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Frontier Lithium (TSXV:FL) formerly Houston Lake Mining Inc. (TSXV:HLM) is a specialized exploration company actively engaged in the development of its wholly-owned PAK Lithium Project in northwestern Ontario. Exploration work conducted throughout 2013 to 2016 shows the PAK deposit could be a potential near-term supplier of technical grade material for the ceramic and glass market which consumes approximately one-third of total global lithium production.
An updated mineral resource estimate was completed on the property in early 2016 showcasing the project’s world-class lithium grades and large tonnage potential. The project is currently in the pre-feasibility stage with bulk sampling and metallurgical studies underway. The PAK pre-feasibility study is slated for completion by the end of 2016.
Frontier Lithium is led by a strong management team and board of directors with decades of experience in resource extraction. With its world-class lithium asset, the company has attracted highly knowledgeable team members with key experience in the lithium mining sector.
- Potential low cost entry into lithium market.
- Tight share structure with management ownership exceeding over 30% of the company.
- 8.2 million tonnes of what is the highest-grade lithium deposit in North America.
- Pre-feasibility study for a lithium mine with by-products of tantalum and muscovite mica concentrates to be completed in 2016.
- Potential for near-term production of technical grade lithium for the ceramics and glass market and the future possibility to participate in the burgeoning lithium battery market.
- Expenditures of CAD $4 million on the project to date resulting in extremely low lithium acquisition costs of exploration at $21.66/contained Li2O eq. tonne.
Opportunity: Low-cost, fast-track entry into a strong market
In the global lithium market the spotlight is on the battery segment; yet lithium is used as much in the production of ceramics and glass as it is in the production of batteries. Producing battery-grade lithium compounds, however, requires the construction of capital-intensive processing facilities which can result in a much higher risk, slower time to market for most junior companies that results in a diluted share structure.
The boom in the lithium-ion battery market has presented a supply-chain problem for the end-users in the ceramics and glass sector. Approximately 95% of global technical-grade lithium product comes from the low-iron spodumene Greenbushes lithium operation near Perth, Australia. The Greenbushes operation is partially owned by China’s Tianqi Group, which also provides lithium hydroxide to the battery industry.
“The industrial users of the lithium market are quite nervous about Tianqi’s control over Greenbushes because it combined with the burgeoning lithium industry could significantly disrupt the supply chain for technical-grade lithium concentrates,” explains Trevor Walker, Frontier Lithium President. “So naturally, that’s whereFrontier Lithium sees opportunity given our high-grade, low- iron spodumene at our PAK deposit. We’re firstly working on establishing a new supply chain for technical-grade lithium to help alleviate this anxiety.”
In addition to solving a supply-chain problem for end-users, another great advantage forFrontier Lithium is that the ceramics and glass sector offers a much more cost-effective and time-saving point of entry into the lithium space. “Because our deposit contains high grade ore with no iron impurities, we have a product that can be directly used for industrial purposes. We can step into the market without the need to raise at least several hundred million dollars to construct a hydromet plant.”
Key Property: PAK Lithium Project
The PAK Lithium Project encompasses 6,976 hectares located 175 kilometers north of Red Lake in northwestern Ontario. First discovered by Ontario Government geologists in the late 1990’s, the property includes the Pakeagama Lake rare-metal granitic pegmatite which has highly anomalous values of lithium, cesium, tantalum and rubidium. The PAK deposit is a lithium-cesium-tantalum (LCT) type pegmatite containing high-purity, technical-grade (<0.1% Fe2O3) spodumene. The deposit is exposed at surface and has a known strike length of 500 meters with an estimated true width varying from 14 meters to 125 meters and a sub-vertical orientation.
Updated 2016 Mineral Resource Estimate
In March 2016, Frontier Lithium published an updated resource estimate on the PAK project. The current resource estimate shows a Measured and Indicated resource of 7.89 million tonnes of 1.73 % Li2O equivalent and an Inferred resource of 295,600 tonnes of 1.35 % Li2Oequivalent. Potential remains to expand the resource as the deposit remains open to depth and along strike to the northwest and southeast.
