With the world’s largest lithium reserves, the South American country of Chile is experiencing declines in prices, despite soaring demand. According to estimates from Bloomberg NEF, demand for lithium is expected to soar from 300,000 tons per year in 2018 to 850,000 tons in 2025. To meet the demand, other companies will need to bolster the efforts of Chile’s top two producers, Albemarle Corporation (NYSE:ALB) and Sociedad Quimica y Minera de Chile (NYSE: SQM). These new producers could come from Canada, in particular from Canadian miners, Nemaska Lithium (OTC: NMKEF) (TSX: NMX), Frontier Lithium Inc. (TSX.V:FL) (OTC:HLKMF) and QMC Quantum Minerals Corp. (TSX.V: QMC) (OTC: QMCQF).
A lithium supply gap is forcing buyers to aggressively jockey for position on global supplies as they roll off the production line. While this war for supplies heats up, the buyers must also be keeping tomorrow’s lithium mines and the miners on their radar.
Compared to 2018, sector giant SQM recently projected that lithium demand should grow at least 20% in 2019, driven by batteries for electric vehicles. Fortunately, recent complications in the world’s second largest lithium producing country, Chile, has the market looking for possible new hotspots to develop for the highly sought-after metal—including the prolific mining jurisdiction of Canada.
Historically, there has been significant potential to mine lithium in Canada. Most recently, QMC Minerals reported the confirmation of significant spodumene (hard rock lithium) mineralization from historical drill cores on its Irgon Property in the province of Manitoba. At present, the property has a historical (non NI43-101 compliant) mineral estimate of over 1.2 million tons grading 1.51% Li2O over a strike length of 365 metres and to a depth of 213 metres.
Currently many eyes are also on the Whabouchi Mine being developed in Quebec by Nemaska Lithium (OTC: NMKEF) (TSX: NMX). Last month, Nemaska received an external and independent audit on the project from Canadian engineering firm, BBA, which validated the company’s internal cost-to-complete construction assessment as of February of this year—signaling a further $375 million would be required to meet the cost.
In Ontario, Sudbury-based Frontier Lithium recently inked a strategic partnership agreement to work with a Glencore spinoff company, XPS Expert Process Solutions, to refine spodumene concentrate into lithium hydroxide.
Canada’s prospects for lithium production are getting more attention as they get closer to becoming a real possibility for a sector breakthrough.
HISTORICAL DATA AIDS THE PROCESS OF MODERNIZATION
During QMC Quantum Minerals’ ongoing Irgon drill program, the owners of the TANCO Mine provided QMC the opportunity to evaluate and re-sample the stored drill core derived from a 1978 TANCO drill program on the Mapetre and Central Dikes that currently lie within the Irgon Property. Visual spodumene was reported in the 1978 logs. On re-sampling, QMC confirmed that pegmatite was intersected in all drill holes for which the core was available.Assay results are pending.
In 1953-54 the Lithium Corporation of Canada Limited (“LCOC”) drilled 25 holes into the Irgon Dike. Subsequently, during 1955-56 they sank a 241 foot 3-compartment shaft off of which 1120 feet of drifting plus 6 crosscuts through the dike were excavated. Data collected enabled LCOC to report a mineral estimate (historical and non NI43-101 compliant) for the Irgon Dike of 1.2 million tons grading 1.51% Li2O over a strike length of 365 metres and to a depth of 213 metres. Historical metallurgical tests at this time reported an 87% recovery from which a concentrate averaging 5.9% Li2O was obtained.
Last year, QMC released a 3-D model, which demonstrated that exploration and underground development had been only undertaken on the upper and central portions of dike leaving significant potential to quickly increase tonnage, as the Irgon Dike is open both along strike and to depth.
QMC Quantum Minerals Corp. continues to develop its flagship, 100%-owned Irgon Lithium Mine Project, including evaluation of the Mapetre, Central and Irgon West Dikes that lie within the Irgon Property. QMC recently reported 2.97% Li20 over 1.22 metres from historical drilling of the Central Dike on the project. During 1978, when TANCO drilled the holes into the Mapetre and Central Dikes they were looking for tantalum and tin only. They were not interested in spodumene at that time, as there was not a high demand for lithium; consequently, the metal’s significance on the ground covered by the current Irgon Property wasn’t truly explored in the 1970s. Demand for lithium has refocused exploration on the Irgon Project, as QMC continues to evaluate not only the Irgon Dike but all other spodumene-bearing pegmatite dikes known to exist on the property.
