December 06, 2022

Kozak on Imperial Mining’s proximity to Quebec’s aluminum production corridor

Just six months ago, the share price of Imperial Mining Group Ltd. (TSXV: IPG) was range-bound between CAD$0.05 and CAD$0.06/share.  This was a good thing, because only a month before, the company was trading at $0.04 or less! The company closed 2020 at approximately $0.09/share but currently trades around $0.16/share with a market capitalization of approximately CAD$20 million.

What happened? As followers of the rare earth space know, the market is catching on to the notable rare earths companies and the need to recreate a domestic US/non-China based supply. In addition to the company’s gold and base metal assets, Imperial’s Quebec hardrock property has excellent exposure to scandium. This was highlighted on December 31, 2020 in a year-end interview, where scandium and Imperial Mining were mentioned by name. On January 4, 2021, the stock soared to $0.16 and continues to trade at that level.

As you probably know, scandium is an additive to aluminum alloys that hardens and strengthens the end product, (not unlike titanium alloys) and allows for lighter weight but equivalent (or better) strength components. Notably, two Russian jet fighters (MiG-21 and MiG-29) use scandium alloys in their construction. Other uses for scandium alloys include (but not exclusive to) automobiles, fuel cells and other defense products.

Peter Cashin, President and CEO, recently explained how Imperial Mining’s 100%-owned Crater Lake Project “provides a strategic opportunity for an exciting new line of lightweighting [sic] products.” The project contains rare earths but is highly leveraged to scandium.

“How it (Crater Lake Project) stands out is that it is a primary bedrock opportunity in Quebec,” said Mr. Cashin. “The grades are exceptionally high relative to our peers for a bedrock deposit. It is exposed at surface so it would be amenable to an open pit operation. Our preliminary metallurgy shows that we have very strong recoveries and high rejection rates of the gangue minerals from our metallurgical work so far. We are ideally located very close to the aluminum capital of Canada.”

In other words, a potential source of a critical metal element for the aluminum industry right on its doorstep in Canada!

After an active 2020 field program, which included 130-line kilometers of detailed ground magnetic surveys, in August the company announced the discovery of several new areas of scandium mineralization on the Crater Lake Project. These new areas lie within the same 14-km magnetic trend hosting the three previously defined mineralized zones on the property (Boulder, TGZ and STG). Subsequent 2020 drilling confirmed strong scandium resource potential on the property, which was announced last November.

The market clearly liked those results. Imperial went on to successfully raise CAD$2.6 million on closing of an oversubscribed, non-brokered private placement of flow-through shares and units in early December 2020.

Looking into 2021, Imperial is in an enviable position in the scandium industry owing to their close proximity to Quebec’s aluminum production corridor, where 90% of Canada’s aluminum is produced. While there is already competition from the recently announced scandium plant by $100 billion market capitalization Rio Tinto, the Crater Lake Project appears to have all of the traits of a high-quality, low cost project which is getting better delineated with every drilling program. Still a competitive advantage, the project has easy egress to the aluminum smelters plus low-cost electricity and a supportive political environment.

While it is too early to say that the Crater Lake Project will be the next (hardrock or otherwise) scandium supply source for Quebec aluminum, the project is getting ever closer to the decision to proceed with a new mining development. There are still a significant number of steps to go before that decision, but the company appears to have a promising future ahead.

Disclaimer: The author of this post may or may not be a shareholder of any of the companies mentioned in this column. None of the companies discussed in the above feature have paid for this content. The writer of this article/post/column/opinion is not an investment advisor, and is neither licensed to nor is making any buy or sell recommendations. For more information about this or any other company, please review their public documents to conduct your own due diligence. To access the disclaimer and other important legal notices, click here.

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