RK Equity // Mining Euphoria and Asymmetric Opportunities

RK Equity // Mining Euphoria and Asymmetric Opportunities

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Welcome back everyone. I'm Jordan Giesige and this is The Limiting Factor. Today, we have two special guests, Rodney Hooper, and Howard Klein of RK equity. I've been in contact with Rodney and Howard for about three months now, and I've been impressed with a lot of the insights they have about the battery materials, mining industry. And that's going to be the topic of conversation for today. With that I'd like to welcome Rodney and Howard. Thanks for joining us guys. Thanks for having us, Jordan. Yeah, good to be here.

All right. So just to give people a bit of context, what does RK equity do? Well, RK equity is a, I guess it's a boutique advisory company I've been in business for 18 years and we have helped, uh, small, early stage companies, mostly in the natural resource, um, sector, often public. Listed companies sometimes private, you know, enlisted in Australia or Canada and also in the United States. Uh, but largely companies that are pre-revenue, uh, development companies

that are seeking capital, uh, to, um, you know, to advance their projects and then become part of the supply. Uh, and we, we, over 20 years, we've done a lot of things in gold and copper and iron ore, et cetera. But in the last. About 12 years ago, I started in lithium, um, including what is now, you

know, lithium Americas, you know, Thacker pass project. Um, and we represented that company for, for quite some time. Uh, but in the last four years, we focused really exclusively on lithium battery materials. Um, and, and I would say 80 to 90% of that is lithium, although we've done some nickel and graphite, you know, and a bit of copper of late. So we are an extremely good filter of, you know, what we think are the best projects, certainly within lithium. Where are we currently for lithium prices and battery materials? Jordan, let me, let me have a stab at that.

So, so one of the things. I should have got to realize with the lithium market is it's a fraction of the size of the nickel market or the copper market. I mean, the entire, let's say a market last year is probably roughly $3 billion. That's the total. And within that, you already have specialized products where they are specific suppliers and specific customers and then their contracts as well. So the amount of lithium that actually trades openly in the market is very small. So where

are we? Well, We've we've come from a place where the processing hasn't been sufficient enough to incentivize incumbent produces or new projects to get into production. And now with ed cells, you know, hitching, you know, people look at it in different measures, but let's call it a 3.2 million last year. And now we're looking at, in our estimates 5 million this year, suddenly. You've got

a lot of big models. As you know, you've got the Cyber you know, the Semi, you know, Lucid, Rivian. These are big models, a high nickel batteries, enormous battery packs. Suddenly. Now a market that's been in marginal over supply is now going to be in, and you saw processes climate on a marginal oversupply. Now, what will they do in an under-supplied if we're going to move into under supply. Then where are we? We're on we're at the start of arise rosin process to incentivize more production to come on. So Jordan, in terms of demand is we, we're definitely seeing, uh, you know, a demand uplift and we're likely to see some kind of a price uplift.

But the question then is it's up to each investor to work out what they're prepared to pay. So the market broadly for a lot of things are expensive, right. You know, quantum scape, you know, and many other EVs specs, so money is available. So when Rodney kind of talks about like, what kind of yield are you looking for? It, it is a good time to invest in lithium, but you definitely need to be more selective. Uh, we are in a very bullish, euphoric market, and there's a lot of. Less good projects that,

um, you know, suddenly kind of come to market. You know, I had a call today with someone who was just like, Oh, Lithium's hot again. So I'm dusting off this old crappy project and I'm going to try to put it into, um, it, you know, try to raise some money on the back of it or, or, or, uh, you know, put it into a public company and promoted. So th th this risk on. The behavior, it makes it very important to be very careful. So. There these stocks or are prone to commodity like volatility and there's investing and there's also trading. So there's a lot of you being on the backside of a negative trade, you know, w Rodney and I have been, you know, have experience, you know, in this regard, the, these, the upstream pre-revenue companies are. There's still risky. There's a lot of value, but you know, you

