New Discoveries Ramp Up Lithium Exploration in Northern Canada

A critical mineral in short supply

Recent years have seen lithium's emergence as a lynchpin for both electrification and the clean energy transition. As the core ingredient in many types of rechargeable batteries, lithium is essential for the electric vehicle industry. It's also used extensively in energy storage systems, which are themselves crucial components for both wind and solar power.

As governments around the world continue to commit to carbon neutrality and climate action plans, lithium has understandably experienced a meteoric rise in demand. Unfortunately, lithium production is struggling to keep pace. Between staffing shortages, supply chain interruptions and permitting issues, lithium mining and exploration companies often face a veritable gauntlet of challenges and delays.

This has led to what RK Equity Partner Howard Klein refers to as an oversupply of investment opportunities. Alongside ongoing delays, this overabundance of incomplete projects has caused automakers to become considerably more involved in the lithium sector. Rather than waiting for others to establish a lithium supply chain, original equipment manufacturers have begun taking matters into their own hands by signing deals with multiple junior mining and exploration companies.

These partnerships will only increase the automotive sector's influence on the lithium market, which at present is heavily impacted by demand from the electric vehicle and industrial sectors.

Here's where Northern Canada comes in. Areas such as Québec's Nunavik and Eeyou Istchee James Bay regions, as well as Northern Ontario, not only house considerable lithium reserves but are also largely underexplored. This makes them an incredibly valuable opportunity for both mining companies and investors. Northern Canada is home to extensive reserves of spodumene, resulting in many potentially viable project sites in the region.

For context, hard-rock lithium projects, which host lithium-bearing spodumene pegmatites, typically contains significantly higher lithium concentrations than either brine or clay. Its abundance and high lithium content make spodumene deposits ideal for large-scale lithium production, which is essential for supplying the growing requirements of battery manufacturers and other industries.

In Eeyou Istchee James Bay, Patriot Battery Metals’ (TSXV:PMET,ASX:PMT,OTCQX:PMETF) Corvette property is located within an emerging spodumene pegmatite district in which Patriot has already identified more than 70 lithium pegmatite outcrops to date.

It's not just mineralogy that makes Northern Canada an attractive exploration target. Although mining regulations vary by province, as a whole, Canada is recognized as one of the world's most stable mining jurisdictions. Many provinces have long histories with the mining industry, which translates to favorable government attitudes and access to a highly skilled workforce.

There's one other factor at play here, as well. Eeyou Istchee James Bay, which in recent years has been a lithium exploration hotbed in Northern Canada, has largely been claimed. As a result, exploration companies are looking to other areas of Canada's north to find prospective ground.

For all its promise, the vast and underexplored region suffers from one potentially crippling drawback — the cold.

Exploring Canada's northern frontier

Northern Canada is largely characterized by harsh, cold, long winters and subarctic permafrost. Winter temperatures in the area can frequently drop below minus 50 degrees Celsius. Work conditions at mining and exploration projects during the winter can be hazardous to both workers and equipment.

When done correctly and safely, however, exploration work that continues through the winter season can provide companies a competitive advantage over their peers. For one thing, access to winter roads is significantly easier with less activity during the winter season, allowing ease of transport of equipment, materials and personnel to and from a project site. It also enables on-foot exploration and surveying to a much greater extent than would be possible during warmer months.

Working year round rather than suspending operations during winter also provides a considerable advantage for both a company and its shareholders, as it means fewer delays and a shorter timeline for the establishment of a fully operational mine. There is also less risk of upsetting the permafrost layer or causing environmental damage — a big gain for sustainability.

Additionally, a resource company with the capability to conduct exploration activities through the winter will benefit from sustained momentum driven by regular news flow on drill results.

Key players in Northern Canadian lithium exploration

Although much of Northern Canada remains underexplored, there have nevertheless been some incredibly promising lithium discoveries in the region.

In 2023, Beyond Lithium (CSE:BY,OTCQB:BYDMF) discovered promising new spodumene-bearing pegmatite zones at two of its projects in Ontario: the Ear Falls project and the Victory project. Both projects are accessible by major highways and a network of well-maintained logging roads. The spodumene discovery at its Victory project even led to the company receiving the prestigious 2023 Bernie Schnieders Discovery of the Year Award.

Following Beyond’s spodumene discoveries, the company has continued its exploration work, launching a follow up stripping and drilling program at Ear Falls in the fall of 2023. The company strategic exploration plan now focuses on four primary projects: the Ear Falls spodumene, the Victory spodumene, the Cosgrave Lake, and the Wisa Lake Projects. The program includes diamond drilling and advanced mapping and sampling to delineate more targets for mechanical stripping and further diamond drilling.

North Arrow Minerals (TSXV:NAR) discovered several new spodumene mineralized pegmatites at its LDG and MacKay lithium projects in the Northwest Territories. To date, more than 17 simple and spodumene-bearing pegmatites have been identified between the two properties. Because both projects display similar geology to the Yellowknife Pegmatite Province, North Arrow asserts they have the potential for similar size and scale.

Brunswick Exploration (TSXV:BRW,OTCQB:BRWXF), meanwhile, announced the discovery of an undocumented spodumene-bearing pegmatite at the Elrond project, part of the company's Mythril option agreement with Midland Exploration (TSXV:MD,OTC Pink:MIDLF).

Other companies with recent spodumene discoveries in the region include Volta Metals (CSE:VLTA), Tearlach Resources (TSXV:TEA,OTCQB:TELHF) and Quebec Precious Metals (TSXV:QPM,OTCQB:CJCFF).

Investor takeaway

Lithium demand has increased exponentially over the past several years, and there is every indication that it will continue to do so. As production struggles to keep pace, we've seen the emergence of multiple lithium mining and exploration companies. Many of these organizations are laser-focused on Northern Canada — potentially the site of the next major lithium rush.

Investors would do well to be aware of both these companies and the investment opportunities they represent.

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