In the electric vehicle space, there is little disagreement that EVs over the next 20 years are going to monopolize the roadways and that the world is going to need to ramp up lithium supply to meet demand in the near-term. As traditional uses for lithium, such as in pharmaceuticals, lubricants, mobile phones and ceramics, started competing with the batteries in EVs, prices of lithium turned sharply northward, tripling to over $20,000 per ton. The good news is that there is plenty of lithium in the ground worldwide. However, there are less than 20 operating lithium mines in the world currently, nowhere near enough to meet expected demand.
Bloomberg New Energy Finance lends some color to the matter with estimates that current Li-ion battery manufacturing capacity, currently at approximately 90 gigawatt hours, will need to climb to 270 gigawatt hours by 2021. To meet power demand, analysts at BNEF estimate that there will need to be 35 factories the size of Tesla’s (NASDAQ: TSLA) vaunted Gigafactory in Nevada operating by 2030, meaning there needs to be an incredible amount of investment across the lithium spectrum to maintain supply/demand equilibrium due to the EV revolution.
Debate wages on over production from lithium brine versus hard rock lithium mining. For the experts at QMC Quantum Minerals Corp., (TSX-Venture: QMC) (OTCPK:QMCQF)(Frankfurt:3LQ), there is no debate, hard rock is the way to go due predictable, high-grade concentrates.
Dusting Off One of Manitoba’s Mining Gems
With its Irgon Lithium Mine Project in southeast Manitoba, Canada, QMC is picking up where miners left off 60 years ago, aiming to leverage known resources to fast-track lithium production from a series of spodumene-bearing pegmatite dikes.
1.2 million tons grading 1.51% lithium oxide (LiO2) over a strike length of 365 meters and to a depth of 213 meters were historically indicated at the then-1,729-acre project six decades ago, with a mine shaft sunk 241 feet in the ground, an adit and additional workings completed at the 200-foot level. A 500-tonne-per-day mill and other buildings were built and Provincial Road 314 was constructed to provide access what was expected to be a lithium-mining hub for the province.
Alas, cheap lithium prices resulted in the project being suspended before the first ounce of lithium was ever produced. Enter the EV revolution, the spike in lithium prices and forecasts for a sustainable acceleration in demand and it’s game on again at the Irgon Mine.
“Thanks to the development work being done 60 years ago, we know a tremendous amount about the Irgon Dike and several other dikes in the area that we believe – and early data supports – contain large amounts of lithium oxide at concentrations well above that required for even the best Li-ion batteries,” QMC President Balraj Mann told Baystreet.ca in a phone conversation.
Dikes, or sheet-like intrusive rock, are an important find for lithium miners because they are formed through crystallization of mineral-rich magma cutting across pre-existing strata. They are frequently long and wide, with spodumene-bearing pegmatite dikes known for high lithium concentrations. The magma reaching the earth’s crust as extrusive rock (outcrops) helps identify trends.
Two other major dikes, Mapetre and Central, are also known to be on the property to the south of Cat Lake. Tantalum Mining Corporation of Canada explored these dikes in the late 1970’s as they hunted for tantalum, a mineral used in high-strength alloys. Ironically, tantalum is frequently mined as a byproduct of lithium, but TMCC didn’t seem to have any interest in lithium at the time, perhaps due to low prices. According to Mann, it seems as if TMCC was only assaying for tantalum and ignoring spodumene even if it ran right into it.
The Central Dike was also reported to host cesium-bearing biotite mineralization, which wouldn’t be a big surprise considering the Tanco Mine, the world’s biggest cesium producing mine of S&P 400 component Cabot Corp. (NYSE: CBT), is located just 20 kilometers to the south of the Irgon Lithium Mine property. During the upcoming field season, QMC geologists will further evaluate the Mapetre and Central Dikes.
So far, twenty-five grab samples were obtained from the known dikes and shipped to SGS Lakefield for analysis. Assay results are expected in the coming months, which could serve as a catalyst for QMC stock.
Mann wouldn’t confirm if his company has been in any negotiations with upstream manufacturers or bigger peers regarding supply deals, saying that they’re first priority is proving and expanding the resource and confirming grade at this time. “Once we accomplish those goals, we’ll have a bigger bargaining chip, so we’re not going to sell ourselves short,” he offered.
To that point, QMC has cleared the decades of overburden and sampling has been conducted with drilling on tap to confirm the historical resources by today’s National Instrument standards. Management applied for permits late in December as it maps out a drill program.
“We not only want to complete conformity drilling, we expect to increase tonnage given the fact that the mineralization is open on strike and depth,” said Mann. “That goes without mentioning all the new drill targets we’re discovering.”
Tripping Over Dikes
The company is not sitting idly by as it waits for the permits and assay results. By staking an additional 9 contiguous mineral claims (taking the total for the project to 13), QMC extended the area of its property to encompass 6,538 acres, nearly quadrupling the size of the original project
In fact, it seems the more they look, they more dikes they identify.
On January 11, the company noted as part of the property acquisition that three new dikes were identified and sampled. That was followed on January 22 with news that on-site QMC geologists discovered three additional “satellite” dikes. Two distinct trends on one of the newest dike discoveries were noted during the exploration. One trend extended at least 125 meters along strike with an exposed width at surface fluctuating between 2 and 5 meters. An adjacent trend was also identified and traced through outcrop over 37 meters, with the width estimated between 7 and 9 meters.
Only three days later, QMC disclosed identifying yet another dike, this time about 50 meters to the northeast of the Irgon Dike. To say that this dike was “identified” in January is a matter or geological speak because QMC actually took channel samples (11 samples, ~10 meters in total) during the 2017 fall field program. These assay results are pending.
The company said that two pegmatite dikes comprise the dike as observed in outcrop, but it is unclear whether they are two independent dikes or part of a single dike. The dikes, which are estimated to range between 0.40 and 2.6 meters, run nearly parallel, separated by a distance of only 4 to 9 meters, appearing to pinch out along strike.
Sampling and mapping all these new findings will be part of this year’s field program as well.
When pressed on exactly how many dikes they have discovered, Mann said “a lot,” but further explained that his geology team is adamant about precision in statements and that can’t be precisely determined without more exploration. “Two could actually be part of a larger body,” he said. “Our team has a long history of successes and that doesn’t come from conjecture; it comes from proving the resource, which is exactly the roadmap we’re following.”
Part of that roadmap includes leveraging the advanced stage development of the mine at the Irgon Dike. The plan is to bring that mine into production and use the cash flow from that to develop the other dikes, building shareholder value and minimizing dilution simultaneously.
“We have the fundamentals for what could be a premier hard-rock lithium mine in North America. It could be a large mining complex that produces for decades with the potential of extracting premium lithium concentrate to feed what is expected to be robust demand and maybe even tantalum, cesium and other rare earth elements. When we prove those resources, no one will care about how many dikes there are. They’ll only want to know whom we are selling to and what kind of revenue and profits we’re generating. That’s what gets all of us excited,” Mann concluded.
Hard to argue with that.
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