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The Dean’s List: What copper company could benefit from Canada’s commitment to critical minerals?

Part 4: Foran Mining Corporation

It’s time for another installment in our series that looks at Canadian companies in the mining sector that could be impacted by Federal and Provincial government announcements with respect to critical materials, supply chain, EV battery manufacturing, etc. As a reminder the province of Ontario first announced in March its strategy for ‘critical minerals’ followed shortly by a C$4.9 billion electric vehicle battery plant in Windsor, Ontario. In April the Federal Government got on board with it’s Budget 2022 proposing up to C$3.8 billion in support over eight years to implement Canada’s first Critical Minerals Strategy. The Fed’s followed this up in late June with a House of Commons Standing Committee on Industry and Technology report entitled: Positioning Canada as a Leader in the Supply and Processing of Critical Minerals. And then in mid-July, a new C$1.5 billion battery materials facility was announced for eastern Ontario in a deal that sees Umicore, a Belgium multinational corporation, planning to transform metals such as nickel, cobalt and lithium into cathode active battery materials.

With announcements like this coming fast and furious one can hope that there is follow through on all of this potential and numerous Canadian mining companies can take advantage of this positive momentum. On top of all this, there was some big news out of the U.S. this weekend that could also have a trickle down affect to Canadian miners. With the Senate passing the Inflation Reduction Act, the Bill includes requirements for domestic manufacturing of EVs and their battery components to qualify for tax credits. As written, the law requires that 40% of battery components be sourced from factories in the U.S. or its free trade agreement partners (that would definitely include Canada), and that Chinese components and minerals be phased out beginning in 2024. The landscape is beginning to look outright bullish for North American purveyors of all these critical minerals.

Up to this point in this series, I had been focused on Ontario-based companies, simply because that province appears (to me) to have the best critical minerals plan and is also the heart of vehicle manufacturing in Canada. However, in light of the latest U.S. development and another piece of news out yesterday, I’ve decided to venture into Saskatchewan for today’s offering. Foran Mining Corporation (TSXV: FOM | OTCQX: FMCXF) just announced it has entered into a non-binding term sheet with Ontario Teachers’ Pension Plan Board (Ontario Teachers), which contemplates a transaction that could see Ontario Teachers’ invest up to C$200 million in the 100%-owned McIlvenna Bay copper project.

McIlvenna Bay is a copper-zinc-gold-silver rich volcanic-hosted massive sulphide (VHMS) deposit intended to be the center of a new mining camp in a prolific district that has already been producing for 100 years. McIlvenna Bay sits just 65km West of Flin Flon, Manitoba, is located entirely within the traditional territory of the Peter Ballantyne Cree Nation and is the largest undeveloped VHMS deposit in the region. The Company announced the results from its Feasibility Study on February 28, 2022, outlining an 18-year mine life producing an average of 65 million pounds of copper equivalent annually. That Feasibility Study indicates an initial capital cost of C$368 million, which means it appears they are already over half way there as far as financing this domestic copper supply.

Over and above all the generally bullish news currently out there regarding critical minerals, Foran Mining has a couple of unique characteristics that make it stand out to me. First is location. Saskatchewan is one of the world’s top mining jurisdictions and with the property being entirely located on the Peter Ballantyne Cree Nation, it triggers one priority found in the House of Commons Standing Committee on Industry and Technology report which recommends that the government provide incentives to ensure that the development of a new mine also establishes a value-added industry in the region where it is located and introduces initiatives to encourage Indigenous peoples to fully participate in the mining sector. Perhaps it’s a bit of a reach but I suspect Foran could tap into some funding from the Federal government if they play their cards right.

The other interesting aspect of the McIlvenna Bay project is Foran’s objective to build the mine based on the Company’s carbon neutrality goals and initiatives, part of a broader mission to create a blueprint for responsible mining that is upheld as leading practice globally. To show they are serious about this undertaking, Foran has already announced an agreement with Sandvik to supply initial underground equipment for development at its McIlvenna Bay project. The initial equipment order includes battery electric underground drills, trucks, and loaders that will be used for the mine’s development and production activities. Clean power is provided by two nearby hydroelectric dams to reduce operational emissions and a state-of-the-art tailings storage facility and paste backfill operation will reduce the carbon footprint and greatly reduce environmental impact. I have to believe that as the push for domestic supply chains of critical minerals evolves, the potential source’s carbon footprint will also play a role in who signs the best supply or offtake agreements.

I’m not sure if the phasing out of anything Chinese in battery components by 2024 was a late add to the US Inflation Reduction Act as a result of China’s military response to US House speaker Pelosi’s visit to Taiwan (likely not, but it’s fun to speculate). Regardless, there appears to be increasing tensions globally as the rest of the world figures out how far behind China they are when it comes to the resources and facilities required to combat climate change and reduce emissions without being mostly reliant on China. In the near term that appears to be good news for North American resource companies.

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Did you miss a previous edition? Check it out….

The Dean’s List – Part 3: What graphite company could benefit from Canada’s commitment to critical minerals?
The Dean’s List – Part 2: What nickel company will benefit from Canada’s commitment to critical minerals?
The Dean’s List – Part 1: What rare earths company will benefit from Canada’s commitment to critical minerals?




Avalon Advanced Materials Don Bubar on the Acceleration of the Separation Rapids Lithium Project

In this InvestorIntel interview with host Tracy Weslosky, Avalon Advanced Materials Inc.‘s (TSX: AVL | OTCQB: AVLNF) President, CEO and Director Don Bubar talks about their lithium extraction technology and about securing a $3M convertible security funding to accelerate Separation Rapids Lithium Project.

In the interview, which can also be viewed in full on the InvestorIntel YouTube channel (click here to access InvestorChannel.com), Don starts, “We’ve been in this space for 25 years…while 25 years ago was a bit early for battery materials, we knew it would have a day and that day has finally come.” Don also provides an update on reactivating Avalon’s East Kemptville Tin Project which “was the only ever primary tin producer in North American history.” Emphasizing how tin has emerged as a very important technology metal due to its growing usage in many technology applications, Don talks about Avalon creating a new supply.

