Patriot Battery Metals Corp changed the name of its Corvette lithium project in Quebec to "Shaakichiuwaanaan" on July 31 ahead of releasing a PEA on August 21, 2024. Its phonetic pronunciation is as follows: SHAA-GI-CHI-WAA-NAAN which is not quite what you would come up with applying English pronunciation to the syllables as spelled. The 5 syllables are gibberish to me; I stall at about 3 syllables and end up with a JackieChoo. In Cree, however, the parts break down into meaningful words. Shaakichiuwaanaan means climbing a hill or a mountain and refers to three hills in the vicinity of the project. If they renamed it "A BigHilltoClimb" I would remember it in a heartbeat. But unlike management and employees of PMET I am not being paid to spend time memorizing it so for me it will remain the Corvette or perhaps the JackieChoo project. I do understand the purpose behind renaming the project in the Cree language. With the publication of the PEA, which envisions a two stage open pit and underground mining operation, the project shifts into the permitting and feasibility study stage. PMET believes it can have the feasibility study done by September 2025. The speed with which Canada's regulatory system issues a mining permit does depend on the extent local stakeholders, in particular First Nations, support development. The name change shows respect for the Eeyou Itchee Cree people.

However, the PEA suggests a better name might be "kâ-pîkiskwêcik êkosi" (Ka Pee Kisk Wechick Ecozy) which according to the online translation service Rephrasely means "Dead in the Water". The stock has now sunk below $4 even though at an 8% discount rate the project has an after-tax NPV of USD $2.23 billion or at a 0.76 exchange rate and 143 million fully diluted a value of CAD $20.50 per share. The IRR which is not affected by the discount rate came in at 34%. Initial CapEx came in at USD $578 million and the expansion CapEx to allow underground mining of the high grade Nova Zone (200-500 m depth) to begin in the third year came in at USD $383 million for a total of USD $961 million. This number assumes the project will not be eligible for a USD $165 million investment tax credit. But the base case economic outcome clears key development hurdles such as NPV matching or exceeding CapEx and the IRR matching or exceeding 15%.

The stock is sinking because the base case price of $1,500 per tonne 6% spodumene concentrate is nearly double the current spot price which has sunk to $785 per tonne after nearly touching $6,000 per tonne in 2022, a level that was never sustainable in the long run. PMET included an NPV sensitivity bar chart in its PEA release which shows that at $800 per tonne Corvette has a negative NPV of USD $165 million. That is why Ka Pee Kisk Wechick Ecozy or Dead in the Water may be a more appropriate name (see Rephrasely).

The company chose $1,500 as its base case price because that is what is needed to make energy transition goals that include EV adoption rates by 2030 a reality. The PEA news release included a chart which shows that JackieChoo is the 8th largest pegmatite deposit in the world in terms of grade and tonnage. However, at the current spodumene concentrate spot price only Greenbushes is operating in the money, and barely so. If you accept the current spot price as the long term reality there will be no future pegmatite lithium-sourced supply. What reasons might one have to believe that the current lithium spot price is the new long term reality?

One reason is optimism that research into Direct Lithium Extraction applied to oilfield brines by the likes of Exxon will achieve a breakthrough that allows the NZE projected requirements of 5-10 times current lithium supply to be mobilized profitably and quickly at the current price. The car makers would love that because they are becoming aware of the hideous development timelines for hardrock deposits in secure jurisdictions such as Canada and the United States (forget Europe, eternity does not qualify as a timeline).

Another reason is that apart from China the EV revolution that accelerated in 2021 has stalled. The western car sector is folding its EV hand in the face of cheap Chinese EV supply potential where the price makes those cars "good enough" for the mass market because the western car makers' product is just not good enough for the masses at their price. Toyota made the right choice in sitting out the EV revolution while both expanding its hybrid models and doing leapfrog R&D on a solid state lithium ion battery which will be good enough for western mass markets in terms of range, charging time and safety. Global West nations are erecting tariffs to block Chinese imports, but the outcome will be that the car makers go back to producing ICE cars. Even Volvo has ditched its goal to produce only EVs by 2030. In this line of reasoning the EV sector is dead in the water. Ideally they all join Toyota back at the R&D drawing board.

Yet another reason is the prospect pushed by Chinese battery maker CATL that the lithium ion battery will be replaced by a battery that does not require lithium, such as the sodium based one it is developing. This would be a technology disruptor that crashes the lithium price and turns all lithium mines into writeoffs.

And then there is the possibility that Trump becomes the president in 2025 and not only pulls the plug on all energy transition goals but goes the extra mile to create obstacles to the adoption of clean energy technologies and measures. However, capitulation could happen regardless of the election outcome. All we need is to witness climate change worsening every year, to the extent that chasing energy transition goals ends up being seen as hopeless in making a difference, so why bother? China would keep expanding its EV fleet because its oil import dependency is a strategic vulnerability. But the rest of the world might just settle into an End Times mentality where praying for divine intervention does not cost anything, and which nobody can refute as worthless because there is always tomorrow.

