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Batteries, tech components provide juice for lithium exploration

Northern Manitoba hopes to tap into lithium boom
Chart uses data from CRU Group to illustrate the dramatic rise in the price of lithium.
Chart uses data from CRU Group to illustrate the dramatic rise in the price of lithium.

When a prospector’s drill first twisted its way into the Thompson Bros. lithium property in 1956, a tonne of lithium was worth US$600.

When drills entered the property earlier this year, the same tonne of lithium was selling for about US$8,000.

Inflation played a role in the dramatic leap, but price spikes in the late 2000s and 2010s were larger factors. Between 2000 and 2015, lithium’s value soared nearly five-fold before dropping slightly.

Credit the environmental movement. The ongoing and anticipated shift toward electric and hybrid cars, fuelled by lithium-powered batteries, has made lithium a hot commodity.

The lithium boom was encapsulated in a headline that accompanied an August article from the Bloomberg news agency: “It’s hard to keep up with all that lithium demand.”

The obvious follow-up question came courtesy of a CNBC.com headline: “Who will supply the lithium needed to run the future’s electric cars?”

While revered for its rich ore reserves and mining tradition, northern Manitoba has no active lithium mines and is not viewed as a major player in the lithium market.

But that could change.

In early 2017, Ashburton Ventures drilled six holes at the Thompson Bros. lithium property, located 20 km east of Snow Lake. Early results have been encouraging.

Drilling had first taken place at the Thompson Bros. property in 1956 and, more recently, in 1997. After the 1997 drilling, then-owner Carta Resources completed a business plan to develop the site into a mine.

A drop in lithium prices stalled the would-be mine in 1998. Ashburton now hopes the mine can prove viable at today’s prices, but it’s unclear when such a determination can or will be made.

About five km outside the Thompson Bros. property, Far Resources has been actively drilling another long-known deposit, the Zoro lithium property.

Far has unveiled a few rounds of promising drill results from Zoro and is considering an access road that would assist exploration and, if warranted, facilitate the movement of ore to a processing facility.

Elsewhere in northern Manitoba, Alix Resources is excited by its Cross Lake lithium property, situated just outside the First Nations community of the same name.

Alix president and CEO Michael England calls the Cross Lake property one of the company’s “key spodumene projects.” Spodumene is a lithium-bearing mineral.

Public enthusiasm for the Thompson Bros., Zoro and Cross Lake projects may be tempered by the fact the three companies involved are small outfits, known in the industry as juniors.

In the capital-intensive mineral sector, juniors are easy to dismiss as boys in a man’s game or, worse yet, charlatans trying to boost, then quickly sell, their shares.

But in a 2016 commentary, Joe Lowry, an expert on the lithium market, contended more juniors will succeed at lithium mining than he first thought.

He believes the juniors’ lithium output will be needed to satisfy future global demand.

Perhaps also playing to juniors’ favour is speculation of an eventual “supercycle” in which strong demand for lithium drives already-high prices even higher.

Not sold

Not everyone is sold on lithium as a game-changing opportunity for juniors.

As the Financial Post’s Sunny Freeman notes, some analysts believe the lithium market is a bubble and that the world’s handful of top lithium producers – none of which are based in Canada – can likely keep up with demand all by themselves.

Others question whether projections around electric car sales are realistic, and there are good reasons to be skeptical.

According to reports, the US failed miserably in meeting its target of one million electric
vehicles on the road by 2015, while Ireland will fall short
of its more modest goal of
50,000 electric cars by 2020.

Closer to home, electric cars have caught on on a small scale in urban Canada, but rural Canadians often have what the Toronto Star calls “range anxiety” over the limited distances the vehicles can travel in between charges.

Some countries – including India, France, the UK and most notably China – plan to ban the sale of gas-powered cars in the coming decades, but some wonder whether these far-off plans are window dressing.

Referencing European governments’ promises to eventually prohibit cars powered by combustion engines, Bloomberg’s Leonid Bershidsky argues such bans will only work if electric vehicles “get a lot better.”

Consumers, Bershidsky writes, “tend to balk” at electric cars “when they get a sense of the range limitations…and considering the strategic aspect of planning their driving around charging opportunities.”

As Bershidsky writes: “Governments are rightly hesitant to force something on consumers that doesn’t really work for them – which is why countries that plan to ban combustion engines in new cars haven’t actually legislated on it yet.”

Such uncertainties aside, one challenge before would-be lithium miners is the complexity of bringing the thin, silvery-white metal – the lightest metal on earth – to market.

That’s something Juan Esteban Fuentes, a regional head with business intelligence company CRU Group, touched on in an August interview with Bloomberg.

“Lithium production isn’t easy,” Esteban Fuentes said. “It requires high technical and chemical knowledge. Clearly there will be more disruptions, to the extent that there are miners entering the market that have never extracted lithium and do not have that technical knowledge.”

To what degree northern Manitoba can capitalize on the lithium boom remains to be seen.

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