To access the full InvestorIntel interview, click here

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About Avalon Advanced Materials Inc.

Avalon Advanced Materials Inc. is a Canadian mineral development company specializing in sustainably-produced materials for clean technology. The Company now has four advanced stage projects, providing investors with exposure to lithium, tin and indium, as well as rare earth elements, tantalum, cesium and zirconium. Avalon is currently focusing on developing its Separation Rapids Lithium Project near Kenora, Ontario while continuing to advance other projects, including its 100%-owned Lilypad Cesium-Tantalum-Lithium Project located near Fort Hope, Ontario. Social responsibility and environmental stewardship are corporate cornerstones.

To learn more about Avalon Advanced Materials Inc., click here

Disclaimer: Avalon Advanced Materials Inc. is an advertorial member of InvestorIntel Corp.

This interview, which was produced by InvestorIntel Corp., (IIC), does not contain, nor does it purport to contain, a summary of all the material information concerning the “Company” being interviewed. IIC offers no representations or warranties that any of the information contained in this interview is accurate or complete.

This presentation may contain “forward-looking statements” within the meaning of applicable Canadian securities legislation. Forward-looking statements are based on the opinions and assumptions of the management of the Company as of the date made. They are inherently susceptible to uncertainty and other factors that could cause actual events/results to differ materially from these forward-looking statements. Additional risks and uncertainties, including those that the Company does not know about now or that it currently deems immaterial, may also adversely affect the Company’s business or any investment therein.

Any projections given are principally intended for use as objectives and are not intended, and should not be taken, as assurances that the projected results will be obtained by the Company. The assumptions used may not prove to be accurate and a potential decline in the Company’s financial condition or results of operations may negatively impact the value of its securities. Prospective investors are urged to review the Company’s profile on Sedar.com and to carry out independent investigations in order to determine their interest in investing in the Company.

If you have any questions surrounding the content of this interview, please contact us at +1 416 792 8228 and/or email us direct at info@investorintel.com.




The Dean’s List – Part 1: What rare earths company will benefit from Canada’s commitment to critical minerals?

Part 1: Avalon Advanced Materials Inc.

Since the start of the very unnecessary war in Ukraine both federal and provincial governments in Canada have made numerous announcements with respect to critical materials, supply chain, EV battery manufacturing, and a whole host of other related subjects. The province of Ontario made a big splash in March, first announcing its strategy for ‘critical minerals’ worth C$3.5 billion to Ontario’s economy followed shortly by a C$4.9 billion electric vehicle battery plant in Windsor, Ontario. Then in April, the Federal Government got in on the action with Budget 2022, proposing up to C$3.8 billion in support over eight years to implement Canada’s first Critical Minerals Strategy.

All these initiatives could have material impacts on several companies in the mining sector in Canada. Against this backdrop, we will begin a series of articles looking at the companies that could benefit from this government support to help position Canada to lead the way in supplying materials for clean technology, healthcare, aerospace, and computing, that will continue to be in high demand for years to come.

We’ll start the series by looking at an Ontario based mining company providing investors with exposure to lithium, rare earths, cesium, tantalum, feldspars, tin and indium. Avalon Advanced Materials Inc. (TSX: AVL | OTCQB: AVLNF) is a Canadian mineral development company specializing in sustainably produced materials for clean technology. Avalon is currently focusing on developing its Separation Rapids Lithium Project near Kenora, Ontario while continuing to advance other projects, including its 100%-owned Lilypad Cesium-Tantalum Lithium Project located near Fort Hope, Ontario. Additionally, Avalon is evaluating opportunities to apply an innovative, new extraction technology to recover rare earths and other metals from acid mine drainage at closed mine sites and remediate the environmental liability.

Unlike typical articles about companies where we focus on what a company is up to and where the next catalyst may come from, this series is going to look at how a company may be able to tap into some of the cash governments are pledging to the industry or benefits that may accrue due to policy changes. Accordingly, let’s review a few of the highlights from the various announcements.

Both Ontario and the Federal Budget announcements included funding to improve the regulatory framework, which has the potential to backfire in my opinion, but if successful this should be a benefit to any and all mining companies in Canada. However, the Ontario announcement goes one step further to include the development of a regulatory framework for recovery of minerals from mine tailings and waste with an amendment to the Mining Act. Avalon has been looking at several such opportunities including East Kemptville Tin-Indium and the Cargill past-producing phosphate mine site in Ontario with concentrations of rare earths, scandium and zirconium in the tailings. Unfortunately, East Kemptville is in Nova Scotia so it falls outside of Ontario’s jurisdiction, but if Avalon can advance their process, I’m sure there is ample opportunities to apply the technology to many of Ontario’s past producing mines.

Another pillar in the Ontario strategy was the encouragement of domestic processing and creating resilient local supply chains. The announcement of the Stellantis and LG Energy Solution JV marking Canada’s first lithium-ion electric vehicle (EV) battery manufacturing plant went a long way toward supporting this initiative. And what goes into lithium-ion batteries? Lithium of course, and Avalon is well positioned with two lithium projects located in Ontario. That strikes me as being in the right place at the right time with the right commodity. We’ll see how this plays out over the next few years as the plant is scheduled to begin production in early 2025.

Another catch-all for all junior miners in Canada was the Federal Budget announcement of the introduction of a new 30% Critical Mineral Exploration Tax Credit for specified mineral exploration expenses incurred in Canada and renounced to flow-through share investors. The tax credit would apply to eligible materials including nickel, lithium, cobalt, graphite, copper, rare earth elements, vanadium, tellurium, gallium, scandium, titanium, magnesium, zinc, platinum group metals, and uranium. This should help any explorer in the sector looking to fund upcoming drilling programs by providing another avenue of raising capital.

