In terms of traffic experienced by the two companies in my session, Beyond Lithium Inc and West Vault Mining Inc, Al Frame and Sandy McVey indicated about 10%-20% of the conference delegates they spoke with were serious and knowledgeable. That wasn't a surprise in the case of West Vault which is a gold proxy buyout story, but Al Frame was surprised by the level of lithium knowledge, a relatively new concept for retail investors. There were no other lithium pegmatite companies presenting at MIF though there was one junior investigating direct lithium extraction of Saskatchewan brines. After my presentation Saturday afternoon and those of the two juniors in my session I moderated the Newsletter Writer Panel Discussion. I asked six questions of which the last two were about the energy transition and lithium. I first introduced the concept of Lithium Mania 2.0 a year ago at the MIF May 2022 conference and I was curious why I am still an outlier, so I asked, "To what extent do you have a lithium story in your portfolio of covered stocks, and, if none, what do you need to see to embrace Lithium Mania 2.0, namely the search for lithium pegmatites in places like Canada?"
The panelists were generally dismissive of lithium and it is worthwhile to listen to the responses just to appreciate how early we still are in the Canadian lithium boom which tried to get going during the 2015-2018 cycle, but unlike their Australian pegmatite counterparts, the Canadian pegmatite hunters were largely still born. In fact, in 2018 I had a predecessor of Patriot Battery Metals in my MIF session because its Corvette project, which it had acquired for the pegmatite lithium story, was next door to Midland's Mythril project which appeared to be a major new copper discovery for the James Bay region. There is currently a major mismatch between the perception of Australian investors with regard to Canada's lithium pegmatite potential and that of North American investors. Some of the panelists were dismissive because they are ideologically wedded to the claim that fossil fuel combustion as a primary driver of climate change is a hoax. Some think that electric vehicles are a passing fad and the world will never need a six-fold expansion of lithium supply by 2030. Some complain that lithium is an industrial mineral like feldspar or kaolin subject to end-user specifications when in fact it is a metal with final product purity requirements like any other "industrial" metal. Some complain that lithium enriched pegmatites are everywhere and that this will lead to massive over-supply, so why go exploring for it? Never mind that we first need an exploration boom that develops the best deposits before over-supply problems arrive five years down the road.
Some, who have seen stocks like Patriot Battery Metals and Sigma Lithium soar during the past couple years, feel they are too late, that they missed the boat. Sigma Lithium was a Brazilian version of the 2015-2018 Australian pegmatite boom, but Patriot is part of the second wave, equivalent to Dia Met in 1992 which boat nearly everybody missed. One geologist (not a panelist) who spun his wheels two decades chasing diamonds without success and recently refocused on gold and base metals declared that he is not an ambulance chaser.
What I think is missing is a proper understanding of the underlying dynamics of the energy transition, in particular the move by carmakers to shift to EV sales whether or not forced to do so by government climate change policies. Yes, most of us, including myself, missed the first lithium wave that began in 2015, stalled in 2018-2020, but came to life again in 2021 when EV sales caught up with the Australian over-supply. I was skeptical EVs would become more than a fad, and assumed the Lithium Triangle brines would provide whatever the world needed. Now I know better. Those first wave success stories will deliver the first half of the required 600% expansion. The second wave is about delivering the second half needed by 2030.
Patriot Battery Metals is the poster child for this second wave. Even if it delivers a 100 million tonne deposit in July grading 1%-2% Li2O, that solves only a fraction of the lithium supply needed. The EV sector needs a couple dozen such deposits. It is entirely plausible that Patriot Battery disappears in H2 of 2023 at $20 plus, a $2 billion plus buyout within three years of starting a drill program. This summer Canada will witness the biggest boots on the ground prospecting boom in its entire exploration history. Pegmatites are indeed everywhere, but they were not created equally. Only some will be 10 million tonnes plus and grade 1% Li2O or better with low iron and uranium impurities. You won't know until you look. Patriot will emerge as the case study of what happens when a junior finds a pegmatite that appears to have scale and grade.
It is interesting to hear from Al Frame that Beyond Lithium is receiving a lot of serious joint venture inquiries for its 60 plus Ontario lithium property portfolio from other juniors who do understand what Lithium Mania 2.0 will be all about. Beyond is in no hurry to do a farmout. During June-July exploration VP Lawrence Tsang will have prospecting teams checking out every property to see which ones have the best potential. During August-September a couple dozen of the most promising properties will receive closer examination with the goal of turning them into targets that can be drilled in the fall or early 2024. I expect Lithium Mania 2.0 begin to simmer during the summer when rumors leak from the field into local communities from where they propagate into social media networks. Now that the threat of a debt ceiling related default has disappeared, speculators will begin to move in from the sidelines. If Patriot turns into a liquidity event, much of the proceeds will be recycled into lithium pegmatite juniors just getting started. Even juniors with a two buck chuck marketing budget will be swept into the stratosphere. September will be the breakout; the MIF panelists have three months to do get their heads around the concept, do their homework, and come up with their own favorite picks. So long as the junior has a competent exploration team and sufficient funding to put boots on the ground this summer, it is unpredictable which one will emerge as the next Patriot.