Lithium mining opportunities being explored

Opinion

Hey there, time traveller!
This article was published 14/08/2023 (753 days ago), so information in it may no longer be current.

After the former CEO of Snow Lake Resources was removed in a proxy battle with shareholders late last year, the company looks like it is back in the race to develop a home-grown lithium mine.

The company recently published a preliminary economic assessment that anticipates requiring about US$150 million in capital investment to build the mine and keep it running for nine years and estimates its lithium resource has a net present value of US$1.19 billion.

The mineral exploration company operating in Northern Manitoba near its namesake town has recently appointed a new CEO, Frank Wheatley, to replace the ousted Philip Gross whose ambitious tenure had the company — which does business as Snow Lake Lithium — planning to be the first all-electric lithium mine in the world.

In an interview, Wheatley — who previously worked for an Australian company that’s one of the largest lithium miners in the world — said that the preliminary analysis suggests a project that warrants further investment.

“The board is 100 per cent committed and very determined to move on to the next stage of valuation,” Wheatley said. “The preliminary economic assessment gives them confidence in the potential merits of the project.”

He was careful to note that this so-called initial assessment is a very preliminary review requiring subsequent, more detailed ones to be undertaken before the real costs can be fully understood.

But he says, as it stands, it has what it takes to go to the next phase.

But he also made clear that Snow Lake Resources is an exploration company with no cash flow at this stage and will have to rely on the equity markets to raise additional capital to fund ongoing development. Which means there is no guarantee that anything will materialize.

He also suggested that the company was backing off plans to continue contemplating building an all-electric operation, saying that sort of (expensive) innovation was best left to the major international miners with name like Rio Tinto, BHP, Glencore and Vale.

But Wheatley was bullish on the same things that made Snow Lake Resources a big hit when it went public on the Nasdaq Exchange in November 2021 — a large potential resource with concentrations that make it economically viable, located near adequate transportation and power infrastructure.

According to the early-stage planning, it would start with an open pit mine producing some initial marketable ore that would then help finance production of an initial concentrator to make the ore ready for further processing.

Snow Lake Lithium’s former management was successful in attracting the interest of one of the largest battery manufacturers in the world, LG Energy Solutions. The two have a memorandum of understanding with the hopes that LG might build a $1-billion lithium hydroxide plant right here in Manitoba.

Wheatley said that MOU is still in place and he said he’s looking forward to having his own conversations with LG. (He’s only been in the job for a matter of weeks.)

Since then others have expressed interest is such a large-scale industrial development elsewhere in Canada. One of them, Tantalum Mining Co., owners of the Tanco mine near Lac du Bonnet, the only lithium producing mine in Canada right now, is also exploring the possibility of such a development in Manitoba.

But Tanco is owned by a Chinese company and has already been mandated by the Canadian government to sell off its stake in another lithium exploration company because of the Canadian government’s moratorium on Canadian critical minerals being owned by state-owned enterprises.

Lithium is one of the critical minerals required to produce energy storage technologies like batteries. Demand for lithium is expected to triple by 2025 as the world’s automobile manufacturers transition to electric cars.

Wheatley said Snow Lake is also talking with Tanco and does not believe any ultimate collaborations would be complicated by the Canadian government’s concerns.

“Were Tanco to proceed with a lithium hydroxide plant, if anything, it would tend to Canadianize Tanco,” he said.

All these developments fit well with the province’s recently released Critical Minerals Strategy which, among other things, would work towards accelerating development of new mines in the province.

But irrespective of all considerations, it would still be some time before Snow Lake Lithium builds a lithium mine in Manitoba.

With the release of the initial assessment late last week, it sets the table for the production of a pre-feasibility study, which would be followed by an even more detailed feasibility study.

Wheatley said in the best of conditions such work would take between six and nine months. He did not give any indication as to how quickly that work is expected to be completed.

martin.cash@freepress.mb.ca