As long as governments don’t get in the way of their good intentions, we could be on the verge of a golden era for critical mineral explorers, miners and processors in Canada. Correspondingly, over the next several weeks we’ll continue to look at companies like Avalon that find themselves well-positioned to take advantage of this renewed focus by the Canadian Government on the security of supply, to exploit Canada’s abundance of valuable critical minerals.




The new S&P/TSX Battery Metals Index – what were they thinking?

On June 2nd the Toronto Stock Exchange (TSX) announced the launch of the S&P/TSX Battery Metals Index. Th​e stated goal of this​ ​new benchmark is to provide investors ​increased ​exposure ​to, ​​and deeper insights in​to the cleantech and energy transition story. The TSX website states “The S&P/TSX Battery Metals Index provides investors with a measure of TSX and TSXV listed mining companies which are involved in production and exploration of battery metals Cobalt, Copper, Graphite, Lithium, Manganese, Molybdenum, Nickel, Palladium, Platinum, Zinc. Weighting is 80% divided equally among companies involved in production and 20% divided equally among companies involved in exploration that are not involved in production.”

Far be it from me to be critical of this index (or any equity index for that matter) or the logic behind adding it to the TSX mix, especially given I have no idea what their mandate was or what criteria (other than what’s noted above) drove their choices. However, I do find some of the top holdings somewhat amusing. Latest data shows Turquoise Hill Resources Ltd. (TSX: TRQ | NYSE: TRQ) as the #1 holding at 11.4%, with China Gold International Resources Corp. (TSX: CGG) as the third largest at 8.9%, followed by Teck Resources Ltd. (TSX: TECK.B | NYSE: TECK) at 8.3%.

Starting with the first name on the list, Turquoise Hill, we have a single asset copper/gold producer located in Mongolia that sells its production to China. Perhaps not what an investor is expecting the largest holding of the S&P/TSX Battery Metals Index to be. The cynic in me thinks this might be the top holding simply because on March 13, 2022, the board of Turquoise Hill received a non-binding proposal from Rio Tinto, the Company’s majority shareholder, to acquire the approximately 49% of the outstanding common shares of Turquoise Hill held by the Company’s minority shareholders for cash consideration of C$34.00 per share. This puts a theoretical floor on the share price and would thus potentially help the Index outperform any peers in a market that is currently beating up base metal equities. I would add that Turquoise Hill barely qualifies as a TSX listed company given 51% is owned by Rio Tinto with an outstanding offer for the rest of the shares and I’ll save my comments on where the production is and where it’s going for the next Index holding.

I’ve already tipped my hand as to where I’m headed with my questioning of China Gold International as an entrant. Here we have a two asset company, both copper/gold mines of which one is in Tibet and the other is in Inner Mongolia. There’s a lot I don’t know for sure about this company but I’m reasonably confident that all of their copper production is staying in China. According to its website, China Gold International is 40% owned by China National Gold Group. This at a time when most North American companies are working hard to establish a domestic battery and critical materials supply chain.

Images from China National Gold Group website.

There may also be concerns that Chinese-run mines in Tibet (or elsewhere in China) may not meet a lot of the ESG standards we are placing on other, more transparent mining operations around the world. Granted I find most ESG commentary spends a lot of time talking about the E and seems to ignore the S & G all together, but I’ll save that rant for another day. What I will say, is that I find it a little disappointing that over 20% of this new TSX Index is basically owned or controlled by China. In fact, the press release states “The S&P/TSX Battery Metals Index tracks Canadian-listed companies engaged in the production or exploration of metals used in battery manufacturing.”, which almost seems a little bit disingenuous.

Then there’s Teck Resources, the one that makes me laugh the most. Especially when you read another quote from the press release – “The responsible mining of critical and battery metals is the first step in achieving global net zero targets, as the transition to electric vehicles and battery storage technologies required to support renewable energy transition to global economies is expected to gain pace and drive demand.” Teck is the largest North American producer of steelmaking coal and the world’s second largest exporter of seaborne steelmaking coal. As per the Company’s first quarter results, 55% of revenue and 69% of gross profit came from coal. And if that wasn’t “net zero” enough for you, another 8% of revenue and 3.5% of gross profit came from bitumen (oilsands production). Yes, Teck produces a significant volume of copper and zinc, but seriously, did anyone bother to look at the whole company?

And there you have it, almost 30% of the new S&P/TSX Battery Metals Index summed up by a someone who is scratching his head, wondering how these things work. Especially given you find this index under the ESG tab on the TSX website.




American OEM automotive industry’s big problem with lithium

… and why Elon Musk is wrong.

 

There isn’t enough lithium mined, and there can never be enough lithium mined and processed into end-user forms economically, to replace the use of fossil-fueled internal combustion engines in the powertrain systems of the current one and one-half billion personal and mass transportation vehicles with electric motors powered by rechargeable lithium-ion type storage batteries.

I think that most of the managers of the global OEM automotive, aerospace, and shipbuilding industries know this, but they are powerless in the face of the demands of politicians who have given in to the greens who are unaware of the limitations of physical natural resource production and processing for non fuel minerals, and who rely on the advice of narrowly and poorly educated and just plain dumb “experts” who have credentials but no experience of business operations, real-world economics or even rudimentary geology. The more often these experts repeat such mantras as “settled science” (to prove that climate change is caused by or can be remedied by human activity) or proclaim the unlimited resources of “earth abundant minerals” (to prove that non-fuel natural resources are unlimited) the more destructive their ignorance impacts our cheap energy based (which they neither see nor understand) standard of living and quality of life.

In order to preserve their industry and their high paying jobs long enough until they can safely retire, the current top managers of the global OEM automotive industry have accepted the economic power and poison of the green energy “transition” in making their decisions rather than the free marketplace.