The lithium market is now quite different, and leans heavily in QMC’s favour. Now that they’ve assembled a technical team tasked with bringing the previously historic non NI43-101 compliant mineral estimate into compliance, QMC is poised to work towards significantly expanding Irgon’s size and potential.
MANITOBA’S MINING ADVANTAGES
Due to the substantial development work already carried out by the former property owners, The Lithium Corporation of Canada Ltd., the project does have what can be considered near-term production potential.
Already there is a significant amount of infrastructure attached to the project. Provincial Highway 314 transects the property, while regional infrastructures such as railway, water and electricity are in very close proximity due to the TANCO mine’s location 20km to the south.
Given that the project is located within a world-renown rare-metal pegmatite district, the Irgon Project is a low-cost lithium asset located in a highly desirable jurisdiction for mining.
It’s factors such as these that have led to the Fraser Institute recently ranking the province as the 2nd most attractive jurisdiction (2016).
LITHIUM DEVELOPMENTS AROUND THE WORLD
Albemarle Corporation (NYSE:ALB)
On its Atacama lithium project, Albemarle has said it will invest in a new technology to increase lithium carbonate yields from the Chilean facility by 30%. Providing very little details on the new technology, the company insists that these results can be achieved without increasing the amount of brine being used, further ensuring the Salar de Atacama operation’s sustainability. Albemarle expects to produce 40,000 tonnes of lithium carbonate this year from its La Negra 1 and 2 operations, with the 40,000t per year La Negra 3 and 4 expansion projects expected to be completed by the end of 2020 or early 2021.
Sociedad Quimica y Minera de Chile (NYSE: SQM)
In its recent annual report, SQM projected that global lithium demand should grow at least 20% in 2019, compared to 2018. According to the company, the demand for lithium chemicals increased around 27% year on year in 2018, reaching about 269,000 mt. SQM reported shipments of 45,100 mt of lithium carbonate equivalent in 2018, and net sales of $734.8 million, leaving the average price at $16,292/mt, 25.6% higher than in 2017.
Frontier Lithium Inc. (TSX.V:FL) (OTC:HLKMF)
Based out of mining city, Sudbury, Ontario, Frontier Lithium recently signed a partnership deal with a Glencore spinoff, XPS Expert Process Solutions to devise a way to produce lithium hydroxide for the North American battery industry. The collaborative testing project is built around Frontier Lithium’s PAK project, in northwestern Ontario. The company claims its 6,976-hectare property is the highest-grade lithium deposit in North America.
Nemaska Lithium (OTC: NMKEF) (TSX: NMX)
Based in the province of Quebec, Nemaska’s Whabouchi Mine continues to get closer to production. The company recently received an independent audit from Canadian engineering firm BBA, validating Nemaska’s internal cost-to-complete construction assessment. The next step is to proceed with its dual-track financing action plan of equity raise and/or consider M&A opportunities, in an effort to meet its $350 million estimated cost requirement. Nemaska has hired new, seasoned experts to the construction team, and it has streamlined and improved its project control processes.
Disclaimer / Nothing in this article should be considered as personalized financial advice. We are not licensed under securities laws to address your particular financial situation. No communication by our employees to you should be deemed as personalized financial advice. Please consult a licensed financial advisor before making any investment decision. This is a paid advertisement and is neither an offer nor recommendation to buy or sell any security. We hold no investment licenses and are thus neither licensed nor qualified to provide investment advice. The content in this article is not provided to any individual with a view toward their individual circumstances. Baystreet.ca has been paid a fee of five thousand dollars for QMC Quantum Minerals advertising. This compensation constitutes a conflict of interest as to our ability to remain objective in our communication regarding the profiled company. Because of this conflict, individuals are strongly encouraged to not use this article as the basis for any investment decision. While all information is believed to be reliable, it is not guaranteed by us to be accurate. Individuals should assume that all information contained in this article is not trustworthy unless verified by their own independent research. Also, because events and circumstances frequently do not occur as expected, there will likely be differences between any predictions and actual results. Always consult a licensed investment professional before making any investment decision. Be extremely careful, investing in securities carries a high degree of risk; you may likely lose some or all of the investment.