“We are extremely pleased with the results of our upgraded resource estimate since there are definitely analogous features to the high grade, multi-element and large tonnage of the prolific Tanco pegmatite in southeastern Manitoba,” commented Walker. “We have about 8.2 million tonnes of what is the highest grade lithium deposit in North America. What sets this deposit apart from the other spodumene plays is the lithium at PAK was originally in the low inherent iron, lithium mineral petalite. In response to decreasing temperature and pressure during the cooling process within the earth’s crust, the petalite underwent an isochemical replacement by a spodumene-quartz intergrowth. This resulting spodumene at PAK has the beneficial low-iron (low impurity) properties of the primary petalite with the added luxury of spodumene’s higher contained lithium. Simply put, spodumene concentrates typically contain up to 7.5% Li2O, whereas petalite concentrates typically carry 4.2% Li2O. This equates to almost twice the units of lithium in a tonne of spodumene concentrate compared with a equal weight of petalite concentrate and thus lower shipping cost per lithium unit. The above is one of the main reasons why lithium mineral supply (both technical grade concentrates and iron-rich chemical grade concentrates for further downstream production of lithium compounds) from spodumene monopolizes the current marketplace.”
UIZ: Stellar High Grade Zone at surface
The updated 2016 resource estimate included results from exploration work on the high-grade Upper Intermediate Zone (UIZ or Lithium Zone) of the deposit. Results from the 2015 channel sampling conducted on the UIZ included up to 28 meters grading 4.41 % Li2O. All channels returned consistent grades between 4.25 percent and 4.59% Li2O over widths no less than 6.2 meters.
The high grade zone indicates PAK’s potential for near-term production of technical grade lithium for the ceramics and glass market. End-users in this segment require very low impurities (mainly iron levels) in order to maintain chemical stability, consistency, and avoid discoloration of glass, glazes, and frits.
“Not only does this low impurity zone have some of the highest grades of any known lithium deposit, it’s very wide, amenable to open pit mining methods and potentially suitable for Direct Shipping Ore (DSO),” explained Walker.
Bulk Sampling Program Underway
In 2015, Frontier Lithium initiated a 300-tonne bulk sampling program targeting the high-grade UIZ to assess the suitability of the high-grade zone for the production of DSO, which does not require concentration (flotation or gravity separation). The sale of DSO as a first product from PAK could provide Frontier Lithium with a source of useful revenue at low capital cost during the feasibility-stage for a concentrator facility. “Beginning with DSO production is a great way to de-risk the whole asset,” added Walker, “and offers the company the unique opportunity to establish first-mover advantage in the lithium market because we wouldn’t have to build a capital intensive plant to produce a salable product.”
Testing of the bulk sampling program is slated for Fall 2016 and the results will influence a part of the pre-feasibility study now underway. Local infrastructure deficiencies are being addressed through a road upgrading study focused on improving access to the project via a winter road that is within 4 kilometers of the deposit. Environmental baseline, and metallurgical studies are also in-progress and will be included in the final pre-feasibility study on track for completion before the end of 2016.
Staged Strategy for Growth
Frontier Lithium is taking a staged approach to advancing the PAK Lithium Project into the lithium market space by producing:
- Direct Shipping Ore to generate revenue during and possibly after the construction of a scalable concentrate processing facility; then
- a technical grade lithium concentrate, tantalum concentrate, and muscovite mica product (metallurgical development now underway); and finally,
- possible chemical grade lithium compounds for the battery market.
“Our story is the most compelling for the realist who might be concerned with a bubble in lithium,” said Walker. “We’re taking a very systematic, staged approach to advancing the project. We’re an opportunity to temper those anxieties and provide the least dilutive avenue to invest in a world-class deposit where at a minimum it’s high grade zone could produce a high-grade, low-impurity direct shipping ore product that has real value.”