It is typically stated that a modern internal combustion engine powered vehicle has over 6,000 components and that an EV, an electric powered vehicle, is “much” simpler. In fact, the much simpler vehicle still has some 4,000 parts.

Henry Ford pioneered the vertical integration of his eponymous car company in the teens of the last century to avoid being controlled by the natural resource “trusts” (monopolies) of his time. By the early 1920’s the Ford Motor Company manufactured internally all of its necessary component parts except for tires (Ford was a personal and lifelong friend of Harvey Firestone) and produced all of its own needs for electricity.

As the decline of the auto-industrial age proceeded after the oil price shocks of the 1970s the OEMs shed their then advanced vertical integration (almost always in order to raise money to cover losses and declining margins) and adopted just-in-time delivery of necessary parts from the then reborn and expanding external supply base. Rising American labor costs in the 1980s created a mass exodus of OEM automotive suppliers to Mexico and Asia. Shortly thereafter that Asian vehicle makers entered the US markets and rapidly learned enough to destroy the postwar global dominance of the OEM American car industry. Chrysler needed rescuing first, then GM. Ford survived the downsizing better than the others, but like them had to withdraw from the global markets of the heyday of the globalization of the pre-war (WW2) era.

Now, in 2022, the OEM American car and truck assemblers – for that is the correct term for a company that imports all of its components and assembles them into a vehicle – are being told that they must reduce and eliminate the use of imported components and find or develop domestic or friendly nation sources to redevelop domestic vertically integrated manufacturing.

At the same time, they are being told by the government that they must convert all power trains to electric drive fueled by rechargeable storage batteries.

The answer, of course, is to rebuild domestic factories to once again produce the 4000 components per vehicle they will need for EVs. There will be components which are common to both fossil-fueled and electric powertrains and vehicles, but such electromechanical marvels as modern multi-speed transmissions as well as efficient gasoline and diesel fueled internal combustion engines will cease to receive attention and the skills to build them will wither away.

The key component to be researched and manufactured domestically now has become the lithium-ion battery to be used to power the battery electric vehicles to be built. No such mass production industry for this type of component has ever been successfully built or operated by a domestic American company. The supply chain for manufacturing lithium ion batteries for vehicle powertrains does not exist today in the USA.

Let me explain how the contemporary (legacy) global OEM automotive industry finds and chooses among its parts suppliers, so you can understand the dilemma that the contemporary geopolitics of globalization has caused, in particular, in the United States and Europe.

The outside OEM automotive suppliers, of course, must have experience in building and successfully selling the components for the same or same type of use. This is not taken for granted just because of the size or reputation of the seller. All production parts accepted for use by the domestic American OEM automotive industry must undergo the PPAP (production part approval process) and the suppliers must pass a financial due diligence.

PPAP involves real time passing of the test of operating under real-world conditions for at least three years in general and for the life of the part’s warranty. For a lithium-ion powertrain battery, this means today’s operation with no more than the stated degradation of capacity for up to 8 years.

Upon passing the PPAP, the due diligence requires that the component meet the following requirements:

  • On-time delivery, to specification, in the volumes agreed, and at the agreed price,
  • Just-in-time delivery to agreed locations, no matter the weather conditions,
  • All parts must meet agreed customer specifications within a narrow quality range, and
  • Prices are agreed for the life of a vehicle model

It has been the practice of the OEM automotive industry to make the direct supplier of the component or subassembly, the Tier One supplier, responsible for the all of its (sub) suppliers to meet their PPAP requirements, even if it is the assembler who PPAPs the mechanical and electrical quality of the sub-tier supplier.

Very recently, for the first time in 25 years, the OEM domestic American automotive assemblers have begun to look at the entire supply chains for critical (without them the vehicle cannot be sold) components.

In the last year, General Motors and Ford have announced “agreements” with domestic, non producing, semi-finished raw material suppliers, of lithium and the rare earths, to provide them with raw materials (lithium) and critical component parts (rare earth permanent magnets), which the companies will somehow get processed into the forms necessary to produce rechargeable storage batteries and electric motors from a currently non-existent domestic American manufacturing base.

Tens of billions of dollars have already been allocated by the domestic American OEM automotive industry to build 7 battery “gigafactories” and several EV platform ( the battery plus the electric motor) factories. Among the domestic OEM assemblers nearly 100 billion dollars has also been allocated to the construction of dedicated and multi-functional BEV plants.

The OEM automotive assemblers have bet the farm that they can become domestic vertically integrated manufacturers of battery powered electric cars and trucks.

Yet, as of today, not one gram of ESG lithium or rare earths is produced in the United States or Canada.

Look at the following chart:

This chart from the IEAE tells you that there is no possibility of producing enough lithium to manufacture the batteries that would be required by the currently planned demand after this year.

I think that the ignorance, by politicians and journalists, of the steps universally and necessarily required in the operations of any and all global original equipment manufacturing business is due to intellectual laziness, intelligence limitations and the rapidly declining coverage and quality of American “education” at all levels.  The attempt to eliminate selection by merit, rather than expand it, and replace it with superficial characteristics as the criteria for education has rapidly eroded the ability to select those best qualified for specialized education and training and given over world leadership in science and engineering to Asian nations.

I repeat that the success of a transformation of the fuel for vehicular transportation from liquid fossil fuels to electricity stored on board in rechargeable batteries depends entirely on the supply of the element lithium.

And that energy and resource illiteracy and innumeracy among our managerial and credentialed classes are the only reason that the domestic American OEM automotive assembly industry has blindly bet the farm on a green fetish pursued by some of the dumbest (or most corrupt, or both) politicians in the history of our Republic.

The BEV revolution will not engender a second Auto-Industrial age in America. It will, in fact, end the dominance of that industry, and ensure that BEVs survive only as luxury vehicles to be driven between enclaves with charging facilities.

Elon Musk tweeted two weeks ago that Tesla may have to get into the lithium mining business. He said that although there is lithium everywhere and lots of it, the mining industry is very slow to bring it to market.

