Growing moves by governments and organizations to set a price on carbon emissions have set up a prospective niche market in battery metals exploration and development. Lithium, cobalt, graphite and vanadium are directly applicable to energy storage, while nickel and copper are seeing growing demand as inputs for electric vehicle manufacturers. Below, we provide an overview of eight companies with exposure to these metals.
Conic Metals
Conic Metals (TSXV: NKL) holds a portfolio of investments with exposure to nickel and cobalt through a combination of equity stakes and royalties.
The company has an 8.56% joint venture interest in the Ramu nickel-cobalt operation in Papua New Guinea, where ore-based slurry feed from the free-digging Kurumbukari nickel laterite deposit is subject to a high-pressure acid leach treatment to produce a nickel and cobalt hydroxide product. Metallurgical Corp. of China is the project’s majority owner and its operator.
Conic acquired a stake in the US$3-billion mine through a US$68-million 2019 acquisition of Highlands Pacific, an Australian company. Based on Highlands’ share of Ramu construction and development loans, Conic expects to start receiving cash flow from this asset in 2022. Once the loans are repaid, Conic’s joint venture interest will increase to 11.3%; the mine has been in operation since 2012 and features substantial exploration upside.
Conic’s royalty and stream portfolio includes nine pre-production projects in Canada and Australia.
Canadian royalties include a 1.75% net smelter return royalty on RNC Minerals’ (TSX: RNX) construction-ready Dumont nickel-cobalt project; a 2% NSR on Giga Metals’ (TSXV: GIGA) Turnagain nickel-cobalt project in B.C.’ royalties on three of New Found Gold’s exploration projects in Ontario, with two additional exploration-stage NSR holdings in Yukon and British Columbia.
In Australia, Conic has royalties on two pre-production nickel-cobalt-scandium assets. The company also has a 7% equity stake in Giga Metals and a 3% interest in Minerva Intelligence (TSXV: MVAI), an artificial intelligence software company.
Conic Metals was formed in October 2019, with certain assets of Cobalt 27 transferred to the new company based on a plan of arrangement between Cobalt 27 and Pala Investments, a Swiss venture capital firm.
Conic Metals has a $12.9-million market capitalization.
Forum Energy Metals
Forum Energy Metals (TSXV: FMC) is focused on copper, cobalt, palladium and uranium exploration in Saskatchewan.
The company has a 100% interest in the Janice Lake copper project in north-central Saskatchewan, where in May 2019, it entered into an option agreement with Rio Tinto (NYSE: RIO; LSE: RIO). Under the terms of this agreement, the major may earn up to an 80% interest in the project by spending a total of $30 million on exploration.
The 383-sq.-km Janice Lake property covers the entirety of the 52-km long Wollaston Copper Belt, a sedimentary copper basin. Over 20 copper occurrences have been identified to date at this project. This winter, Rio Tinto was working on a winter access road to Janice Lake, with an exploration program planned to start in June. In March, Forum announced that work at the project was temporarily postponed due to COVID-19.
In September 2019, Rio Tinto drilled three targets at the site: highlights include 52 metres of 0.57% copper and 1.5 grams silver per tonne, as well as 22 metres of 0.37% copper and 2.82 grams silver from the Jansem and Janice targets, respectively. At Jansem, copper mineralization has been traced over 650 metres of strike and over a width of 200 metres with thicknesses of up to 66 metres. At Janice, drilling has defined mineralization for 1.2 km of strike, over a width of 400 metres, with thicknesses of up to 57 metres. Both targets remain open.
Historical exploration and the work that Rio Tinto completed last year cover 4 km of the 52-km prospective trend.
At the 142-sq.-km Fir Island project, where Orano Canada may earn up to a 70% interest by spending $6 million, a 3,000 metre drill program is planned for this year. The property, situated on the northeast edge of the Athabasca Basin, is within trucking distance of Orano’s McClean Lake mill. Fir Island is near Cameco’s (TSX: CCO) Centennial deposit and adjacent to the historic Nisto uranium mine.
The company’s wholly owned Love Lake palladium project, 60 km northeast of Janice Lake, features a geological environment comparable to Impala Canada’s Lac des Iles project, according to Forum. At 308 sq. km, the property covers all of the known showings within the Swan River mafic-ultramafic complex. Exploration plans for this year include airborne geophysics as well as mapping and sampling to generate drill targets.
Forum also has a 100% interest in the 10.7-sq.-km Quartz Gulch cobalt property in Idaho, within the state’s cobalt belt and on trend with the past-producing Blackbird mine.
Forum Energy Metals has an $8.7-million market capitalization.
