A winter drilling campaign at Critical Elements Lithium‘s (TSXV: CRE; US-OTC: CRECF) Rose lithium-tantalum project in Quebec has confirmed a discovery called Rose West.
The 2024 winter drill campaign at the Rose West site, first encountered during summer prospecting in 2023, drilled 3,670 metres across 31 holes targeting spodumene-bearing pegmatites. The results include an intersection of 40.4 metres grading 1.31% lithium oxide (Li2O) in hole RD-24-20 and 20.3 metres at 2.22% Li2O in hole RD-24-23A, among others.
“It is very satisfying that assay results continue to confirm the discovery at Rose West, as well as the efficacy of our exploration model,” CEO Jean-Sébastien Lavallée said in a press release Monday.
The Rose West discovery comes amid an ongoing, soft lithium market, with analysts revising the expected operational start date for the cornerstone Rose project to 2027, a year later than previously predicted.
At 70¢ per share during midday trading on the TSXV, the company’s shares were trading near a 12-month high just shy of 72¢ apiece, doing little to lift the equity out of its more than two-thirds decline over the past 12 months. It has a market capitalization of $152.5 million.
Mostly to blame for the company’s sagging valuation are lithium carbonate prices trading at 112,000 yuan per tonne ($21,319.50) on Monday, about 32% below the year-earlier level, according to Trading Economics. Prices continue to struggle to see a significant rebound since plunging to under 100,000 yuan from last December until March this year – a two-and-a-half-year low, as slowing demand for electric vehicles magnified the sharp oversupply of lithium to battery manufacturers.
But despite a weak lithium market, Critical Elements is keeping its head down and focusing on the Rose West discovery. According to the company, the drill results confirm the presence of a continuous mineralized pegmatite body, which extends over 450 metres in strike, 370 metres down dip, and reaches a vertical depth of 140 metres. To the west, several near-surface pegmatites are up to 12.4 metres thick. These formations merge into a larger spodumene-bearing pegmatite in the east, which measures up to 40.4 metres wide, the company said.
The mineralized body remains open, with significant exploration potential to the east.
The Rose property comprises 1,050 sq. km of area in Quebec. Credit: Critical Elements Lithium
In addition to the early intersections of lithium-rich pegmatites, the drilling program encountered a distinct type of mineralization associated with an aplite dyke, the company says, which exhibited high-grade tantalum concentrations. These include 2,009 parts per million tantalum oxide across 0.7 metres in drill hole RD-24-07.
Low prices spur delay
The delay in confirming a financing solution for the Rose project is taking longer than expected in the current muted environment for lithium, prompting Cantor Fitzgerald mining analyst Matthew O’Keefe to say he expects no urgency to conclude a deal on the part of Critical Elements’ potential downstream partners.
“As a result, we have pushed out our expected start time for Rose to 2027 from 2026,” said O’Keefe in a note to clients Monday.
The analyst went further to adjust his model, reducing the company’s net asset value multiple to 0.6x from 0.7x “to be more in line with other lithium developers.” As a result, the analyst’s price target drops to $2.50 from $3.50 per share.
“Critical Elements continues to stand out among lithium developers for its permitted Rose project, favourable location and significant exploration upside potential. Our ‘buy’ rating is unchanged,” the analyst wrote.
Ongoing exploration shows the regional potential for additional lithium resources surrounding the Rose deposit. While the company had initially budgeted for about 5,000 metres of drilling on the Rose West deposit, depending on the outcomes of these initial drillings, the program may be adjusted and potentially expanded to explore further and define the area.
“We look forward to launching follow-up drill programs to extend Rose West, Rose lithium-tantalum, and the mineralization at Lemare and Duval, not to mention applying our proven exploration model to test new targets identified on Critical Elements’ extensive land package,” Lavallée said.
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