Critical Elements Lithium clear set path to production races alongside the tenfold global demand for lithium this decade
Lithium demand is set to increase around tenfold this decade, driven by the electric vehicle (EV) boom. This means quality lithium junior miners have a good chance of becoming a market Darkhorse overnight. The trick here is for investors to sort out which lithium juniors are most likely to succeed versus those that are not. So let’s start with a review and update on Critical Elements Lithium Corp. (TSXV: CRE | OTCQX: CRECF) (‘Critical Elements’) who Frederick Kozak recently described in an InvestorIntel column as having “one of the purest lithium deposits globally” on its way to being completed.
Lithium demand is set to increase 10x this decade
Critical Elements owns the advanced exploration stage Rose Lithium-Tantalum Project, located in James Bay, Northern Quebec, Canada.
Key positives for the Rose Lithium-Tantalum Project are:
- Western location – James Bay, Quebec, Canada is an excellent mining jurisdiction with excellent infrastructure.
- Good size lithium-tantalum spodumene (hard rock) resource, with low iron and mica content.
- Strong Phase 1 Feasibility Study result (Nov. 2017) – Based on an average annual production of 186,327 tonnes of chemical grade lithium concentrate and 50,205 tonnes of technical grade lithium concentrate the mine has an expected life of 17 years. The post-tax NPV8% is C$726M with a post-tax IRR of 34.9%, and a CapEx of C$341M. Total operating costs net of tantalum by-product credit are forecast to be US$337/t spodumene.
- Strong metallurgical test results including very high lithium recoveries (~80%) to produce a high purity 6% lithium spodumene concentrate, that can be converted to battery grade lithium hydroxide.
- Advanced stage project – The Company say that they are on track to have Rose fully permitted and start construction at Rose hopefully in 2021.
- Potential to expand production at Rose in Phase 2 and/or to produce the higher valued end product lithium hydroxide.
All of the above are very strong results. The CapEx is reasonable and should be achievable especially given Canada’s recent focus on promoting and supporting critical materials production, the post-tax NPV is good, the IRR is excellent, and the forecast operating costs are low.
Critical Elements Lithium Corp. forecast development timeline to production
Rose Project update
The final stages of Phase 1 permitting is continuing both at the Provincial and Federal levels. At the Provincial level Critical Elements stated on March 8, 2021 that: “The environmental and social impact assessment and review procedure will conclude shortly, to be followed by a recommendation in respect of the authorization of the Project.” The Federal level result is slightly delayed due to COVID-19 with Critical Elements reporting in March 2021: “The Impact Assessment Agency of Canada and the Cree Nation Government (the “Committee”) needs more time to consult with local communities in order to complete the environmental assessment process.”
As shown on the development timeline above, project financing usually follows permitting, then mine construction, and finally, production can begin to ramp. All going well the target for initial production is later in 2022 or early 2023, commercial production in 2023, and full production (28.9 Kt LCE) in 2025.
Other projects and valuable metals/materials
Critical Elements also has several other exploration stage projects with potential for lithium, copper, nickel, zinc, lead, gold, silver, rare earths, and platinum group elements (PGE). A brief summary of their projects is shown below.
- Nisk – The property is prospective for lithium, copper, nickel, PGE and gold.
- Arques – Prospective for lithium, rare earth element, niobium, and tantalum.
- Bourier – Prospective for lithium, copper, zinc, gold, and silver.
- Caumont – Prospective for lithium, copper, nickel, PGE and gold.
- Dumulon – Prospective for zinc, lead and gold.
- Duval – Prospective for gold, copper, nickel, and PGE.
- Lemare – Prospective for gold, copper, nickel and PGE.
- Valiquette – Prospective for copper, nickel, PGE and gold.
Critical Elements trades on a market cap of only C$246M. Investors are certainly getting a lot when you consider the late stage Rose Lithium-Tantalum Project’s Phase 1 post-tax NPV8% of C$726M. All going well there is further exploration potential at Rose, the Phase 2 potential (lithium hydroxide production) and the 8 other projects listed above. The stock has rallied 365% in the past year but this was from a ridiculously low point back at the March 2020 COVID-19 lows. One thing for sure, the world is moving now rapidly to EVs and lithium demand will be through the roof.
Matthew Bohlsen is a Senior Editor for InvestorIntel.com. With a Graduate Diploma in Applied Finance and Investment, and a Graduate Diploma in Financial Planning. He ... <Read more about Matthew Bohlsen>