Grid Metals
Grid Metals (TSXV: GRDM) has a 100% interest in the East Bull Lake property, 80 km west of Sudbury. The 22-km long by 4-km wide project is underlain by a layered platinum group metals-bearing intrusion where past drilling and channel sampling traced widespread platinum and palladium.
The two main targets at the site, the Central and South zones, have a combined strike length of over 4 kilometres. Six holes drilled into the Central zone in 2002 returned intercepts such as 28 metres of 0.9 gram per tonne total PGMs and gold as well as 20 metres of 0.67 gram total PGMs. The South Zone, situated on strike with the Central zone, represents a similar target but has not been drilled. Airborne geophysics over this zone traced an anomaly over about 1,000 metres of strike.
In September 2019, the company added the Parisien Lake and Kid zones to its East Bull Lake holdings, which cover 2 km of the prospective Parisien Lake Deformation Zone. Past drilling at these claims traced shallow platinum and palladium mineralization over a strike length of 600 metres.
In addition, Grid holds the Makwa-Mayville nickel-copper-palladium project in Manitoba, 145 km from Winnipeg. This asset consists of the nickel-dominant Makwa holding and the copper-dominant Mayville property; the two are located 40 km apart. A preliminary economic assessment (PEA) completed in 2014 envisions two open pit mines at these sites producing nickel and copper concentrates. The study proposed an 8,300 tonne per day, 14-year operation, at an initial capital cost of $208 million, with a post-tax net present value estimate, at a 7.5% discount rate, of $97 million.
Total indicated resources across the two projects consist of 33.8 million tonnes grading 0.27% nickel, 0.37% copper, 0.06 gram platinum and 0.19 gram palladium. Additional total inferred resources are at 5.9 million tonnes at 0.2% nickel, 0.43% copper, 0.06 gram platinum and 0.15 gram palladium.
Both Makwa and Mayville feature exploration upside with additional targets and favourable geology nearby existing resources. Makwa is a past-producing open pit with a higher-grade sulphide core. At Mayville, a platinum group metal zone has also been traced 2 km southeast of the deposit.
Grid Metals has a $7.2-million market capitalization.
Largo Resources
Largo Resources (TSX: LGO) holds the high-grade open pit Maracas Menchen vanadium mine in Brazil’s Bahia state. This year, the operation is expected to produce 11,750 tonnes to 12,250 tonnes of vanadium pentoxide at total cash costs of US$3.45 to US$3.65 per pound.
Largo completed an expansion project at Maracas Menchen in the fourth quarter of last year, producing a record 3,011 tonnes of vanadium pentoxide in Q4. In addition, during a plant maintenance period this April, Largo expects to add further improvements to the kiln, to increase its production capacity to 1,100 tonnes of vanadium pentoxide a month, up from 1,000 currently.
At the end of April, an offtake agreement with Glencore (LSE: GLEN) will expire, allowing Largo to receive all of the premiums associated with high-purity vanadium sales: these are currently split with Glencore on a 50:50 basis and the agreement covers 100% of production.
Earlier this year, the company introduced two new products to its vanadium offering: the Vpure and Vpure+ offerings. Vpure flakes are mainly used to produce ferrovanadium, whereas Vpure+ flakes and powder are used in the production of master alloys and as inputs to vanadium redox flow batteries, respectively.
In January, the company’s board approved the construction of a ferrovanadium conversion plant at the mine site, which would allow Largo to provide this material directly to consumers. With start-up of this facility planned for the first quarter of next year, engineering studies and permitting efforts are underway with an estimated capital budget of US$5 million to US$7 million this year for the conversion plant.
With a continued focus on vanadium processing integration, Largo’s board has also approved a vanadium trioxide processing plant, which would allow increased sales to the aerospace market as well as to the vanadium battery market. Construction is expected to start in the first quarter of next year, ahead of a start-up in the third quarter of 2021.
Largo’s tailings are non-magnetic and contain ilmenite and titanium dioxide. Engineering studies are underway to evaluate the possibility of upgrading the tailings through flotation to produce titanium dioxide concentrate. With a successful pilot plant study started last year, the second phase of testing is expected shortly.
The Campbell pit at Maracas Menchen features total reserves of 19 million tonnes at 1.15% vanadium pentoxide and lies within a total land package of 177 square kilometres. Largo has developed a multi-year exploration plan to grow its resource inventory and advance existing deposits. Last year, a 25,000 metre drill program resulted in a resource upgrade at the NAN deposit with additional assays pending.
Largo Resources has a $366-million market capitalization.
Lithium Americas
Lithium Americas (TSX: LAC; NYSE: LAC) holds a 49% interest in the construction-stage Cauchari-Olaroz lithium project in Argentina’s Jujuy province, and wholly owns the Thacker pass lithium asset in Nevada, where a feasibility study is underway.
