Australian explorers rush to join Canada’s lithium boom
The call of Canada is being heard clearly by Australian lithium hopefuls, with some of the best-known names from the Aussie mining boom heading north to ride a wave driven by the US Government’s trade protection policies.
Ken Brinsden, the key man in growing Pilbara Minerals (ASX: PLS) from penny dreadful to $13 billion member of the ASX’s top 50, is the leading Australian lithium export as chairman of the Quebec-focussed Patriot Battery Metals (ASX: PMT).
Former managing director of WA-based nickel producer Mincor, David Southam, has made the trek north to lead one of the newest Aussie-in-Canada success stories, Cygnus Metals (ASX: CY5).
Another well-known personality in the Aussie lithium space is Chris Evans, who led Altura Mining until it was acquired by its neighbour, Brinsden’s Pilbara Minerals. Evans has popped up as managing director of Winsome Resources (ASX: WR1), which is enjoying exploration success at its Adina project also in Quebec.
Meanwhile, Mark Connolly, best known as a director of Australian gold stocks with interests in Africa, and the WA based Calidus Resources (ASX: CAI), has responded to the call of the Canadian wild by taking on the chairmanship of Omnia Metals (ASX: OM1), which is also chasing lithium in Quebec.
James Bay a go-to destination
Early exploration result look encouraging, especially around James Bay, the southern extension of Canada’s famous Hudson Bay – it also borders the western half in Ontario and the eastern half in Quebec.
Most striking, and a common feature of reports from the Australian explorers in the James Bay area, are large outcrops of pegmatites, which is the classic source rock of lithium mined in Australia by companies such as Pilbara Minerals, Mineral Resources (ASX: MIN) and IGO (ASX: IGO), which is part owner of the biggest pegmatite mine in the world at Greenbushes in the south of Western Australia.
While impossible to judge an exploration asset by simply looking at a photograph the shots published of James Bay pegmatites by a number of Australian explorers in the region appear to show similarities to what’s being mined at Greenbushes.
If there is a difference, it lies in the proliferation of Quebec pegmatites whereas Greenbushes has always been seen as an orphan despite a decades-long search for lookalike structures.
Another difference, which could prove to be more important than the geology of James Bay, is that it lies almost due north of Detroit, car capital of North America and a city which is developing an appetite for lithium and other battery metals.
The importance of the US car industry to Australia’s lithium explorers in Canada cannot be overstated.
Proximity to major consumers
Not only is Tesla already a major consumer of battery metals, but Ford has just signed a US$3.5 billion (A$5.14 billion) deal with China’s CATL group, the world’s biggest battery maker, to produce batteries in Michigan.
Driving everything in the US and Canada is the seriously misnamed Inflation Reduction Act (IRA) which became law last year and offers generous tax breaks and other incentives in a US$370 billion (A$543 billion) package designed to encourage the production of battery and other energy transition technologies.
The primary target of the IRA is China and its massive manufacturing sector which has cornered the market in a wide range of minerals and metals needed in modern technologies – to the annoyance of the US Government and the European Union.
Countries which have a free trade agreement with the US, including Australia, can benefit from the IRA, but those closest to the manufacturing heart of the US and Canada, around the Great Lakes and in the deep south, stand to be the biggest winners because of the logistics advantage which means raw material can be driven to the factory gate.
Patriot blazing a trail
Patriot is the lithium stock with Australian connections being most closely followed by ASX investors, running the stock up by 106% from opening sales in January at $0.74 to last trades around $1.53 on Friday, which, from a Small Caps perspective is a bit of a nuisance as it means Patriot is already way out of our league with a market value of C$1.45 billion (A$1.57 billion) – Pilbara Minerals Part Two?
Size, however, is not everything, because Patriot is a template, like Pilbara Minerals was, blazing a lithium trail and helping open up a region remarkably rich in pegmatites with some (perhaps many) abundant in lithium, which is where drilling and assaying are the only way to find out.
The Corvette project is the current focus of Patriot on its James Bay tenements with the CV5 pegmatite forming the basis of a maiden resource calculation being made now and scheduled for publication next month (March), when it is expected to show more than 100 million tonnes of material grading more than 1% lithium oxide.
Recent drilling at CV5 has intercepted 156.9m at 2.12% lithium.
Macquarie describes the maiden resource as the next key to Patriot, but the bank also said in a research note last week that other pegmatites could expand the Corvette project with results from drilling at CV13 catching the eye of investors because of its 22.6m at 1.56% lithium with a 6m core grading an impressive 3.19%.
Other Aussies in Canada
Other recent exploration results and company announcements to stir the interest of investors in the rapidly emerging Canadian lithium sector include:
- Cygnus is encountering multiple mineralised zones from first drilling at its Pontax project, including 13.3m at 1.3% lithium, with high grades up to 3.1%. Drilling is accelerating ahead of a targeted inaugural mineral resource by mid-year;
- Winsome is reporting assays of 1.28% over a broad 93.5m intersection from a depth of just 3m, with high grade intervals in that drill hole up to 4.1m at 4.19%;
- Omnia has reported a 2.3km outcropping pegmatite at its Lac des Montagnes project in the James Bay region;
- One of the latest Aussie explorers to join the Canadian lithium rush is Megado Minerals (ASX: MEG), which picked up the Cyclone prospect, which is close to Patriot’s Corvette project and Winsome’s Adina asset;
- Late last year, Cosmos Exploration (ASX: C1X) jumped on the bandwagon by agreeing to acquire the Corvette Far East lithium ground only 20km east of Patriot’s CV5 discovery within the Corvette project; and
- While focussed on its cobalt-copper ground in Idaho and Nevada, Koba Resources (ASX: KOB) joined the lithium rush in Canada in December last year by picking up the Whitlock project adjacent to the country’s only operating lithium mine Tanco in Manitoba.