There is also the potential for the geopolitical conflict between Global West and East to turn hot, where globalized trade collapses because autocracies like China and Russia succeed in annexing their backyards, Taiwan and Ukraine for starters, and the Global West led by the United States chooses not to acquiesce. When the great power game gets seriously underway, perhaps not just Global West versus East but MAGAmerica against everybody, climate change and energy transition goals will become the least of everybody's worries.

These are not necessary outcomes. It is possible that Trump, Putin and Xi disappear into the sunset, taking their power goals with them and letting the world get back to the goal enjoying life and creating prosperity. It is possible that Toyota commercializes a solid state lithium ion battery that gives the ordinary consumer a 1,200 km range on a 10 minute charge at the cost of a Corolla or Camry much sooner than 2030. The lithium ion battery thanks to physics is the best battery solution so that would kill off cheaper but inferior new technologies. It is possible that DLE of oilfield brines ends up with a high unit cost and never scales to feed the 5-10 fold supply expansion needed to make mass adoption of LiB based EVs a reality during the 2030s.

The lithium space is in an air pocket that could change dramatically on the upside in 2025. The market has a hard time grasping the idea that the spot price in the case of lithium does not matter. That is no surprise because the world has never seen demand for a metal expand so quickly thanks to a new technology backed by existential necessity.

At last year's average $16.89/lb LCE price the global lithium output of 185,600 tonnes lithium metal equivalent was worth $37 billion. If we assume $10/lb as the long term reality that value would be $20 billion, 3 times the value of 2023 uranium supply. If pegmatite is supposed to provide the bulk of the future lithium supply we need a future price of $10/lb as a minimum, which is roughly indicated by the spodumene concentrate base case price used by PMET. However, if the EV revolution is back on track in a couple years, that means that in a half dozen years the annual market for this element would be worth $100-$200 billion. This has never happened in history. It was the premise for Lithium Mania 1.0 (2015-2018) and Lithium Mania 2.0 (2021-2023). The human brain does not want to compute such radical change, especially in view of the negatives hanging over the market about the future of energy transition goals. The next four months are going to be rough for PMET and the lithium juniors, but it is reasonable to expect Lithium Mania 3.0 to emerge from the latest lithium winter by 2026. Meanwhile lithium juniors will suffer from the poor lithium spot price optics and the lost momentum of the EV growth trajectory.

The sad news is that on Tuesday, Bob Termuende, a keen Sullivan 2 Hunter, passed away at the age of 94. He and his son Tim were founders of Eagle Plains Resources Ltd in 1999 as a prospect generator that survives today without a rollback and with multiple spinouts to its credit. Eagle Plains published an obituary on September 4, 2024. I talked to Bob last week and asked him if he had heard any gossip from his ex-Cominco pals about how drilling was going for PJX Resources Inc at its Dewdney Trail project in southeastern British Columbia. CEO John Keating had announced on July 8 that PJX had finally received an expanded drill permit but there had been no news since then and in a case of high expectations no news is not good news, especially with a project in the backyard of Cranbrook where everybody dreams about a Sullivan 2 discovery.

The original 161 million tonne Sullivan deposit discovered in 1896 had run out of ore in 2001 and is now a reclaimed mine with a museum that I visited last year. But because this sort of deposit occurs in clusters for over a century prospectors and juniors have explored for Sullivan 2 in southeastern BC wherever Lower to Middle Aldridge stratigraphy outcropped. But only zinc-lead silver veins and vent puddles were found. PJX got the community buzzing last October when it announced its prospectors had found massive sulphide boulders with high zinc-lead grades and the fragmental textures characteristic of a SEDEX system, one whose sulphides were exhaled through a vent onto the sea floor. The boulders were in the talus at the base of a mountain slope whose lower face consisted of a igneous rock called syenite that had intruded about 160 million years ago; the upper half of the mountain consisted of 1.5 billion year old Middle Aldridge sedimentary stratigraphy that dipped 40 degrees to the east.

The community was stunned because the boulders meant somewhere up the mountain was a horizon of bedded seafloor mineralization similar to that of the Sullivan deposit. How could that be? Every Lower to Middle Aldridge outcrop has been prospected for SEDEX style mineralization in this part of the world. If Sullivan 2 outcropped it would have been found. All that had been found were discordant veins such as the former nearly Estrella Mine which crosscut the stratigraphy. The Hunt for Sullivan 2 had become one of drilling geochemically blind geophysical targets such as Eagle Plains attempted last year at its Vulcan project, DLP attempted at DD in 2021, PJX attempted at Vine in 2019, and Highway 50 tried at Monroe in 2018. It turned out that at Dewdney Trail the syenite was a dyke that intruded perpendicular to the stratigraphy, shielding it from prospectors like a curtain. The boulders must have popped out from small erosional windows in this curtain. PJX planned to drill from above to find where within the shrouded Aldridge layer cake the mineralized horizon was located.