A 2019 feasibility study for Cauchari-Olaroz outlines a conventional brine operation producing 40,000 tonnes per year of lithium carbonate at cash costs of US$3,576 per tonne over a 40-year mine life. With an estimated project capital cost of US$565 million, the post-tax net present value estimate for the project, at an 8% discount rate, came in at US$1.8 billion.
Ganfeng Lithium owns 51% of the project. As of February, 59% of the planned capital costs had been committed or spent with the construction efforts approximately 36% complete. At the time, first production was on schedule for early 2021. In March, the company announced that construction activities at Cauchari-Olaroz were temporarily suspended, in line with the government restrictions in place due to COVID-19.
Cauchari-Olaroz is adjacent to Orocobre’s (TSX: ORL) operating Olaroz lithium facility and sits within the same basin. With measured and indicated resources of 19.9 million tonnes lithium carbonate equivalent, this pre-production asset is one of the largest projects in South America.
The company’s Thacker Pass sedimentary lithium deposit in the U.S. has produced over 10,500 kg of high-purity lithium sulphate solution at a process testing facility in Reno. A 2018 prefeasibility study outlined a two-phase open pit project, initially producing 30,000 tonnes per year of lithium carbonate and later increasing to 60,000 tonnes annually. With a 46-year mine life, average cash costs of US$2,570 per tonne of lithium carbonate and initial capital costs of US$581 million, the net present value estimate post-tax for the project, at an 8% discount rate, came in at US$2.6 billion.
A feasibility study for the first phase of this project, targeting production of 20,000 tonnes of lithium carbonate equivalent annually, is expected by mid-year. Lithium Americas expects to have the major permits for the project by next year and is exploring financing options for Thacker Pass and evaluating potential joint venture partners.
Lithium Americas has a $325.2-million market capitalization.
Plateau Energy Metals
Plateau Energy Metals (TSXV: PLU) holds the Falchani lithium and Macusani uranium projects in Peru. The two sites are within a wholly owned, 930 sq. km group of concessions that is in the southeastern part of the country, 25 km from the town of Macusani and 650 km from Lima.
The Falchani lithium project features a high-grade, near-surface hard rock lithium deposit that is a volcanic-hosted solidified brine. A preliminary economic assessment (PEA) for the project released earlier this year suggests a 26-year open pit operation with a dedicated processing facility, with peak annual throughputs of 6 million tonnes. Producing an average of 63,034 tonnes of lithium carbonate in the first seven years at operating costs of US$3,958 per tonne with an initial capital outlay of US$587 million, the after-tax net present value estimate for the project, at an 8% discount rate, came in at US$1.55 billion.
The proposed open pit operation would extract mineralized material from the Falchani and Ocacasa 4 concessions. Within the optimized pit shells, these contain total in-situ indicated resources of 43.2 million tonnes at 1.83% lithium carbonate equivalent for a total of 790,000 tonnes contained lithium carbonate equivalent with a further 102.2 million tonnes inferred at 1.75% lithium carbonate equivalent, containing 1.79 million tonnes lithium carbonate equivalent.
The mined material would be crushed, then undergo warm sulphuric acid leach tank processing to extract the lithium to a leach solution, followed by a purification, evaporation and precipitation to produce low impurity, battery-grade lithium carbonate within a matter of days.
A baseline environmental study for the project is ongoing – it has been expanded to include the area of the Macusani uranium project and recently transitioned to an environmental impacts assessment.
There are additional lithium exploration targets within the Falchani project area and extending into the surrounding concessions held by the company.
The Macusani uranium project contains measured and indicated resources of 95.2 million tonnes grading 248 parts per million U3O8 for a total of 51.9 million lb. uranium oxide and inferred resources of 130 million tonnes at 251 ppm of U3O8 totalling 72.1 million lb. uranium oxide.
A PEA for this asset from 2016 outlined an open pit mine with a 10-year life, producing an average of 6.1 million lb. uranium oxide a year.
With heap leach processing, average costs of production of US$17.27 per lb. uranium oxide and an initial capital spend of US$300 million, the after-tax net present value estimate for the project, at an 8% discount rate, came in at US$603 million.
In October, the company announced that it started a judicial process, intending to overturn a decision made by the country’s mining council, which supported a resolution made by Peru’s Institute of Geology, Mining and Metallurgy deeming 32 of its 149 mineral concessions at Macusani invalid due to late good standing fee payments. According to the company, an administrative process is ongoing with the judicial path pursued early and as a precautionary measure.
Plateau Energy Metals has a $16.7-million market capitalization.