gotta do a lot of work and, and if you do your work, you could, you could make those three, four or five times returns, but you don't have to do the work. So, so the market's run quite a bit and, um, there, but there may still be some, um, potentially some opportunities out there for stocks that haven't been recognized yet. Are there, is there. Anything or anybody that you're partnered with, it kind of fits that description at

the moment. Is there anything that's really asymmetric that's uh, for instance, uh, a low valuation that in the future has the potential to be, um, uh, a much larger company. So like a lot of the stocks that we saw, like beaten up Piedmont, for instance, uh, six or nine months ago. Um, so Jordan, this is, uh, a, a scoreboard that I put together. So this is RK equity. This is our brand, um, the lithium ion bowl. That's my, uh, my Twitter

handle. And it's also part of the brand. This was taken from January. 29th. Uh, by the way, everything we say here is not investment advice. So please do your own research. We're not financial advisors, but we, we do invest and we do talk to people,

you know, individually, um, you know, separately from this, but that don't have nothing we're recommending. We're not recommending anything in here, but so this is a scoreboard we rank, these are the chemical producers here as of Ganfeng Albemarle, SQM, these are kind of big cap producing companies. Um, then you go down here. I have a list of Spodumene producers, that's a precursor to making lithium chemicals. So that includes Western Australia and spa and producers, including

mineral resources and Pilbara, as well as galaxy. Then we have what I call it. So Spodumene that's the, that's the hard rock resources and that's typically the way that, uh, Lithium is mine. I'm just for the viewers. They may not know what spodumene is. Th th th that's, uh, that's a good point. So I'm going to go to the right here. So basically the scoreboard has a market cap. It has the share price. This is the one month performance. And this is from, you know, right after battery day. You could say there's a lot of green here, right.

Then there's the location. And then there's the type. You know, lithium Americas. They have a clay asset in Nevada and they have an origin time. Brine asset. Then when you asked about asymmetric with where is that opportunity in this kind of advanced development exploration? Okay. These are companies that are early much earlier stage. So at the bottom of the list here, you know, there are some companies that are only 20 and 30 million market cap. Six months ago, there were a lot here that were kind of five and 10 million market cap. And so if you go, this is. Where our focus is significantly. And if you look here, this is since battery day.

Um, But near battery days. So do so some companies are up this rock tech lithium up 600%, right. Uh, you know,E3 metals is up 400%, right? Ethan B metals is a 74 million market cap. Now that company, like I said, was 8 million market cap, uh, you know, six months prior to that. Piedmont is the top of the advanced exploration right there. Now a 722 million, actually a bit more than that. Cause this is a $49 price at the end

of January. They're now about $60, but you get the point every month. I put this out and this is a starting point for me as to, you know, Which of the companies that I'm watching, how are they performing, which are, um, uh, you know, uh, relative value and an absolute value. So a, uh, you know, a company, like one of the companies we like a lot is this European metals holdings. It is a client of ours. And again, you know, do your own research here,

but it only has 140 million market cap. It's the largest and most advanced. Uh, project in Europe, right? It's in the Czech Republic to pass producing tin mine. They're fully funded until their definitive feasibility study. And they're ready to kind of make a construction decision. And, you know, they have a hundred percent of their they're unpartnered today, right? So they haven't signed any offtake agreement, but that's likely to come sometime over the course of this year.

So there's a very. Obvious and specific potential catalyst for European metals holdings to achieve something that Piedmont achieved, which is, you know, an agreement with a Western, um, automaker or battery maker. And that is an obvious catalyst that demonstrates, you know, that a credential, you know, an, a brand to th to that, you know, um, that company in general, if we were to break down the world again, we're focused on.