Elon Musk is a brilliant businessman and an even more brilliant financier, but he is a mineral economics moron.

I invite readers to please challenge my assumptions and conclusions with data, logic, experience, and educationally based counterarguments.




Avalon’s Don Bubar on the first regional lithium battery materials refinery in Ontario

In this InvestorIntel interview with host Tracy Weslosky, Avalon Advanced Materials Inc.’s (TSX: AVL | OTCQB: AVLNF) President, CEO and Director, Don Bubar talks about Avalon’s recent partnership agreement with an Essar Group company to co-develop Ontario’s first regional lithium battery materials refinery in Thunder Bay, Canada.

In the interview, which can also be viewed in full on the InvestorIntel YouTube channel (click here), Don Bubar says that the setting up of the refinery is the key step in establishing a domestic battery materials supply chain to serve the needs of future electric vehicle and battery manufacturers in North America. Touching upon the Ontario government’s Critical Minerals Strategy to support a domestic electric vehicle supply chain, Don provides an update on the feasibility studies for both the refinery operations and lithium mineral concentrate production at Avalon’s Separation Rapids, Ontario, Project. With the Canadian Federal government also signaling strong support to the domestic critical minerals industry in the 2022 Canadian Federal Budget, Don talks about the renewed interest for Avalon petalite lithium mineral concentrates from high strength, high temperature capable, glass and ceramic manufacturers.

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About Avalon Advanced Materials Inc.

Avalon Advanced Materials Inc. is a Canadian mineral development company specializing in sustainably-produced materials for clean technology. The Company now has four advanced stage projects, providing investors with exposure to lithium, tin and indium, as well as rare earth elements, tantalum, cesium and zirconium. Avalon is currently focusing on developing its Separation Rapids Lithium Project near Kenora, Ontario while continuing to advance other projects, including its 100%-owned Lilypad Cesium-Tantalum-Lithium Project located near Fort Hope, Ontario. Social responsibility and environmental stewardship are corporate cornerstones.

To learn more about Avalon Advanced Materials Inc., click here

Disclaimer: Avalon Advanced Materials Inc. is an advertorial member of InvestorIntel Corp.

This interview, which was produced by InvestorIntel Corp., (IIC), does not contain, nor does it purport to contain, a summary of all the material information concerning the “Company” being interviewed. IIC offers no representations or warranties that any of the information contained in this interview is accurate or complete.

This presentation may contain “forward-looking statements” within the meaning of applicable Canadian securities legislation. Forward-looking statements are based on the opinions and assumptions of the management of the Company as of the date made. They are inherently susceptible to uncertainty and other factors that could cause actual events/results to differ materially from these forward-looking statements. Additional risks and uncertainties, including those that the Company does not know about now or that it currently deems immaterial, may also adversely affect the Company’s business or any investment therein.

Any projections given are principally intended for use as objectives and are not intended, and should not be taken, as assurances that the projected results will be obtained by the Company. The assumptions used may not prove to be accurate and a potential decline in the Company’s financial condition or results of operations may negatively impact the value of its securities. Prospective investors are urged to review the Company’s profile on Sedar.com and to carry out independent investigations in order to determine their interest in investing in the Company.

If you have any questions surrounding the content of this interview, please contact us at +1 416 792 8228 and/or email us direct at info@investorintel.com.




With lithium demand skyrocketing here are 5 early-stage lithium junior miners to watch

With lithium demand projected to increase 10-11 fold this decade, there is a huge opportunity for successful lithium junior miners to prosper. Last year Rio Tinto was quoted as saying that “filling the supply gap will require over 60 Jadar projects”.

Then just last month Tesla CEO Elon Musk said (Tesla Q1 2022 earnings call transcript): “…can more people please get into the lithium business? Do you like minting money? Well, the lithium business is for you…” Musk also said on Twitter: “Price of lithium has gone to insane levels! Tesla might actually have to get into the mining & refining directly at scale unless costs improve.

Of course, industry experts have been warning of EV metals supply deficits for some years, but it appears these warnings mostly fell on deaf ears. With this background in mind, today we take a look at some early-stage lithium junior companies with the potential to help fill the lithium supply gap in the second half of this decade.

China lithium carbonate spot prices – up about 6x over the past year due to lithium shortages

Source: Trading Economics

5 early-stage lithium junior miners to watch out for in 2022 (in no particular order)

  1. Essential Metals Limited (ASX: ESS)
  2. Green Technology Metals Limited (ASX: GT1)
  3. Metals Australia Ltd. (ASX: MLS)
  4. Lithium South Development Corporation (TSXV: LIS | OTCQB: LISMF)
  5. Winsome Resources Limited (ASX: WR1)

Essential Metals Limited (ASX: ESS)

Essential Metals is an Australian exploration company with 9 projects (lithium, gold, gold JV, and nickel JV) all in Western Australia (WA). Three of the projects are 100% owned and 6 are JV’s with other companies, with ESS retaining a 20-30% interest (see below).

Essential Metal’s flagship project is their 100% owned Pioneer Dome Lithium Project in WA. The Project is located in a known lithium corridor and the gold-rich Eastern Goldfields region of WA, which contains the Mt Marion, Bald Hill and Buldania lithium mines/projects. The Project has a reasonable sized JORC compliant Total Resource of 11.2Mt at 1.21% Li2O, still with exploration upside. The Resource starts from or near surface. Drill assay results from the recent campaign are due out by the end of May 2022.

Essential Metals also has two other 100% owned gold projects in WA, namely the Golden Ridge Project (100% owned), 20kms from the Kalgoorlie super pit and the Juglah Dome Project, 60km east-southeast of Kalgoorlie. In addition, the Company has numerous JV projects including Acra Gold Project JV (25% interest), Kangan Gold Project JV (30%), Balagundi Gold Project Farmin/JV (25%), Larkinville Gold Project Farmin/JV (25% gold interest) (hosts a JORC Resource of 19,700 t @ 3.02 g/t for 11,600 oz. Au), Blair-Golden Ridge Nickel Farmin/JV (25% nickel interest) and Wattle Dam Nickel Joint Venture (20% nickel interest).