SRG Mining
SRG Mining (TSXV: SRG) is focused on developing the wholly owned Lola graphite deposit in Guinea, 1,000 km southeast of Conakry, the country’s capital. In July last year, the company released the results of a feasibility study for the project, which outlined total proven and probable reserves of 42 million tonnes grading 4.17% carbon graphite for a total of 1.75 million tonnes of contained graphite.
The 2019 feasibility study for the asset outlined an open pit operation with a 29-year mine life, producing an average of 54,600 tonnes of graphite flakes a year. With an average concentrate grade of 95.4% carbon graphite, the suggested plant on site would be designed to produce 50,000 tonnes of concentrate annually, divided into four standard size fractions and recovered through a conventional flotation process. Based on an initial capital costs estimate of US$123 million and life-of-mine average operating costs pegged at US$508 per tonne of concentrate, the associated after-tax net present value estimate for the project, at an 8% discount rate, came in at US$159 million with a 21.2% internal rate of return.
The mineralization at the project extends over 8.7 km of strike and is, on average, 370 metres wide. The upper 20 to 50 metres is weathered saprolite, where graphite flakes are freed from the silicate component for optimal recovery of larger flake sizes. According to the company, approximately 50% of the graphite at the deposit is large flake and 26% is ‘jumbo’ flake.
In January, SRG signed four three-year off-take agreements for a total of 89,000 tonnes of graphite concentrate, covering approximately 60% of the company’s production over that time frame. Prior to that, in November 2019, it received the mining permit for Lola for a renewable 15-year term.
On the financing front, in March, the company closed a $2.4-million private placement with net proceeds intended for development of Lola. Last summer, SRG also entered into a share purchase agreement with a U.S.-based industrial firm where the latter acquired US$5 million of SRG stock and entered into a memorandum of understanding (MOU) with the company to jointly investigate cooperation possibilities in areas such as debt financing, energy production and concentrate transportation. At the same time, the company also entered into a convertible debt agreement with Sama Resources (TSXV: SME), which includes a $5 million credit facility and a $1 million bridge loan.
In a release published last fall, SRG indicated that it was in a bidding process with four engineering groups to determine the optimal partner to advance Lola under an engineering-procurement-construction management model.
SRG Mining has a $22.6-million market capitalization.
Wealth Minerals
Wealth Minerals (TSXV: WML) holds over 670 sq. km of ground in Chile, as part of its lithium brine project portfolio, as well as the Valsequillo silver project in Mexico.
Its Chile holdings consist of the Atacama, Ollague, Trinity and Huasco projects. Atacama is the largest, at a total of 541 sq. km, and is within the Atacama Salar in northern Chile’s Antofagasta region. The Atacama Salar is the world’s highest-grade and largest producing lithium deposit. The Wealth concessions are contiguous with grounds held by BHP (NYSE: BHP; LSE: BHP), Chilean SQM (NYSE: SQM) as well as COFRO, the Chilean economic development agency.
A geophysical survey completed over the core property outlined a 500 metre to 2 km thick very low resistivity zone, covering at least 100 sq. km of the project grounds. This geophysical low is interpreted to be porous media containing high salinity fluids with an estimated average thickness of 1.5 kilometres.
In October of last year, the company signed a memorandum of understanding with Uranium One, a subsidiary of Rosatom, a Russian-state owned corporation, which proposed up to a 51% acquisition of 462 sq. km of the Atacama project. The MOU includes a due diligence period with terms yet to be agreed upon and specifies that the two parties will enter into an off-take agreement with Uranium One having the right to purchase all of the products from Atacama.
In March 2018, Wealth entered into a partnership with ENAMI, the Chile’s national mining company, with a 24-month period to form a joint venture for development of the Atacama projects and ENAMI holding a 10% stake in the partnership. A joint venture would allow Wealth to apply for the permits required to explore, develop and produce lithium.
In a corporate update released in April, Wealth indicated that, although the 24 month period to form a JV with ENAMI had expired, the company still expected the state-owned entity to enter into a joint venture for the Atacama project.
At Ollague, 200 km north of Atacama, geophysical surveys identified conductive zones that are interpreted to represent porous media with high-salinity fluids at depth.
In addition to the lithium holdings, at the Valsequillo project in Mexico’s southern Chihuahua state, Wealth may earn a 100% interest over 90 months by spending a total of US$6 million. These grounds are interpreted to cover the upper portions of an intermediate sulphidation epithermal system. Having secured surface access rights to the project in October 2019, the company now intends to advance this asset towards the drill-ready stage.
Wealth also holds a 42.6% stake in Wealth Copper, a private company holding two exploration-stage copper project in Chile, with efforts underway to list this entity publicly.
Wealth Minerals has a $21.5-million market capitalization.
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