Um, North America and European supply for North American and European demand. We used to like Argentina and Brine's a lot. Right. And Chilean Brine's, but in general, those Brine's make. Carbon it right. Hard rock makes hydroxide more cheaply or is the preferred route to make hydroxide. So the hydroxide that's going into the cyber truck and the

semi that's kind of where we want to be. So we spend a lot less attention than we used to on brines in South America, which we see, I see as, um, Carbonate focused, which is largely going to be sold into the China market. Right. So it's going to be a lower price product and it's serving largely the non. You know, it it's the China market is the Asia market. Would that be, would that be used for a lithium carbonate? My understanding that would be used for like lithium iron phosphate batteries, uh, which are lower nets. Right. Is that correct? Okay, cool. That, that, that, that is correct. And lithium, but to be clear, you can use,

uh, anything up to a six to two and NMC 62, you can use carbon it. Once you get over 65% Nickel it's to do with the Sintering process. You, you can't and the temperatures you have to use hydroxide above a 65% nickel, but anything, and you can use hydroxide in any, you can use hydroxide in LFP. If you want to, you can use hydroxide in anything you just can't use carbon at above a 65%. Nicole's got that. And if you follow Tesla, and I think the industry will follow Tesla. I mean, Tesla ha is getting into the hydroxide business from Spodumene, uh, minds. What other

spa? I mean, minds are there in North America that might attract Tesla or Volkswagen or others to partner with? Well live and made an a, one of the majors has recently made an investment in Nebraska, in Quebec. So Quebec. Has a lot of spa. I mean, so does, um, Ontario. So another company that we like, uh, you know, is critical elements here, which is in Quebec, which is similar to new Maska at the end of January, the market cap was about $150 million, but they're awaiting the permit. And, um, uh, you know, that they've been in discussions with a lot of different

off-take partners for a long period of time, you know, that have just been waiting for them to kind of get, get permitted. Another one is an Ontario, which is frontier lithium. It's listed here as 81 million market cap. Again, this is the end of January. These stocks have run a lot in February. So the

market cap of frontier, I think is maybe twice that today, But still even at a a hundred million or 150 million market cap compared to Piedmont, you know, 800 million, you know, there's, there's a lot of, you know, gap from there. So Ontario it's close to the, you know, it's all in the great lakes region. Uh, very high grade deposit. Um, we liked that story, you know, very much been under the radar significantly is not, you know, there's a lot of companies here that have a lot of promotion behind it. Um, but not a lot of substance frontier has the opposite.

You know, there's a lot of substance, but the company has not been very good at. You know, getting its message out to a, a significant degree. So, I mean, those are names that we liked on the hard rock side. So European metals holdings, you know, for Europe, there's very limited resources in Europe, right. And, and European metals holdings has actually, it's the biggest, hard rock resource by far.

And I think bigger than all the others combined represents something like 50 or 60% of all of Europe's resources. And it's the most advanced and it's right. You know, it's within 500 kilometers of where all the battery and Catholic plants are, you know, in central Europe. So we liked that story and then. If we, if we were to, if I was to rank, you know, where I, if by type, right. So rock

is hard. Rock is the number one, in my opinion, again, because you can go direct into hydroxide. So it's cheaper, you know, and it's, it's getting more scalable and it's in good jurisdictions. I would then rank as number two. Um, you know, from an asymmetric risk point of view, you were asking, you know, we're very intrigued by these DLE, direct lithium extraction, possibilities and technologies.

They're not yet proven yet at scale anywhere, but the market is starting to understand that there are a number of technologies out there that have been proved on pilot and demonstration scale that, um, there there's great hope that, uh, They will succeed. Uh, so the market is demonstrating enthusiasm. For DLE, Brine and clay, we have a greater preference for the DLE brines. Right? Know, we want to see if clay could be proven by Ganfeng and back in Nora and Mexico. And we'll see if, um, if, if, uh, lithium Americas could pull it off. So there are a number of other clay opportunities on here, like Cyprus development and genderly and Nevada and American lithium. But, um, in general, Where we're watching more closely