Essential Metals trades on a market cap of A$162 million.

Essential Metals summary showing the Pioneer Dome Lithium Project location near other successful lithium mines and projects in WA

Source: Essential Metals company presentation

Green Technology Metals Limited (ASX: GT1)

Green Technology Metals (GT1) has multiple lithium projects (options to acquire, some at 80% interest others at 100% interest) spread over 39,982 hectares in Ontario, Canada. GT1’s most advanced project is the Seymour Lithium Project with a JORC Total Mineral Resource of 4.8Mt @ 1.25%. Within the Seymour Project, drill results include an impressive 40m @ 1.54% Li2O. When combining all GT1’s Ontario Lithium Projects the target resource is 50-60 MT @ 0.8-1.5% Li2O.

An updated resource estimate is targeted for Q2, 2022. Management is top tier and highly experienced.

Green Technology Metals trades on a market cap of A$212 million.

GT1’s portfolio of multiple lithium projects in Ontario Canada

Source: GT1 website

Metals Australia Ltd. (ASX: MLS)

Metals Australia is an Australian junior miner with several projects. Their most advanced project is the Lac Rainy Nord Graphite Project in Quebec, Canada with an Indicated and Inferred Resource of 13.3Mt at 11.5% TGC for 1.529M tonnes of contained graphite.

With regards to lithium, Metals Australia 100% owns the promising Manindi Lithium and Zinc Project in WA. The Project has several lithium-cesium-tantalum (LCT) pegmatites spread over a total 3km strike length. Individual pegmatites have strike lengths of over 300m and widths of up to 25-30m. Past drilling includes intersections of 15m @ 1.2% Li2O, 117 Ta205 from 34m. Drilling is ongoing notably at the Foundation pegmatite where consistently high grade lithium grab samples (1% Li2O and >0.4% Rb) have been detected over the entire 500m strike length. Assay results are expected shortly. Manindi also has an existing JORC 2012 Resource estimate of 1.08Mt at 6.52% Zn, 0.26% Cu and 3.19g/t Ag.

Metals Australia trades on a market cap of A$54 million.

Lithium South Development Corporation (TSXV: LIS | OTCQB: LISMF)

Lithium South Development Corporation (Lithium South) is already quite advanced at their 100% owned Hombre Muerto North Lithium Brine Project in Argentina. The Project lies near several billion-dollar projects such as Livent’s lithium mine, Allkem’s Sal de Vida project, and POSCO’s quite new project purchased for US$280 million. Hombre Muerto is the premiere salar in Argentina, known for very high grade lithium and very low impurities.

The Hombre Muerto North Project has an M&I Resource of 571,000t contained LCE, with an excellent grade of 756mg/L, and a very low Mg/Li ratio of 2.6:1. Drilling is about to begin at their Alba Sabrina claim with results to follow most likely later in Q2, 2022. The Resource has potential to grow significantly from here.

Lithium South trades on a market cap of only C$68 million.

Winsome Resources Limited (ASX: WR1)

Winsome Resources is a lithium explorer focused on their 4, 100% owned, projects spread over 50,000 Ha in Quebec, Canada. The Projects are Cancet, Adina, Sirmac-Clappier, and Decelles (option to acquire 100%).

The flagship Cancet Lithium Project has had outstanding previous drilling success and boasts a JORC Exploration Target of 15-25Mt @ 1-2% Li2O + 100-250ppm Ta2O5. The past drilling includes 59 holes for 5,216m averaging ~70m drill depth defining a shallow high-grade lithium deposit. Drilling will continue in 2022 with a substantial maiden Resource estimated expected later this year.

Winsome Resources trades on a market cap of A$66 million.

Summary of Winsome Resources 4 lithium projects in Quebec, Canada

Source: Winsome Resources company presentation

Closing remarks

Investing in early-stage lithium juniors carries higher risk and reward.

Of the 5 companies discussed in this article three (Essential Metals, Green Technology Metals, Lithium South Development Corp.) already have a lithium resource, one (Winsome Resources) has defined a lithium deposit with a resource estimate due later in 2022, and the other (Metals Australia) has a graphite and a zinc-copper-silver resource with an exciting lithium project with drill results out soon.

I could also include Avalon Advanced Materials Inc. (TSX: AVL | OTCQB: AVLNF) in this group, but I already wrote on them recently here, discussing their lithium projects, lithium resource, and plans for a JV lithium refinery in Thunder Bay which were given a huge boost recently as you can read here.

Finally to answer Elon’s question: “Can more people please get into the lithium business?” The problem is it takes at least 5-10 years to build a lithium mine from scratch. I will finish with two key quotes last month from lithium market experts:

  • Benchmark Mineral Intelligence was quoted stating: “Battery capacity is currently growing at twice the speed of lithium raw material supply.
  • Mr. Lithium, Joe Lowry was quoted stating: “I believe there will be a day in the future when lithium is in oversupply, but it won’t be in this decade…..You can build a battery factory in two years, but it takes up to a decade to bring on a lithium project.”

Disclosure: The author is long ALL the lithium companies mentioned in this article and intends to hold long term.




Four major mining industry takeaways from the 2022 Canadian Federal Budget

In this InvestorIntel interview with host Tracy Weslosky, CBLT Inc.’s (TSXV: CBLT) President, CEO and Director Peter Clausi discusses the four major mining industry takeaways from Canada’s 2022 Federal Budget.

