really notable in this is that there's a much increased recognition that an industry like mining, particularly a new industry, or new at a large scale to Argentina, offers the ability to generate foreign revenue, which helps solve it. No matter which end of the equation you're on, on whether you wanna be tighter on fiscal policy or whether you wanna be more populous, all of that requires money, one way or another to get out of it. And so we're noticing that the federal government is much more aligned with many of the regional governments in Argentina in realizing that it's very important to attract foreign investment, that they need that to go forward. And that mining offers the opportunity for large-scale foreign investment in a new industry, a new source for this. Agriculture is always important there, but developing mining can provide a new source of benefits and tax revenue.

33:29 And it also carries over even, there's now quite a strong push to be developing the Vaca Muerte shale oil fields in the south, perhaps these green hydrogen opportunities in the southern parts of the country. So even though the different elements of the government in Argentina may

33:47 have different approaches to what's going on. They all seem to recognize that mining is important to move forward. Thank you. Cole is asking if the placement covers the 2022, 2023 exploration expenditures, what would the additional funds from the potential upside placement be used for?

34:09 Probably that additional upsize is what would be needed to cover the full aggressive program. The amount that's announced right now, 10 million would allow us to work, but probably not complete everything we'd like. So an additional upsize to it would likely land us in about the point that we'd like to see to go forward. I just, I can't give that number just yet, but it'll be a little bit more than what we're looking at at 10 million. Great, thank you. Mike's asking how much revenue would be generated from outstanding 0.70 September warrants being fully exercised?

34:46 Some of those, many of those have already been exercised. I don't have that number off the top of my head, I should. But there will be, if those are attractive for people to bring in, there'll be some additional funding in there. It's on the order of 3 or $4 million. All right, thank you so much. Well, those are all the questions we have for today I want to thank you so much John for taking us through this presentation and the live Q&A and of course everyone who Joined us today and asked great questions. If you think of any other questions following this event The contact information for other brands on the slide here Feel free to reach out to them directly and I'm sure they'll be happy to answer all your questions. And of course you can find more information on their website AldebaranResources.com and a recording of this as I said is available on SIX.com following this event if you want to re-watch anything. I'll pass it back to you John if you have any final remarks.

35:35 Okay Dasha thanks once again for providing this format for us and hopefully we got to most of the questions are answered. If you have any other questions feel free to contact us and we're happy to discuss what we're going forward. Having this out of the way allows us to get back to being able to talk a little bit about what's going on, particularly once it's closed here in the next few weeks. So

35:56 we're looking forward to a very active season. It's a fantastic place to be in Argentina right now. If we can secure all the rigs and I think as Mike pointed out in one of his questions, we also have to make sure we've got good operators pulling the levers on those rigs to move forward. But we're working very closely with our service providers. Last year caught all of us a little bit of surprise. We didn't complete all the drilling we wanted to last year. We weren't alone. Most of our peers were caught into the same thing. So we're, PDAC was a wonderful event in Toronto a few months or less months when We're working with many of the service providers to all get better prepared for more aggressive season coming up. So look forward to being able to talk a lot more about this project and happy that we've got it on sound footing now.

36:45 You