companies like , which is a client of ours, you know, again, in full disclosure, um, you know, it's been a very good performer. We we've had a number of investors come into that stock and they've done very well, but we think there's, there's a lot more room to run because they not only have a technology. They also have their own resource, which is a very large resource. And is, um, it's in Alberta. And if you think about Alberta as an oil province, this is an opportunity to

kind of like the make and energy transition in Alberta, you know, from oil to lithium, simply by taking, you know, uh, waste, right. The, the Lithium's in, you know, depleted oil reservoirs. Right. So it it's a very, um, There's a lot of lithium in there. There's a lot of challenges. It's not at this technology risk here. This is not a no-brainer it, um, it, it still has a lot to prove over the next

three, four or five years, but, um, it has an enormous amount of upside. And if it works that technology could be applied to other oil reservoirs and other areas in the world, what we do is we can, uh, probably close this out for now and then, uh, have a conversation about. Uh, some of the companies that you mentioned, so people can get a feel for them because there's a part of the, part of it is people are interested in something that has a lot of room to run. Uh, but they're also interested in why that company is specifically interests you or, or why they might be interested in it. European metals that one I'm, I'm relatively familiar

with that one that one's in the Czech Republic. And it's, uh, as you mentioned before, it's right on the it's right on the border. So it's a very large resource. It is on a historic 10 man that stopped in the early

nineties when the price at the skids. So, you know, you you've got chairs, which is the state owned utility as it's a joint venture partner. So you would think. If a, if a 70% owned, 70% state-owned entity were to buy in that you one would assume you're paying is looking a little bit rosier than not. Um, otherwise they should have done the due diligence going in to say yes, you know, w w we're to allow permitting. So last year, the entire battery. The entire battery, uh, market lithium demand was around 200,000 tons, maybe a little more. So Europe on its own,

just for EVs is going to be 1.6 times bigger than the entire global demand last year. So it's a big ask you, you need projects. The other thing is we think they're going to be quite generous government grants to assist in the building. You've seen subsidies for cell manufacturers, et cetera. We're expecting. To see subsidies on the chemical conversion side, you know, for projects like this and some soft funding as well.

So that improves the economics of the project. So that's EMH, it's going to produce a hydroxide. It's going to be, it's also a lower carbon footprint just given, uh, what energy sources are available. And the fact that it's a Mica Zenwaldite project. So it's not as hard as Spodumene, so you don't have to heat it as high in the conversion process. So it has a less of footprint. Excellent. So it sounds like there's a lot of, uh, forcing functions and tailwinds there, you have the CO2 requirements, the requirements to localize subsidies is just this whole, um, And demand of course, because I was about to say, and so what you're seeing is because you've got the carbon possible coming in in 20, 24 and actual enforceable limits that you've got to be below by 2027. It's a matter of time before the downstream customers look to sign up EMA, which is likely to be maybe not first, but very close to the first producing year. All right. So look at

what type contracts have done for the Piedmonts the Core Lithiums the other companies of this world, you know, it's, it's been, it's a, it's a huge endorsement of the, of the project to have someone sign off, take with you. Yeah. And to be the first in Europe is, uh, something it's a feather in their cap as well. And it sounds like that wouldn't be terribly difficult because it was an operating mind before it's, that's what it's designated as everything's in place. And the other thing not to overlook Jordan is. You know, the them and concentrate producers had contracts with Chinese companies, but Chinese companies can renege on those contracts and there's no legal recourse, no one did anything because they're the only customers and everyone just accepted it. If you sign offtake agreements in Europe with European companies, then you've got a bankable credit that you can take to fund us. Assuming it's a quality company, you know, that's committing,

you know, pick a nine, but. Even the cathode manufacturers about, of these businesses, you know, BAS if you recall, they're all coming in as well. You look at the battery cell plans, these are good credits to, you know, to have as your architect partner. Yeah. That's trust is always, it's an unappreciated factor and business and getting things done, operating in a market that's trustworthy and having partners that the market trust is huge. We agree. All right. So that's, I feel like that covers off European metals really well now, frontier,