In the interview, which can also be viewed in full on the InvestorIntel YouTube channel (click here), Peter Clausi talks about four major items in the budget that affect the mining industry, including $1.5 billion to support the domestic critical minerals industry with new infrastructure and “access to federal data”, and the proposed flow-through increase to 30% of the new Critical Mineral Exploration Tax Credit. He also discusses the $70 million earmarked to research and develop small modular reactors as a major policy shift towards reconsidering nuclear power, and the importance of partnering with First Nations.

To watch the full interview, click here

About CBLT Inc.

CBLT Inc. is a Canadian mineral exploration company with a proven leadership team, targeting lithium, cobalt and gold in reliable mining jurisdictions. CBLT is well-poised to deliver real value to its shareholders.

To learn more about CBLT Inc., click here

Disclaimer: CBLT Inc. is an advertorial member of InvestorIntel Corp.

This interview, which was produced by InvestorIntel Corp., (IIC), does not contain, nor does it purport to contain, a summary of all the material information concerning the “Company” being interviewed. IIC offers no representations or warranties that any of the information contained in this interview is accurate or complete.

This presentation may contain “forward-looking statements” within the meaning of applicable Canadian securities legislation. Forward-looking statements are based on the opinions and assumptions of the management of the Company as of the date made. They are inherently susceptible to uncertainty and other factors that could cause actual events/results to differ materially from these forward-looking statements. Additional risks and uncertainties, including those that the Company does not know about now or that it currently deems immaterial, may also adversely affect the Company’s business or any investment therein.

Any projections given are principally intended for use as objectives and are not intended, and should not be taken, as assurances that the projected results will be obtained by the Company. The assumptions used may not prove to be accurate and a potential decline in the Company’s financial condition or results of operations may negatively impact the value of its securities. Prospective investors are urged to review the Company’s profile on Sedar.com and to carry out independent investigations in order to determine their interest in investing in the Company.

If you have any questions about the content of this interview, please contact us at +1 416 792 8228 and/or email us direct at info@investorintel.com.




Betting the farm on lithium in the short term and the long term.

Politics Before Economics: The Coming Train Wreck of Peak Lithium, Mandated EVs, and Alternate Electricity Generation

This is the best time ever to invest in lithium mining and processing because the legacy global OEM automotive industry as well as dozens of newcomers, including TESLA, have bet their continued and future existence not on the market but on the politically mandated ultimate replacement of internal combustion engine power trains by rechargeable battery fueled electric ones. This powertrain replacement is to be 100% dependent on lithium-ion batteries to store the electricity (i.e., fuel) to supply the electric motors that will replace fossil fuel using internal combustion engines. These EV batteries are, for their operation, 100% dependent on the chemical element, lithium.

At the same time, the politicians have also decreed that the generation of relatively inexpensive electricity, which today is mostly done by the use of the fossil fuels, coal, oil, and natural gas (with the balance, more than 20%, coming from nuclear) shall be completely replaced by alternate forms of electricity generation dependent upon the wind and the sun with their excess outputs stored until needed in lithium ion batteries. Wind and solar are, at best, intermittent, and they are therefore not remotely reliable or dependable. They exist only because of government subsidies and, worse, mandates. Alternate energy generation being intermittent must be smoothed out (continuously maintained) ideally (in the Green Dream) by backup batteries. This would ultimately require enormous quantities of lithium, more than for EVs, for the gigantic smoothing and backup systems that would be necessary.

From the perspective of the supply of the key critical battery metal, lithium, these two goals, electrification of mobility and stationary storage of electric power for grid smoothing are competitive with each other for lithium, and this competition shows the complete ignorance of politicians and manufacturers of the fact that the overall demand for lithium from the two mandated uses cannot possibly be supplied from currently existing, planned, or known accessible sources.

A recent article in the Wall Street Journal states that “mining is like anything else. Eventually high prices stimulate more production. But the slow real-world expansion capabilities of mining explain the IMF’s forecast that mineral inflation would last “roughly a decade” until supply catches up.”

This is utter nonsense.

Mining any natural resource is entirely dependent on the physical accessibility of the resource, the grade (concentration) of the desired mineral, the ability of deployable technology to extract the desired mineral, the economics of the processing of the mineral concentrate to a usable form, and that the total costs incurred by the entire supply chain can be borne by the selling price for the end user products enabled or manufactured from that resource.

Supply of anything cannot “catch up” to demand if that supply is limited by a maximum price limit for the demanded form and for the accessibility, grade, and applicable process technology for the “deposit.”

The highest grade accessible and processable deposits of lithium from brine and from hard rock minerals are, respectively, in Chile, Argentina, and Australia. These deposits are already mined at scale and represent the lowest cost of production today. So, since the highest grade, accessible, physically and technologically, deposits are in production why can’t they just ramp up and supply any amounts of lithium needed? Those writers who are ignorant of geology, mineral economics, and geopolitics, and who are not aware of the limitations of contemporary known deposits of natural resources, think that lithium production is organic, i.e., that to get more lithium you simply do more mining. But, in fact, all mineral deposits decline in grade and fall below economic grades after a time. The period during which the mine is projected to be profitable is called, for that reason, the life of the mine.

In 2007 the global production of lithium, measured as metal, was 16,000 tons. In 2021 that figure was 86,000 tons, a 5.5X increase. Yet at the beginning of 2022, the price of metallic lithium, $60,000 a ton in January 2021 had reached $360,000 a ton! I note that lithium metal is now more expensive than silver.

Why?

The demand for lithium today just for batteries is 60% of global lithium production, and new battery factories are coming online and being planned and under construction daily. The total demand for lithium for all of these factories by 2025 is calculated to be 2.5 times total global lithium production in 2021. By 2030 that figure would be 5 to 10 times the total global 2021 output of lithium.

It is likely that the lithium supply is already in deficit due to existing battery factories buying for inventory and traders buying for speculation.

The legacy OEM car/truck makers have almost all allocated essentially all of their R&D capital and their new manufacturing construction to EVs. The better managed ones realizing that the total conversion of their outputs solely to EVs cannot be supported anytime soon, if ever, by the lithium supply chain and that the cost of such vehicles is already prohibitive in the mass market are hedging their bets by continuing to plan for a mixed output of EV and fossil fueled powertrains indefinitely.

