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 Fri Feb 3, 2023
KW Excerpt: Kaiser Watch February 3, 2023: Patriot Battery Metals Corp (PMET-V)
    Publisher: Kaiser Research Online
    Author: Copyright 2023 John A. Kaiser

 
Patriot Battery Metals Corp (PMET-V: $14.700)

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Kaiser Watch February 3, 2023: The Eye of the Hurricane
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(0:10:01): Any new developments in the lithium sector?

Claystone projects in Nevada received a boost when the Department of Energy offered a $700 million loan to Ioneer conditional on securing a permit for its Rhyolite Ridge project which is being opposed because a rare buckwheat species grows on the property. This past week GM made a $650 million equity financing offer to Lithium America's for its Thacker Pass project, also conditional on securing a permit which is being blocked by Indigenous objections. That a car maker like GM would move to the very top of the stream to secure a domestic source of lithium for its EV fleet is an amazing development which makes me wonder if it is GM that is the secret 9.9% strategic investor in FPX Nickel Corp.

The most important lithium development this week is the James Bay region turning into a full-blown Great Canadian area play for its lithium potential. We have not seen a Great Canadian Area Play since the 1990's when Dia Met discovered the Ekati kimberlite cluster in Canada's Arctic, and in 1995 when Diamond Field's discovered the Voisey's Bay nickel-copper deposit in Labrador. It's kind of ironic that open pit mining of the Ovoid ends this year. In 1992 the entire Slave Craton ended up being staked, and that was before online staking. That was an area the size of Switzerland. The James Bay region has similar scale and will end up being staked wall to wall even though 90% of the ground is not prospective for LCT enriched pegmatites. Juniors like Azimut who have toiled for decades in the James Bay region are discovering their claims have lithium potential. This makes sense because the sort of geology prospective for base and precious metals tends to adjoin geology prospective for pegmatites.

My KRO members are having a lot of fun during this early erupting stage of the Great Canadian Area Play. One of them managed to track down a 2007 technical report Virginia Mines did for its Poste Lemoyne Extension project which Brunswick has optioned 90% from Osisko and calls the Plex project. The technical report indicates that the basalt hosted Orfee gold zone adjoins a large outcropping pegmatite at least 2 km long and up to 300 m wide. In fact, drilling of the Orfee zone had to pass through pegmatite which was never assayed because back them lithium deposits were worthless. This is the same host geology as the Corvette trend which Patriot Battery Metals acquired from Osisko and where about 100 holes have delineated a tonnage footprint of at least 50 million tonnes for the CV5 pegmatite cluster. The northeastern end of this pegmatite continues under a lake, possibly another 2 km to the CV4 pegmatite outcrop on the northern shore. Hole 93 reported on January 30 for the northeastern limit of this body yielded excellent intervals. If Brunswick can get access to the Orfee core and confirm that this pegmatite is LCT type, it could start permitting right now to begin drilling in June after spring thaw.

Despite a rocky week which saw gold plummet $50 and cool off the resource juniors, the animal spirits surged back into the lithium juniors and pushed PMET to a new high amid speculation that Australian lithium producers like Mineral Resources were contemplating a run at PMET. And we know that Rio Tinto, which already has lithium brine production and the stalled Jadar project in Serbia, is eyeing the James Bay region which is also known for its reservoirs that produce clean energy in the form of hydro-electricity. PMET currently has a $2 billion market cap. If lithium is going to be a $100-$200 billion market by 2030, how much is too much for a premptive cash bid by Rio Tinto in a jurisdiction where it already operates the Alcan aluminum smelters and iron mines? The Corvette property tracks 50 km of prospective pegmatite geology. Can anybody imagine what would happen to the all the other James Bay juniors if Patriot Battery becomes the target for a hostile takeover battle?

Geology will be important in a way that it was not for the diamond play on the Slave Craton because kimberlites originate in the mantle, pick up their diamond payload near the base of the lithosphere, and can erupt anywhere. You find diamond pipes by till sampling vast regions for indicator minerals that have been dragged from the exposed source by glaciers. So any junior could end up with a major discovery. The same does not apply to LCT pegmatites which evolve within granitoid intrusions and migrate to their margins during which fractionation causes lithium enrichment. Where a recent arrival in the James Bay region could still get lucky is when the geology has been poorly and on closer inspection the junior discovers its claims cover prospective geology. Most juniors will not be in a position to drill targets until Q4 of 2023, but during the early stages of a Great Canadian Area Play the smallest shred of evidence will be magnified by a market looking through a 90% full glass.

In terms of where the James Bay Lithium Area Play is today in comparison to the 1990's Diamond Boom, we are in February 1993 jus ahead of the April 1993 explosion when Dia Met and BHP delivered new evidence supporting the Ekati discovery, and Rio Tinto, which had farmed into the DHK land package south of Ekati, discovered the large Tli Kwi Cho pipe with micro diamond counts comparable to those reported by Dia Met. This refuted claims by Chuck Fipke that he "got it all", and although Tli Kwi Cho turned into a bust, a year later Rio Tinto and Aber had discovered the Diavik cluster which became a world class mine.

The Canadian diamond boom spread well beyond the Slave craton into other parts of Canada, and even the world because third world frontiers opened up in the wake of the collapse of the Soviet Union. The annual rough diamond market was worth $8 billion in 1993 and three decades later has only grown to $14 billion. The annual value of lithium supply was $200 million in 2005, was worth $30 billion in 2022, and, even if lithium carbonate prices decline into the $10-$15/lb range, will be a $100-$200 billion market in 2030-2040, with only half the required supply so far identified. This has to happen unless governments are prepared to give up policy goals of replacing fossil fuel burning ICE cars with lithium ion battery powered EVs. While Quebec's James Bay region will emerge as a major lithium mining district, other parts of Canada will also see lithium deposits delineated and possibly developed. Lithium Mania 2.0 is thus not just about the James Bay Lithium Area Play, but about the broader hunt for the missing half of future lithium enriched pegmatite supply, whose extraction, unlike "direct lithium extraction" technologies for brines which remain to be commercialized, is well understood.


James Bay Regional Map 2007

Geology of PMET's Corvette Trend

Geology of Brunswick's Plex Trend

Note large unassayed pegmatite next to Orfee Gold Zone at Plex

Where we are in the James Bay Area Play compared to 1990s Diamond Boom

 
 

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