Winsome Resources Ltd published a maiden resource estimate on December 11, 2023 for its Adina lithium project in Quebec's James Bay region. Although the market initially had a positive response, trading Winsome as high as $1.25, by the end of the day the stock closed down a half penny at $1.04, and traded as low as $0.85 during the next couple days. The resource was estimated at 58.6 million tonnes of 1.12% Li2O based on 93 core holes (27,625 m) with 100 m spacing covering 1,340 m strike of the Main Zone (Jamar). Assays are pending for another 25,000 m drilled in 2023, with 5 rigs operating in December and another 50,000 m drilling planned for 2024. I thought it was an excellent maiden resource estimate and was puzzled by the negative market reaction.
One reason is the poor optics of a lithium carbonate price plunging as low as $6.30/lb during December amid hand-wringing media talk about how consumers are no longer lining up to buy an electric vehicle. That concern is irrelevant to resource juniors making lithium pegmatite discoveries today, because none of that lithium will be in production before 2030. You just need to look at the lithium price-grade rock value matrix to see that even a price in the $5-$10/lb lithium carbonate range makes most open-pittable gold deposits look pitiful.
The main reason, however, for the negative reaction to Winsome's maiden Adina resource is the decision to choose 0.6% Li2O as the cutoff grade, chosen I suspect to meet the market's expectation of a resource with at least 50 million tonnes. The trade off was a lower grade than the 1.42% achieved by Patriot Battery Metals Corp for its maiden CV5 resource of 109.2 million tonnes. But Winsome did publish a table with different cutoff grades, and at 1.1% the Main Zone delivers a resource of 26.7 million tonnes of 1.44% Li2O. Following an October financing Winsome has about $60 million, so dilution to fund expansion of the Adina resource is not a problem for 2024.
The Adina resource is good news for Comet Lithium Corp whose 100% owned Liberty property adjoins to the east of Adina and is on strike with Winsome's expansion drilling northeast of the Main Zone. Comet underwent a management change in November that brought on board the team behind Nomad Resources Partners Inc, including Vincent Metcalfe as the new chairman and Vincent Cardin-Tremblay as exploration VP. They were too late to influence a sampling program initiated by former management, but they did manage to get a gravity survey done in the western part of the property where the Trieste formation is present before it bends southeast onto the Galinee project Rio Tinto has optioned 70% from Midland Exploration Inc and plans to drill in Q1 of 2024. Azimut Exploration Inc, which is joint ventured 50% with SOQUEM on their own Galinee project to the south of Winsome and Midland, has drilled a dozen holes chasing the down dip projection of the Adina Main Zone and is awaiting assays. Azimut has not yet generated any LCT-type pegmatite targets elsewhere on its large Galinee project.
Silica rich pegmatite has a lower density than the country rock and Winsome has found gravity a useful tool for defining pegmatite drill targets where overburden obscures outcrop. Comet managed to secure drill permits for its pegmatite outcrops, so if they prove LCT-type (the sampling crew had no LIBS or XRF unit on hand to get a sneak preview), Comet may be drilling in early 2024. The key question for Comet's Liberty property is whether pegmatite emplacement was limited to the Trieste greenstone rocks, which gives Comet about 2.75 km strike potential, or also exploited a structural lineament that projects in a northeasterly direction for 6.5 km on the Liberty property. Comet is part of the 2024 Bottom-Fish Collection. Its Liberty project has an implied value of $12 million compared to Winsome's Adina implied value of $215 million, which itself is a fraction of PMET's $1.4 billion value. It will take some luck for Comet's Liberty to deliver a standalone resource, but there is a very good chance it has sufficient LCT-type pegmatite to deliver whatever shortfall Adina may deliver for Winsome. |
