The James Bay Lithium Index slipped this week despite the news about Albemarle's revised proposal for Liowntown and more announcements that juniors were getting boots onto the ground. Part of the drag comes from the gloomy news about China's shrinking economy and the threat of higher interest rates to curb inflation lowering expectations for metal demand in the near term. But the continuing drop in the price of lithium carbonate also doesn't help with the optics, though investors should familiarize themselves with my lithium rock value matrix.
Even if lithium carbonate drops to $5/lb, the rock value of an LCT type pegmatite grading 1%-2% Li2O is $273 to $545 per tonne. That's the same as 4.2 to 8.4 g/t gold at a $2,000 gold price. Nobody is ever going to find an open pittable hundred million tonne gold deposit with those grades. There are plenty of skeptics who pooh pooh lithium as having a high crustal abundance, as they do with rare earths and even scandium, but that merely reveals how ignorant they are about the cost of extracting lithium and concentrating it into a form usable for making batteries. Below $5/lb lithium carbonate the world will never see enough lithium supply to make lithium ion battery based EV deployment goals a reality unless there is some miraculous DLE process technology breakthrough. So consider $5/lb a worst case long term floor for the price of lithium carbonate, and then place your exploration bets on juniors with the assumption they will deliver LCT type pegmatite deposits grading 1% Li2O or higher. By the end of 2024 boots on the ground in James Bay may have identified a dozen such deposits with 50 million tonne plus scale implications, sending the valuations of those lucky juniors north of $1 billion. Never before has there been such a low hanging fruit exploration boom dominated by Australian and Canadian resource juniors!
The big news this week was that Brunswick Exploration Inc has started a 5,000 m drill program on its Mirage project where it has identified a 3 km long train of spodumene mineralized boulders down ice from a 2.7 km trend along which it has found multiple pegmatite outcrops with similar mineralization. In fact, according to the September 7 news release which had a conspicuous absence of graphics, this 2,700 m corridor of pegmatite outcrops is now 850 m wide, a result of additional prospecting in the past few weeks. They do not yet know the orientation and geometry of these pegmatite dykes within this corridor which question the scout drilling program will seek to reveal.
In the update Brunswick mentioned that it had found a new 175 m long outcrop 4.5 km up ice from the center of the 2.7 km long outcrop trend. They don't yet know what's under the boulder train to the southwest, but LCT type pegmatite outcrop has now been spotted along a 6 km trend from the up ice head of the boulder train. The less exciting outcome scenario is that this wide corridor is a mish mash of variously oriented pegmatite dykes whose spodumene crystal distribution and size will result in high pegmatite hosted lithium grades that will end up being diluted down when all the waste rock between the dykes is included in a bulk mining scenario. But at this stage of the game it is also legitimate to speculate in an anti-Hearst scenario. Brunswick this winter drilled about 2,000 m on a 65 m long outcropping pegmatite at the Hearst project in Ontario. The hope was that Hearst would be the tip of an iceberg, but the drill showed that along strike there was nothing and at depth the body quickly pinched out to nothing. It was as if the tip of an iceberg had fallen from the sky and buried itself upside down in the Ontario dirt. Well, why not dream about the opposite outcome? What if the outcrops within this 2,700 m by 850 m corridor are all local tips of a giant iceberg, turned into "tips" by glaciation and local topography? What if lurking highly connected beneath the surface is a Greenbushes body capable of sinking multiple Titanics? We don't know yet where within this bleakly pessimistic and hyper-optimistic spectrum the Mirage pegmatite field will turn out to sit, but by early October Brunswick will have a rough idea about the geometry, and by late October assays that will allow back of the napkin tonnage estimates.
James Bay prospecting activity after a 3 month forest fire closure is just getting underway. Brunswick's field crew has found a second spodumene boulder train 2 km west of the southwest oriented boulder train, suggesting a parallel pegmatite corridor which my plotting estimates suggest is within the property boundaries. Given the scale of the Mirage pegmatite field, Brunswick is now the hottest emerging discovery junior in the James Bay region. But the discoveries are just getting started. Brunswick found the boulder train during the first two days in the field in late May before getting kicked out because of the fire closures. And it was able to return to the field in late July because Mirage is in the eastern part of the James Bay region where fires were less a problem than in the western part. If Brunswick's drilling starts to give meaningful shape to its pegmatite dykes over the next few weeks, and the other juniors start reporting LCT type pegmatite outcrops later this month, we will see Lithium Mania 2.0 go crazy in the James Bay region in October, setting the stage for many winter drill programs in Q1 of 2024.
At the May MIF conference in Vancouver I hosted a panel of independent commentators such as myself, and some of the panelists shrugged that they had missed the boat, though one Trumper dismissed the energy transition as a liberal conspiracy by fretting that Wyoming is populated by bumpkins who had never heard of a tungsten enhanced saw that could cut a defunct wind turbine blade down to size for recycling (tungsten, unlike silver, is not a biblical metal).
Yes, they and myself included missed the PMET boat. But PMET is just one Jadar, and according to Rio Tinto the world needs 60 Jadars by 2035, and if my calculations are correct about how much more lithium will be needed if Toyota's boast about a solid state lithium ion battery is not bullshit, the world will need 2-3 times as many Jadars as Rio Tinto predicts. We only missed one Canadian boat. And Brunswick, which KRO members boarded a year ago, is only just leaving the harbor. The JB Lithium Index now has 57 members after I added three ASX listed companies this week. More are coming. If Brunswick's Mirage proves itself to be another Jadar (heaven forbid a Greenbushes!), which within 2 years can command a $2 billion valuation, and, after it gets walked through another 4 years of feasibility demonstration, can attract a $4-$6 billion valuation buyout by the likes of Albemarle, which in a couple years will have serious competition from major mining companies like Rio Tinto, BHP, Anglo American and perhaps even dirty metal producers like Glencore, there is still so much money to be made by latecomers. Brunswick has barely left the harbor and the other boats are just starting to put out to sea. |
