Australia’s Winsome Resources (ASX: WR1) has bought itself an extra three months to decide whether it will acquire the Renard diamond mine and plant in northern Quebec, paying $2 million to extend the option signed in April.
Winsome plans to repurpose the existing infrastructure for lithium processing to handle ore from its nearby Adina project. It now has until the end of the year to decide whether it will pay $52 million to $54 million to exercise its option. The company originally paid $4 million for the option.
“Extending the option provides us additional optionality to consider the various commercial and corporate opportunities available as we advance project studies on our significant lithium project in North America,” Winsome’s general manager Carl Caumartin said.
The acquisition of Renard comes as diamond markets are struggling and lithium prices remain low. This is notable given that Quebec is a leading region in Canada for lithium exploration and mining and is home to one of the country’s only two active lithium mines.
Early evaluations suggest the plant conversion might be more cost-effective than building a new facility, potentially reducing capital expenditures and accelerating project timelines. The extension also means that Stornoway Diamonds will continue to cover the Renard site’s care and maintenance costs until Winsome makes a final decision.
Stornoway temporarily suspended operations at Renard last October due to mounting uncertainty in diamond prices and a sharp, sudden decline in the global market value of the resource. These factors, compounded by the suspension of rough diamond imports to India and the current global geopolitical climate, have significantly affected the company’s long-term financial outlook.
New study signposts
Winsome is conducting due diligence on both new and repurposed project development. The ‘greenfield’ study focuses on developing a new lithium project at Adina while the ‘brownfield’ study assesses the feasibility of using Renard’s setup for lithium extraction. Both studies are expected to wrap up by this year’s third quarter.
Recent drilling at Adina increased the resource estimate by 33% over the 2023 estimate, with indicated resources now at 61.4 million tonnes grading 1.14% lithium oxide (Li2O), and inferred resources at 16.4 million tonnes grading 1.19% Li2O. The Main zone holds 8.7 indicated tonnes and 37.1 inferred tonnes at 1.23% Li2O. Exploration continues with drilling at the Adina SW and Footwall zones.
If Winsome acquires the Renard project, it would gain year-round road and rail access to key infrastructure at Bécancour and major ports on the St. Lawrence Seaway, enhancing its position in the North American electric vehicle (EV) supply chain. The Renard site, with over $900 million invested in development, has a capacity of 2.2 million tonnes per year.
“Winsome Resources is firmly committed to developing the Adina lithium project in a cost effective and efficient manner as we continue to develop a pathway to production aligned with our vision to integrate into the North American EV supply chain,” managing director Chris Evans said.
The company is also exploring other mineralization zones and projects in Quebec, which is emerging as a key player in lithium production thanks to its rich deposits and supportive regulatory environment.
Despite the positive developments, Winsome’s stock fell 6.8% to A55¢ apiece by market close, giving it a market cap of A$119 million.
As Winsome Resources moves forward with its evaluation and project studies, the extended option for the Renard plant could prove pivotal in shaping the company’s future in the lithium sector. With promising evaluations and strategic planning underway, all eyes will be on Winsome as it navigates its path towards integrating into the North American EV supply chain and advancing its lithium projects.
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