Bob had not heard anything so during the weekend he drove out to the valley at the base of the mountain and used his telescope to search for drill rigs. He posted a distant photo to our Slack forum with the locations circled. Yes drilling was underway. A few days later he passed away, leaving it to the rest of us to dream about Sullivan 2.

On Thursday September 5, 2024 PJX published an update indicating that the first 2 holes had been duds but the third one had intersected 20 m of true width sulphide mineralization, mostly pyrrhotite with trace chalcopyrite and sphalerite. The stock sold off, trading 1.3 million shares to a low of $0.15. The sniper shot, instead of hitting an elephant, had slammed into elephant dung.

According to John Keating of PJX the drill pad was built above the peripheral outcrop which they found last year to the north of the talus pile. The mineralization had decent zinc-lead grades but was not magnetic like the talus boulders, and thus not a lateral extension of a Sullivan 2. It turned out physically impossible to build the drill pad directly upslope the talus field. The stratigraphy dips 40 degrees to the east and they are drilling 55 degree angle holes (I've shown an arrow indicating the direction of the dip but you have to imagine it as dipping into the mountain, not pointing to the sky). The first two holes aimed at the outcrop did not deliver similar mineralization, but the third hole aimed more toward the slope above the talus did hit fragmental sulphides indicative of a vent at the end of the 275 m hole. The sulphide is mainly pyrrhotite and pyrite which dominates in the lower part of the vent at Sullivan.

The news release was issued because PJX was concerned that the locals would find out about the intersection, and, because the locals are watching for clues that PJX is vectoring in on Sullivan 2, they would have unfair "selective" knowledge. As it turns out the news release backfired because it was treated with dismay by shareholders hoping for a sniper kill shot. What PJX does not yet know is the geometry of the system; they are going to drill another hole from this pad to triangulate where they are. The copper is evidence of the hotter vent environment. They know there is folding but not enough to know whether to go up or down to find the Zn-Pb massive sulphides that would have deposited above the phase that spewed the largely barren iron sulphides.

I have clipped a plan and section graphic of the Sullivan deposit from John Lydon's 2007 paper Geology and metallogeny of the Belt-Purcell Basin (you can download the pdf from this web page). Note the "iron core" in the plan view. The purple at the base of the deposit is pyrrhotite which is what PJX appears to have encountered. Although this is not yet ore, they are excited because they have evidence of a venting environment. They have not yet reached the most intense part of the magnetic anomaly. I think their hope with the first 2 holes was that the outcrop would be a distal part of the main system and once they intersected it they could simply track it back to the main horizon above the vent. No such luck, they will have to drill many more holes to sort out the 3D geology. Keating is thinking of adding a second rig. We now have 3 pieces of the Sullivan model and the game going forward is to watch for additional puzzle pieces such as the tourmalinite "pipe" beneath Sullivan which formed well before sulphides did and which is believed to have served as a key gateway for the later sulphide rich fluids.

In terms of the negative market reaction it reflects dashed hopes of instant gratification and makes stronger the nagging fear that Dewdney Trail may also just be a vent puddle like FORS. There is also the flow-through liquidation problem. I have heard that at least one of the three funds that bought 60% of the $0.10 FT unit financing is gone. The way these funds work is that the FT portfolio gets rolled over into a mutual fund in which the investors hold units that they can redeem for cash once the 4 month hold period is over. Flow-through really only works as a tax deferral mechanism because the cost base becomes zero and any money received from the sale is a capital gain. Q4 FT fund offerings are thus preferred because the capital gain consequences from liquidation four months later in the subsequent year do not have to be tallied until the second year. Given the bad resource junior market since mid 2023 there are probably lots of redemption requests which forces the fund manager to keep selling the portfolio contents.

These mutual funds are basically garbage cans not managed for upside gains, but only in terms of a quest for liquidity. PJX is probably an anomaly in these portfolios because at today's price it is still showing a profit from the financing price of $0.10. It is interesting what happens to the warrants. When an investor redeems a fund unit that investor gets cash based on the percentage of the fund's value that unit represents. If warrants are decently in the money they get exercised and the stock promptly sold. The $0.20 warrants are now not in the money and represent an extra 8 million shares overhang while redemptions continue. Once a unit is redeemed the investor loses any right to potential future profit from the warrants. It is thus conceivable that the sucker who holds out as a unit owner while everybody else redeems ends up with title to the entire pool of worthless warrants. But since these are 2 year warrants and PJX does have a story that could deliver a homerun before they expire, the holdout could get very lucky, though I'm not sure this has ever happened.