Source: Streetwise Reports
November 6, 2023 (Investorideas.com Newswire) This lithium company is starting the first phase of the Definitive Feasibility Study for its 100%-owned Ontario lithium project. One analyst considers the deposit to be "premium quality."
Frontier Lithium Inc. (FL:TSX.V; LITOF:OTCQX; HL2:FRA) announced it is starting the first phase of the Definitive Feasibility Study (DFS) for its 100%-owned PAK lithium project north of Red Lake in Ontario.
It has contracted with DRA Americas Inc., a fully owned subsidiary of DRA Global, to complete the study, Frontier said.
"Following the encouraging results from the company's Preliminary Feasibility Study (PFS) on the project ... the company is excited to be moving forward with the next stage of project engineering," Frontier noted in a release. "The fully integrated mine, mill, and refinery flowsheet demonstrated in the PFS will be studied in two distinct scopes at the DFS level with the mine and mill scope set to conclude in the next 12-18 months."
According to the PFS released last summer, the mine will produce 12,520 tonnes per year of lithium hydroxide (LiOH) and 7,360 tonnes of lithium carbonate equivalent (LCE) over 24 years with a post-tax NPV of US$1.74 billion using an 8% discount rate.
The mine and milling facility would have an estimated output of 200,000 metric tonnes of spodumene concentrate per year, the company said. It will be brought online in two steps: Using the existing winter road to construct the first concentrator line to facilitate production of up to 100,000 metric tonnes per year and completing an all-season access road for a second mill line extending output.
"This phased construction approach serves to mitigate project risks, capitalize on existing infrastructure, and focuses the company on short-term concentrate production goals," Frontier noted. "Additionally, this strategy will aim to minimize potential delays associated with all-season road construction and to provide a more streamlined path with options for operational success."
Frontier said it remained "fully financed" for the completion of the DFS.
Project Is 'Top Three' in Size on Continent, Analyst Says
A research report from Canaccord Genuity rated the company's stock as a Speculative Buy for investors with a target price of CA$4.00.
Analyst Katie Lachapelle wrote that PAK lithium project encompasses nearly 27,000 ha (hectares) and "contains North America's highest-grade lithium resource that is top three in size on the continent and is considered premium quality globally as a result of its rare low-iron spodumene."
Chris Temple of The National Investor has listed the company as an attractive and creative investment proposition.
According to Temple, the company's Spark property has high-grade mineralization that makes it extremely attractive, and "it is simply a matter of time" before the company attracts the attention of larger companies.
The Catalyst: Catching Up With China
Western countries are trying to shift supply chains for the vital battery metal away from South America and China, which has less than a quarter of the world's lithium resources but controls about two-thirds of the world's lithium processing and refining capacity, Rystad Energy reported.
The deficit between lithium demand and production and highly probable and probable lithium projects will be over 3.5 million Mt by 2040, according to Benchmark Mineral Intelligence.
A soft, silvery metal with highly reactive and flammable properties, lithium is a major component of electric vehicle (EV) batteries and is also used to strengthen alloys, as a high-temperature lubricant, and as a drug to treat bipolar disorder.
The lithium market is expected to grow at a compound annual growth rate (CAGR) of 22.1% between 2023 and 2030, from US$22.2 billion to US$89.9 billion, according to a report by Fortune Business Insights.
"The growing adoption of hybrid and electric vehicles, high-drain portable electronics, and energy storage systems have boosted the growth of the overall market. The increasing awareness of electric vehicles is attributable to the growing concerns about surrounding environmental pollution as EVs reduce carbon emissions," the report said.
While the EV segment has been enjoying a long period of growth - sales hit a record of 300,000 last year, 9% of all auto sales, according to JD Power - dealers say inventories are building up on lots, and automakers may have overestimated the demand for the vehicles this year, Business Insider reported.
But this week, Business Insider's Tim Levin wrote, "EVs don't have a demand problem. They have an affordability problem."
"Surveys show there are plenty of people out there who are curious - enthusiastic, even - about going electric," Levin wrote. "But enthusiasm only gets you so far when snapping up a new EV costs over US$50,000 on average. Affordability is only becoming more crucial amid a dwindling supply of early adopters willing to pay up to participate in the EV revolution."
The market has hit a "trough" in the adoption curve between early adopters and later customers, EV-industry analyst Mike Austin of Guidehouse Insights told Levin.
"There's a sort of gap in between before a product really takes off," Austin said. "We're running out of people that want to spend US$60,000-plus on a car."
Ownership and Share Structure
Reuters has provided a breakdown of the company's ownership and share structure, where According to Reuters, management and insiders own 14.86% of the company, including Executive Chairman Reginald F. Walker, who owns 12.49% of the company with 28.43 million shares; Vice President of Exploration Garth Lloyd Drever, who owns 0.98% of the company with 2.22 million shares; President and CEO Trevor Walker, who owns 0.52% of the company with 1.19 million shares; Director John Ralph Didone, who owns 0.47% of the company with 1.07 million shares; and Director Marian Koziol, who owns 0.40% with 0.92 million shares.
Institutions own 2.45%, Reuters said, including Commodity Capital AG, which owns 1.09% of the company with 2.49 million shares; Amati Global Investors Limited, which owns 0.69% of the company with 1.58 million shares; Picton Mahoney Asset Management, which owns 0.33% of the company with 0.75 million shares; Purpose Investments Inc., which owns 0.17% with 0.40 million shares, and CI Global Asset Management, which owns 0.17% with 0.38 million shares.
Reuters reported that the company has 227.63 million shares outstanding, with 192.9 million free-float traded shares. Its market cap is CA$168.44 million, and it trades in a 52-week period between CA$0.73 and CA$3.04.
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