where, where is that located? And what's, uh, uh, what's some of the stories there's frontiers and, and Toria, and in my opinion, in terms of just the deposit itself and the quality of the old body, it's great. It's impurities and the width of the, of the, of the docs it's in the top three in the world. So they are progressing. They've just released the pea preliminary economic assessment to look at being a hydroxide producer by 20, 25. But as it happens, such as the quality of the ow that they have an opportunity to make what we call a technical grade spodumene. So you make a chemical grade spodumene to go into the chemical plants to for battery.

But you can make a technical grade Spodumene, which has an iron content of below 0.15. And that can go to the gloss and ceramics market. That process is tried to substantially it's, you know, two to three times what chemical grade spodumene trades that. So they've got, and they've packed deposit. I mean, they have, um, they have lithium grades at surface of

as high as 4%. So, you know, versus what a lot of projects only have one. And with this low iron content, um, they have an opportunity to, to do a pilot plant and do and make, uh, technical grade spodumene to sell into that gloss and ceramics market and produce a chemical grade, Spodumene to continue their tests work on making hydroxide.

As it happens. I've partnered with XPS, which is a, uh, an, uh, Glencore company that, uh, they've got a mini pilot plant going on, making hydroxide. So as a broad rule of thumb and how do we says this? If you can make 20 to 25,000 tons of hydroxide, if your cap ex is going to be five, six, six 50 million, and you can keep your operating costs at $5,000 a ton or less. That's kind of a blueprint for a $1 billion NPV. And, um, that's exactly kind of the PA of frontier came out of 975 million, the NPV. Now they behind some of the other companies

in terms of feasibility studies that are at a PEI level. A lot of the other guys are already at PFS or doing a DFS definitive. So you got to your fundable bankable. So there are probably 18 to 24 months behind, but they

are trading at, you know, 0.1, five cross percent NPV of 0.15. Granted it's an unfunded ratio, but, um, from an ore body perspective, It's really is, you know, they've got up to 40 meter widths, which you don't really get, you know, when you man center, uh, you know, dykes, you, you can lose a bit of mining dilution, cause you're taking narrow strips out, but 40 meters, you might lose slightly on the fringes, but you're really gonna have a good recovery. Um, and as I say, they've got a, they've got a low, they've got a low iron content. I think

the mic is also. Yeah, very much, um, manageable. So in terms of the quality of the old body, uh, consistent and homogenous products, if you can produce a consistent and our margin is Spodumene concentrate, the probabilities of producing a battery grade, high drop side offer consistent and stable and very clean Spodumene is very high. And we think that frontier delivers that. Oh, that's really persuasive. So it's, uh, uh, the or grade it's high percentage. And then on top of that, the, the. Um, the beds that the, or that are sitting in are extremely wide. So like for instance, if you have a tool and you're trying to chisel out an area of rock, that's very narrow.

There's not much margin for error, but if you have an orebody that's meters and meters wide, it can just drive a dump truck through it and scoop it out and you don't have to worry so much about it it's surface. Oh, wow. So you're pretty much money into the old buddy. So, if you go and look at their website, you can see the lithium, you know what, at surface at pack deposit, it's, it's based in what they call electric Avenue in, in Onatario. So the names of the deposits are Pack, Spark, Bolt, you know, they have those kinds of names on them.

