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Research report (Initial Coverage) - Power Metallic Mines Inc. - 17.03.26

De Risking Quebec’s High Grade Nisk Lion Tiger Copper PGE System Toward Canada’s Next Carbon Neutral Polymetallic Mine

Power Metallic Mines Inc. is advancing the Nisk-Lion-Tiger polymetallic system in Québec’s James Bay region, a project that has rapidly evolved from a traditional nickel exploration story into a high-grade copper-nickel-PGE discovery with clear district-scale potential. The Lion Zone discovery has significantly reshaped the investment case by demonstrating the presence of a metal-rich polymetallic system containing copper, nickel, platinum group metals, gold and silver. Deposits of this type are rare globally and often support long-life, high-margin mining operations when sufficient scale is demonstrated. Importantly, the project benefits from strong infrastructure including road access, nearby hydroelectric power and proximity to the Cree community of Nemaska. These factors materially improve the potential development profile relative to many early-stage exploration projects located in more remote jurisdictions.

The Lion Zone has emerged as the central driver of the company’s investment thesis. Drilling to date has returned multiple thick intervals with very strong copper equivalent grades, highlighting the unusually high metal endowment of the system. In addition to strong drilling results, early metallurgical testing has produced encouraging outcomes, demonstrating high recoveries across copper and precious metals and confirming the ability to generate a clean copper concentrate enriched with platinum group metal credits. These results provide an important early indication that the mineralization is amenable to conventional processing methods. At the same time, the Lion system remains open along strike and at depth, suggesting that the current drilling footprint likely represents only an initial view of the broader mineralized system.
Beyond Lion, the wider Nisk project area offers meaningful exploration upside and supports the view that the company may be exploring a larger polymetallic district. The Nisk deposit already hosts a defined nickel resource that provides a technical foundation for the project and contributes longer-term development optionality. In addition, the discovery of the Tiger Zone and several additional geophysical targets indicates that mineralization occurs across a broader structural corridor. The company has also expanded its land position significantly, consolidating a large claim package along the favourable geological trend. In our view, this district-scale footprint meaningfully increases the probability of identifying additional Lion-style zones as exploration continues.

Exploration momentum remains strong and is supported by a large and fully funded drill program designed to rapidly advance the project. Multiple drill rigs are currently operating at the Nisk property, enabling the company to maintain a steady pace of drilling and consistent news flow. The current program focuses on expanding the Lion Zone while simultaneously testing additional targets such as Tiger and other conductive anomalies. This balanced exploration strategy positions the company to both grow the known mineralized footprint and potentially deliver further discoveries across the broader system.

In our valuation framework we apply a sum-of-the-parts approach reflecting the company’s key assets. The Lion and Tiger system represents the largest contributor to value, where we estimate approximately C$535 million based on exploration scale assumptions and comparable enterprise value per tonne metrics observed for high-grade polymetallic discoveries. The existing Nisk nickel resource contributes an additional estimated value of roughly C$160 million, while smaller contributions come from other exploration assets and net cash.

Based on this framework we derive a fair value estimate of C$2.85 per share. In our view, the company remains at an early stage of defining what could become a significant polymetallic discovery, and the current valuation does not yet fully reflect the potential scale of the system. With strong drilling momentum, encouraging metallurgy and a large pipeline of exploration targets, Power Metallic offers in our opinion meaningful exposure to continued exploration success. We therefore initiate coverage with a Buy rating.