Could you introduce us to Li-FT’s operations?
There are three main sources of lithium. First, you have lithium brines, which involve pumping salty water out of the ground, mainly in South America. Secondly, there are clay deposits, found mostly in Nevada. Thirdly, you have hard-rock, or pegmatite, deposits. These are veins of rock that fill a crack in the surrounding rock and contain a mineral called “spodumene”, which is the lithium-bearing mineral that we are after. Li-FT is a mineral exploration company focused on hard-rock lithium deposits in Canada. We have three ongoing projects. Presently, Yellowknife is our main project, comprising a portfolio of 14 spodumene deposits. What sets Yellowknife apart from other areas is that there is almost 100% outcropping exposure, meaning that the lithium sticks out of the ground—you can literally see them from space. For decades Yellowknife was under the radar since it was privately owned and out of operation, until we acquired it. But, to say that we have a resource in the earth, and not merely outcrops, we must keep developing the deposit and gain more confidence about what is in the sub-surface.
We have another project, Kali, which is also in the Northwest Territories in Canada, and is known as a lithium pegmatite district. The third area is in Quebec, which is one of the hottest places in the world for lithium right now due to Patriot Battery Metals having found the Corvette deposits, in the James Bay region. We have the largest land position there, which surrounds the Whabouchi lithium deposit.
Our priority now is to develop the resources and showcase the economics of Yellowknife and Kali. Due to the surrounding rail network, both can feed into a central location, which is where the lithium converter should be built. Once we can prove how much ore we have in the ground in those sites, the company will undergo a significant valuation increase.
How does Canada compare to other lithium-bearing geographies, such as Australia?
The largest spodumene lithium deposit in the last years has been Greenbushes, in Western Australia, which has been mined for around 20 years—being considered the only deposit of its kind in the world. In the last decade, several new spodumene deposits have come online in Western Australia. Canada, for its part, has a similar geology, but just vaster. However, nobody has gone out looking for lithium before, since we never needed it in the quantities we need it now. So, I am confident many deposits will be found in Canada in the near future.
Would you say that exploration companies are struggling right now despite the increasing demand for lithium?
I would say that lithium exploration companies are not necessarily struggling. We see many companies today moving from gold exploration to lithium. That is because there is money to be made in the capital markets, given that the importance of lithium for the green transition is widely understood. The price of lithium has gone up about 10x in recent years. Accordingly, the capital markets are willing to fund high-risk exploration.
Is there a risk that China will flood the market for lithium and tank exploration efforts?
It is important to differentiate between the various kinds of lithium products. In the hard-rock deposits, you start with spodumene, which comes out looking like a granite, which must then be concentrated in order to later be sold to a lithium converter, which turns it into a lithium hydroxide or lithium carbonate, which, finally, is sold to the battery makers. China has the majority of the lithium conversion capacity, but in terms of the raw materials themselves, it is dependent on Australia mostly. They control a part of the supply chain but will not be able to control the whole of it.
To what extent does the Canadian government facilitate lithium mining?
The Canadian government understands mining. About 50% of the capital for mining globally goes through the Toronto stock exchange. As a large country with a small population, we must focus on resource extraction. The government has been reasonably helpful, having given a Critical Minerals tax credit.
We have a system here whereby mineral exploration companies get a 30% tax credit which can then be flowed to investors. This allows exploration companies to do equity financing out of premium to their share price. For example, during our last financing we raised $35 million at a 1.6 premium to our share price, implying less equity dilution for our shareholders. In that sense the system here is great.
What needs to happen now is expediting the permitting process, without of course losing the rigor of environmental protection. The bottleneck of the battery supply chain is mining. To build a gigafactory takes two years. To build a mine takes around 15 years, from the start of exploration until production. Sometimes companies wait for two years for the government to make a decision. With timelines like these, it is difficult to keep investors interested, and market windows are likely to be missed.
We decided to take more financial risk to cut down on the timelines and even so we have an estimated timeline of six years—from exploration to building the mine. Whereas in Western Australia it might be two years. We must realize that ultimately what is driving the timelines for lithium production is a common goal—tackling climate change and executing the green transition.
