Highlights Need for Domestic Resources
Chile is home to the world’s largest known lithium reserves, and is the second largest producer of the metal that is crucial to an electrified future with reduced CO2 emissions. Chilean President Gabriel Boric recently announced the country’s plan to nationalize lithium mining, mandating that current independent production be transferred over time to state-owned companies. Going forward, new lithium contracts will only be issued as a private-public partnership with state control.
Chile’s decision is part of a wider global trend. In recent years, Mexico has nationalized lithium resources and put development under the control of its energy ministry. Zimbabwe has outlawed the export of unprocessed lithium. Indonesia has banned export of nickel and bauxite, and is considering doing the same for tin and other metals. In many ways, supply chain issues exacerbated by the pandemic have spurred these moves, making it plain that China’s dominance of the resource sector was not a sustainable model.
Though Canada and the United States don’t appear to be interested in nationalizing resources, they along with many other nations have implemented critical minerals strategies to encourage the domestic development of resources like lithium that are crucial to national security. The trend of resource nationalization will likely serve to ratchet up those efforts.
In that light, investors may be well-served to investigate quality domestic lithium projects. One such prospect is FE Battery Metals Corp. (CSE: FE) (OTCQB: FEMFF) and its flagship Augustus Property. FE Battery Metals is currently conducting advanced exploration on the project which is located directly adjacent to the North American Lithium (NAL) mine. The NAL mine very recently restarted, and is one of only two operating lithium mines in Canada. The other one is, of course, owned by a Chinese company.
The Augustus Property
Historic exploration at Augustus, as well as more recent geologic mapping by the Québec government, indicate the presence of lithium-bearing pegmatites within the same geologic units that host the NAL mine. FE Battery has completed the re-drilling of the historic areas and is now embarking on a more comprehensive and methodical drill program with the goal of building out the extent of the lithium-bearing pegmatites.
See FE Battery Metals Director Craig Alford, P.Geo, talk about the company’s 2023 drill program designed to further expand the lithium resource on the Augustus Property.
Results of the 2023 drill program are starting to come in. The most recent announcement reported one hole intersecting two zones of lithium mineralization, with highlights including one 3 meter stretch of 1.38% Li2O and another 10 meter section of 1.03% Li2O. Another recent drill hole cored into multiple sections of lithium mineralization, including a 17 meter zone of 1.19% Li2O which aligned nicely to a 2021 hole, located 120 meters away, that encountered 1.17% over 19 meters. Other positive 2023 drill results recorded 1.07% Li2O over 6.9 meters, while another hit 1.17% over 2 meters. A review of the 2022 results reveals grades ranging from 0.93 – 1.56% within the Augustus main zone. These are all promising results as FE Battery Metals moves closer to producing a NI 43-101 Technical Report, an important step in the development of a potential resource.
Some information to keep in mind when examining lithium grades, drill results and any future resource estimates is that the NAL mine reopened based on a proven and probable reserve of 29.2 million tonnes of ore with an average grade of 0.96% lithium oxide. In general, hard rock lithium mines are very profitable with deposit grades of 0.6 – 1.6% Li2O (lithium oxide) range.
Location, Location, Location
If you were to choose a spot to explore and develop a lithium resource, you would be hard-pressed to find a more suitable location than the Augustus Property. The biggest factor in its favor is its proximity to an existing lithium mine with concentrator/processing operations on site. Sayona Mining, 75% owner of the NAL mine (Piedmont Lithium owns the other 25%), is committed to finding more ore to process there, looking to maximize production onsite beyond what its own mine can provide.
See FE Battery Metals Director Craig Alford, P.Geo, discuss the importance of infrastructure to a mining project, and the advantages the Augustus Property has over many other prospects.
Infrastructure, and mining jurisdiction, is often a key factor in whether a resource can reasonably be developed. The Augustus Property has that angle covered. From the regulatory perspective, both Québec’s provincial government and Canada’s federal government are interested in expanding lithium production. As well, the area around the Augustus Property, known as the Abitibi region, is basically built on a mining economy. Should any future resource prove to be significant and profitable, it’s not hard to imagine the project developing in a timely manner.
What to Watch For
In the face of global factors, like Chinese control of resource markets and increasing nationalization of critical minerals, projects with the potential to enhance the domestic supply of lithium are becoming more crucial than ever. FE Battery Metals will continue to announce drill results as it works toward the production of the NI 43-101 Technical Report. The company also has several other important lithium properties in its portfolio, and has been aggressively adding more claims with lithium potential. For now, though, the advancement of the flagship Augustus Property is the main value driver for FE Battery and its current market cap of about $12 million. Stay tuned.
