What is the current development pipeline for lithium and other battery metals projects in Canada?
Personally, I have had a keen eye on the development of Canada’s electric vehicle (EV) and battery materials projects. I’m excited about the whole Canadian supply chain. Many people, myself included, have been saying that Canada is what Western Australia was like 10 years ago. There are massive opportunities for companies working throughout the EV supply chain right now in areas like Quebec, Ontario, Newfoundland, and Manitoba. There are prospects all over that contribute to the Canadian EV development pipeline.
Are there explorers or junior developers that are starting to build projects in these regions?
Right now, it’s most notably explorers, but the company taking the spotlight is Patriot Battery Metals (TSXV: PMET). They are exploring a potentially monstrous project in James Bay, Quebec. Mind you, as of right now, they don’t have a resource estimate yet, but based on the geological readings and the drilling assets so far, it looks like they are in fact sitting on a huge project. Their drilling results have attracted money and market attention to the region, with other projects or exploration prospects now interested in James Bay. Earlier this year, there had been a bit of a lithium rush for retail and institutional investors to see who the next junior exploration company would be to find the next big lithium deposit in Canada.
It’s virgin territory in a safe jurisdiction. It’s a no-brainer in terms of opportunity
Let’s talk a bit more about those investment opportunities. Why should investors be looking at this? What do they need to be considering when looking at these types of projects?
Until two or three years ago, the most recent lithium exploration work done in Canada was in the 1970s. In the past few decades, there has been very, very little exploration work done on lithium. To me, it’s virgin territory in a safe jurisdiction. It’s a no-brainer in terms of opportunity.
In terms of investment opportunity, I think the junior companies that are working in James Bay, trying to replicate the success of Patriot Battery Metals, are a good bet. Though obviously, there are so many companies working in James Bay right now, you have to make the right bets.
Personally, I like the opportunities in Ontario because, relatively speaking, I think the infrastructure in Ontario is better. And right now the lithium deposits in Ontario are much, much smaller. However, it also means that the companies trying to push their smaller projects into production could move faster and require far less CapEx. More importantly, I think there’s potential for consolidation. Different smaller Ontario projects could be consolidated into a big one. I just think there’s more investment attractiveness in Ontario projects right now.
Finally, let’s look at the full development chain. Is there opportunity to move further downstream with these projects? Beyond the mining and the exploration, are there opportunities for more processing in the region or to work more with the end-users?
Yes, definitely. This is why I said Canada right now is what Western Australia was 10 years ago. Right now, the glass is half full. Nevertheless, I think it’s still a little bit too early to discuss middle and downstream development. First, the industry needs to see where the deposits are located. And once there’s a clear picture, then you can start to build near the best locations for middle stream and downstream processing plants.
In the long run, I think for companies working in Canada’s EV industry, the opportunity’s not just in the upstream, but there’s also opportunity for vertical integration. I think there’s massive opportunity and investment potential in companies working in the EV industry across Canada.