Mis-allocations of capital in the most capital intensive industry on earth, the OEM automotive industry, cannot be reversed rapidly, and the damage to competitive advantage from losing the lead in internal combustion engine and transmission development could be fatal. This misallocation is not confined to the assembly operations of the global legacy OEMs. It could also be fatal to suppliers of ICE specific components.

There are today some 1.5 billion ICEs in use globally, and the number is growing. Imagine that each of them will use on average 4 kg of lithium, measured as metal, for a 50 kWh lithium-ion battery. A Tesla Model 3 uses 6-8 kg for a 100 kWh battery. So to replace just today’s powertrains would require 6 billion kg of lithium, or 6 million tons of lithium, or 36 million tons of LCE (lithium carbonate equivalent). This is more than 70 years total global 2021 lithium production with nothing left over for the stationary storage market for grid smoothing of wind and solar generation. Neither conversion will ever happen, because it is beyond the capability and capacity of our current know-how in mining, refining, and fabricating the end-use raw materials.

The looming and fatal to the green revolution lithium supply deficit has spawned an enormous price increase for the metal and its compounds, which has reversed the steady decline in the costs of lithium-ion batteries.

But is it too late to stop the attempted suicide of the global OEM automotive and electric energy generating industries?

Cars and trucks running on high priced electricity generated by increasingly expensive wind and solar systems backed up by hugely expensive stationary storage battery parks will not have large enough markets to be self sustainable or reasonably priced.

Lithium mining and processing will boom until no one can afford the vehicles or the electricity. At some point before that occurs the decarbonization of Western society will reverse and steel, aluminum, oil and gas will return to their central place in our world of cheap energy. Until then look for lithium, the rare earths, copper, and uranium to enter a long Super Cycle.

Betting the farm on lithium in the short term and the long term.




Market applauds Avalon Advanced Materials’ lithium battery materials refinery news

Governments around the world are starting to figure out what China realized 20 (or more) years ago, if you want to be at the leading edge of a technology you need to secure and support the resources that facilitate it. Unfortunately, it took a global pandemic followed by a war on European soil to disrupt supply chains and impact resource availability, for developed nations to begin to figure this out. But perhaps the light switch has been turned on and the politicians of the world have finally recognized that simply saying something repeatedly doesn’t necessarily make it happen. I will spare readers from another rant from me, even though it’s like shooting fish in a barrel, but let’s just hope that rumblings out of Ottawa, with respect to the next Canadian budget are accurate. It’s anticipated that Canada’s federal budget will include an investment of at least $2 billion for a strategy to accelerate the production and processing of critical minerals needed for the electric vehicle battery supply chain. Specifically, the investment would be focused on critical minerals including nickel, lithium, cobalt and magnesium.

What a novel concept. I wonder how they managed to come up with such a creative idea? (I really need to find an emoticon or something that expresses when I am being sarcastic). Nevertheless, it’s progress so we should all be happy that an encouraging step is being made by politicians. This progress follows on the heels of another supportive announcement, this time from the provincial government of Ontario, where they defined their own first-ever Critical Minerals Strategy. Premier Doug Ford is quoted as saying “The Critical Minerals Strategy is our government’s blueprint to connect industries, resources and workers in our province’s north to the future of manufacturing in the south as we build up home-grown supply chains.”

The timing of these announcements couldn’t dovetail any better with news from Avalon Advanced Materials Inc. (TSX: AVL | OTCQB: AVLNF) on Monday that it has signed a binding letter of intent to establish Ontario’s first regional lithium battery materials refinery in Thunder Bay, Ontario. I can state with confidence that their timing was excellent because the market rewarded Avalon shareholders handsomely, rallying the stock by 48% on the day. So let’s have a little closer look at why investors got so excited about this particular press release.

Avalon is a Canadian mineral development company specializing in sustainably-produced materials for clean technology. The Company now has four advanced stage projects, providing investors with exposure to lithium, tin and indium, as well as rare earth elements, tantalum, cesium and zirconium. Avalon is currently focusing on developing its Separation Rapids Lithium Project near Kenora, Ontario while continuing to advance other projects, including its 100%-owned Lilypad Cesium-Tantalum-Lithium Project located near Fort Hope, Ontario. Social responsibility and environmental stewardship are corporate cornerstones as witnessed by the fact that the Company recently reported its tenth (yes, they have been doing this for 10 years) annual comprehensive sustainability report. In a nutshell, Avalon Advanced Materials is an ESG focused company at the forefront of sustainable best practices in cleantech mineral development. Find me a box that doesn’t tick.

Timing of all this coming together is somewhat fortuitous for the Company, given they weren’t waiting around for any government support. They recognized a long time ago what their roadmap to success would include. Simply finding critical materials wasn’t going to be enough, Avalon identified that to control their destiny, they had to control their destiny. To get production started another key step is to have a centrally located lithium refinery that could purchase concentrates produced locally to make the battery material products. Avalon had a much bigger vision whereby a lithium refiner would be designed to accept lithium minerals concentrates, not only from Avalon’s Separation Rapids Lithium Project, but also from other aspiring new producers from the many lithium pegmatite resources that occur in northwestern Ontario. Monday’s announcement states this refinery will operate as a separate private business, called Avalon Lithium Inc., a newly established Avalon subsidiary.

Avalon’s do-it-yourself (sustainably and responsibly) mantra has resulted in fantastic timing as both Provincial and Federal governments have only just realized what needs to be done at the same time as Avalon is actually doing it. Combine that with an exemplary ESG track record and you have yourself a pretty exciting investment opportunity. Even after the recent run-up, Avalon’s market cap is sitting at roughly C$77.5 million. Is that a fair price for a company doing the right things, in the right way, at the right time?