Um, and you can, you can have a look at it. And you know, the guy, the CEO who runs it comes from a mining family. They have moved a lot of, uh, A lot of dirt in their time. And they are, my understanding is they are the only company that has a manufacturing, explosive license in Canada. So they have a long history of, of actually mining material. Um, but they all, they all, they all slow and steady that aren't, they're not rushing it. So. No, we feel that that's fine because we feel that the lithium market given where EVs are going and demand for batteries in general. And if you look at energy storage,

that's really is something that's going to come into play. I think the lights are on this decade is, uh, you've got to, if you've got a constructive lithium market, then you don't have to be in a mad panic to rush your feasibility and get to where you're going because. Processes are going to be supportive going forward now because we've now the flood Gates have opened on EVS. I mean, if you look, if you think about it, you've got Tesla, which is a pure Evie company saying sales are out constraint and we're at a 4.6% EV penetration globally, you know,

w w we're on our way to a hundred preferably. And we're talking about self constraint at 4.6%. So. Yeah, I know it's sells themselves, but raw materials obviously aligned into that. So what we're saying is, if you can find companies that fit the profile, that how do we is likes of size of, of, uh, production and CAPEX and, and, you know, operating costs and price, then. You know, they should all end up in the same place, which is around a, a billion dollar NPV. It's a question of what you paid for it. And how long are you going to wait for them to put it into production? Now they one or two more questions on frontier is, uh, now does that technical grade lithium that they produce, does, does it cost extra to produce that or is that just a side effect of it? Well, that's a good one. So I know at green bushes, they have to fund Grandage to get rid of the iron content, because if you put.

Like a hot plate or whatever it is on, on, on, uh, on, on a gloss, it's got too much on content. It can crack the things that can happen. So getting the content down, but what you find is in a lot of Spurgeon deposits, there's on in the lectures of the Spurgeon. So you can't get it out. So it's not suitable to making a technical grade. My understanding with, with frontier is that they don't have to overly fund granted. So

if you look at the. If you look at the fees at the PA, I think that talking about now, it could be wrong and we'll have not have to backtrack, but I think $335 a ton X works is the price of the Spodumene. And I think that Spodumene is, is both chemical and technical grind. All right. Interesting. And why did I need to double-check that? Okay. Well, if, if that's

the case, I can always splash something up to correct it. Or, uh, we can re remove that one thing. The one thing I can say is that when they looked at, at doing a, um, at doing a technical grade product to the IRR on that project was steady 8%. Alright. So very hard returns. So how long would that take? It was to be turned off. It was probably back two and a half years. Payback. Nice. Okay. Very nice. But as I said, I've got full stent at surface, but hydroxide for EVs is the grand prize yet. Hmm. Yeah,

but it's, uh, it's, it's nice to know they have those fallbacks and other areas with the technical growth in the glass, participate in that market and earn a very good margin without disrupting their progress to producing hydroxide for EVs. In fact, you have to do a demonstration or pilot plant one way or the other to prove this up. So the fact that you can actually make a technical grade and set it into the glass market at a profit. At a handsome profit whilst you continue your feasibility on the hydroxide is a nice add on. All right. And, uh, while we're on the topic of PFS and DFS, that's, uh, Or pre-feasibility study and definitive feasibility study. So, so, so essentially what happens is with a pre-phase I think you're allowed to be within a 20 is a 25%. I think it depends which country, but let's call it a 25% of the final number

you needed with an accuracy. And when you do a definitive feasibility, it's typically 15% within 15% accuracy. All right. So the pre-feasibility study that's usually, I don't know. Uh, you're going to have to

correct me because I'm not that familiar with these, but it's like pre-feasibility study would be like three to four years away from production. Whereas definitive feasibility study is one to two years. Yeah. That's not, that's not a bad, well, you can do a pre fees and then you can do a pre fees and do a definitive feasibility depending on what you taste and what you tick off.

So. The other thing that comes into play in order to be more accurate is you have to have more of your resource and measured and indicated rather than inferred. So the spacing of the dilling needs to be narrowed. So you've gotta be sure about what you've got, but you can do a definitive feasibility study within a year of finishing a PFS.