Some Notable Management
Michael Tamlin has more than 27 years of commercial and technical experience in mining, milling and hydrometallurgy with significant expertise in lithium and tantalum concentrates and chemicals. His lithium experience covers the development of the Chinese chemical and global technical spodumene markets for the Greenbushes Mine in Western Australia which currently controls an estimated 95 percent of lithium mineral supply, the Zhangjiagang Lithium Carbonate Project and the Rincon Brine Project. He is currently the Chief Operating Officer for Neometals, an ASX-listed company which is preparing for the start of production of its Mt. Marion Lithium Mine in Western Australia and is conducting feasibility of a lithium hydroxide plant. Tamlin brings extensive experience in the development of both hard rock and brine lithium projects, lithium supply negotiations, lithium markets and management at executive level with significant lithium producers.
Peter Vanstone, P.Geo—Advisory Board Member
Peter Vanstone has specialized expertise in rare metals with over 35 years of lithium, tantalum, cesium and rubidium exploration and mine production in the Canadian Shield. He is a former Chief Geologist with the Tantalum Mining Corporation of Canada Ltd. (Tanco). The Tanco facility, located in southeastern Manitoba, is a cesium chemicals producer that also produced lithium mineral concentrates from 1986 until operations were suspended in 2009, and tantalum mineral concentrates until March 2013. He is a graduate of Lakehead University with an HBSc in geology and is a member of the Association of Professional Geoscientists of Ontario.
Executive Leadership Team
Henry J. Kloepper—Chief Executive Officer
Henry Kloepper has worked in investment banking and structured finance over a 30 year career. He has held executive positions with JP Morgan, Citibank, Bank of America, and North American Trust in Canada, the US and Europe. Currently, he is a director of a number of public companies listed in Canada and the US which are involved in consumer finance, and merchant banking; manufacturing and distribution. Notable directorships include: Award Capital (Spot Coffee-food and beverage), National Construction, Mogul Energy (Oil and Gas), DealNet Capital (Consumer finance/merchant banking), Gilla (E cigarette manufacturer/distribution), Sofit Mobile (App. and technology incubator), and Pacific Software (Metal Fabrication).
Trevor R. Walker—President
Prior to joining Frontier Lithium in 2010, Trevor Walker was Vice President of the Consbec Group of Companies where he accumulated 10 years of experience in mining and construction. During his tenure at Consbec, he personally worked with companies such as GoldCorp, Rio Tinto, Westdome, Barrick, Noranda, Agrium and Unimin as well as other major companies. Walker holds an honours BA from the University of Western Ontario, and an MBA from Webster University Geneva, Switzerland. The Walker family maintains approximately 20% of the outstanding shares of Frontier Lithium.
Garth Drever, P.Geo—Vice President, Exploration
Garth Drever is a geologist with over 35 years of mineral exploration experience primarily with Cameco Corporation. He specializes in innovative technologies for detecting ore bodies and has worked on many uranium deposits worldwide. His past experience as an exploration geologist has included positions as Senior Geologist, District Geologist for Cameco Corporation. Drever began his career with the Geological Survey of Saskatchewan managing geochemical and geophysical programs exploring for uranium in Northern Saskatchewan. From 2001 to 2007, He played a key role in the development of Cameco’s global exploration portfolio with experience in the USA, Australia, Africa, Asia, and Europe. He holds a B.Sc in geology from the University of Regina and is a member of the Association of Professional Engineer and Geoscientist of Saskatchewan, and Ontario.
Reginald F. (Rick) Walker—Chairman of the Board
Rick Walker has been the owner/operator of Consbec since 1975. Consbec is the largest private drilling and blasting contractor in North America. Walker has extensive experience in open pit mining and quarrying including Hemlo, and Lac Des Isles, large diameter pipeline, and other heavy civil projects. His open pit experience involves pit design, government regulatory requirements, high tonnage production, dilution, wall and drainage control. He is a member of the International Society of Explosive Engineers and the Canadian Institute of Mining and Metallurgy. The Walker family maintains approximately 20% of the outstanding shares of Frontier Lithium.