E3 metals as one that I've had several of my patrons asked about it's one that they're very interested in. It's a, because it's direct lithium extraction and that's really captured people's minds at the moment. Be able to extract lithium directly from a brine and turn it into a finished product. So it's not something I know much about. I'd probably get placed to start with E3 is again a, where is it located and, uh, why is it, uh, a persuasive. Story for you eat three is located in Alberta. It's the projects that the La Duke reservoir. So it's a contained aquifer. So it's not like, you know, um, other brands that you have in South America that are almost, you know, living organism of, of, of flows of, of, you know, of, uh, you know, water flowing in and out or brand flying in and out.

This is contained, it was an old oil, petro... Uh, you know, area. So, um, what they had is very fortunate for us that it has a lot of historic drilling or testing. So they had all those results that didn't have to do it again. They didn't have to reinvent the wheel

and knew what they had there. The trick again is has an enormous amount of contained lithium within, within the, the jokers of all that I. But they, um, they own, um, and, uh, but th the issue that they have had to overcome, and the challenge that overcome is it's not a very high grade Brine. It's a, it's a level of grad you're talking sort of 70 to maybe a hundred PPM. So what they did is they partnered

up with the university, I think of Alberta and they've created what they call a Sorbent. So, you know, the, the, the beads, the resin. In order to attract the lithium ions and then you, you, uh, you know, wash it off once. So you need a very resilient resin in order to be able to flow a lot of bland brand through, to, you know, a low grade brand through to attract it. So they partnered with, um, with has moved on, they, they doing it on their own.

They're busy building a pilot plant. They've had a lot of support in government grants. So you haven't seen. Masses of Shea issues and dilution to get where they are because they've had the historic drill holes. They've had government grants and I've, you know, the partners in their head, the support for each three, they both own the resource and they own the technology. So that's the similar to some other competing products. In the instance they control both.

And again, it's, you know, the one thing you know, that we do like is, uh, for sure is it's a scale out, not scale up project. So once you've got a working pilot plants of a decent size scale, you just modularizing it and you have, I don't know if you've ever seen Sun Resin’s deposit in China. Maybe you can put the picture up is there's a whole lot of these cylinders. So once you've

got one of those chambers, you're just putting a lot of chambers in place. So there isn't a risk of going, you know, like other lithium deposits where you piloted a certain level and then you build a much bigger plant. This is if you get it right, you see some possibly, you know, moderate engineering challenges, but then you just simply are putting, you know, putting a modularized, you know, amount of production in place. So they have the potential. To scale up substantially once they get going.

I think that PA, uh, also powered correct me, but I think the Pre-Tax PV was around about a billion and the after tax about 800. Yeah, that's right. But that's for 20,000 tons, but I have the potential to scale the production update to over a hundred thousand tons. It's lithium. I think there was a good, like 7 million tons. You can, you can really, you've got lots to draw from the trick is if they can extract the lithium with a resilient resin and get a decent recovery. And I've done it at lab scale, then moving on to pilot, if I can do it, then you've got a very good chance of producing a very high quality, low impurity that's CMR drug side. And that's that's the grant process is if you can do that, given the scale of the resource and what they could do with production.

Yeah, the isometric you talk about, you know, is, is, is unlimited here a day symmetric because they own the technology. They own a large resource. The technology could be licensed elsewhere and. It's not disruptive in our estimation. It's not disruptive in terms of lowering the cap ex or lowering the op ex of producing lithium in a meaningful way.

So it's not like, Oh my God, everyone is just going to do this. And they're not going to do hard rock because this is so much better, but it will. Compared to brines in South America, which have very large land footprints, which, you know, uh, the recoveries are much lower even though they're higher grade in, you know, in the ground.

It, they come with all sorts of issues, uh, geopolitical and, and other issues that we, that we talked about that, uh, if this works, then there are lots of reservoir oil, reservoirs, and other locations that this could then be applied to. And we think that Alberta is an ideal location for this, um, to make up for the low. Uh, concentration. So it's like 80 parts per million, right. That, that compares to, you know, let's say an Argentine brine that might have 400, 500 or 600 PPM. So it's, it's meaningfully

lower PPM. However, Brine flow rates are very important in the processing. Brine. So in Argentina and Chile, you can't flow the brine super duper fast, but in Alberta, a lot of the success apart from the resident, a lot of the success is the, is how fast you can pump the water through these cylinders and in. Alberta in oil industry, they know how to move water, right. There's skills there to do that. So if you can move the water very fast and the resin holds it and it was very

selective for lithium, then you can concentrate it, you know, in a fast way. And then you, you making it a high purity that, that that's a part of the secret sauce there. So this has gotten a lot of political support that premier of the, uh, of the, of the province.

I think Kenny, you know, I've seen him tweet, uh, you know, about this project, right. And you mentioned the Alberta, um, Uh, you know, academia and the, like, there's, there's a lot of support for this. This is a major, like Alberta's not, Alberta is an oil province, right? So to the extent that the world is, you know, anti oil, it's not like, you know, that people in Alberta have made their livelihoods there. It's, um, they're looking for, you know, different

things. So this is, uh, definitely has political support. Uh, they'd gotten some grants and the like, but, uh, uh, you know, from a permanent perspective, there should be no problem at all. Um, and it, again, it's a North American jurisdiction. If you look, you know, you talk about Piedmont

or Quebec or Ontario CA proximity to. To Austin, you know, Alberta down to, you know, uh, Nevada down to Texas also is very similar. So as a, as I mentioned, uh, Jordan, because it's a contained aquifer and from what I recollect my recollection in terms of the drill results is you are dealing with a very consistent body of brines.

So when you say as much as it, the, you know, the, um, the, the PPM is low you're, you're able to calibrate and sit, you know, how you design the resin, et cetera, for what's very consistent in terms of what's coming through in lithium and other. Minerals within it, within that, within that Brine. So when you, when you have a normal, uh, you know, when you have a conventional brand, you've got that, got to be very careful with that pump from, and keeping the potassium levels and so on and everything consistent because it's different in different parts of the cellar. As I said, it's like almost a live organism that, you know, that, that things are moving around and happening. Um, and if you get your pumping, your flow rates wrong, suddenly you

are struggling with what it is that you're trying to process through the plant. So yes, it has a, it has a lower grade, but I think given that it has a very consistent nature across it. If you can crack that code, then you are, you know, you're off to the races because you've got a massive. A party of prime that you can then process this is generating so many questions for me. It's fascinating to learn about because it's Chris Doornbos because you understand selective absorbent technology, that's the on exchange.

So, um, and, and, you know, he can, he can sort of explain it, but the recoveries of lithium in their tests work have been high. And then what they do is they re-inject. The brand at 12 kilometers away. So a lot of the capics and so on was pumping it back much, further away because you obviously don't want to pumped back, you know, uh, stripped bro back into too close to where you're going to pump out. So that, that comes with the cost of that done. As I would say, the capital is similar, but the world needs consistent and high quality. Let's see, um, chemicals, it needs our drugs

up, but obviously carbon it as well. And this is a way of doing, you know, this is a potential way of doing it, um, with, you know, with massive opportunity because there the drug reservoir, I mean, the, the land package that I have is huge. All right. And, um, I'll try to wrap it up with . Even though I have a list of questions here, uh, how far along are they with, uh, uh, PFS or DFS? So that PA, so they've just finished a PA now they've got to go to P onto PFS and they're also setting up a pilot plant, uh, in Alberta. How that's correct? Yes. So they will be.

So there'll be doing the going above lab scale to now pilot plant, to making sure that they're pumping big volumes through to test that they've already made hydroxide off the lab scale. Now you need to move to pilot plant and do it again. And then you're moving closer to, as I say, these senators ever look at sunrise and you'll see they've got a range of them that they all have their, so once you get to a certain size, then. Then you're done, then you're just modularizing it. She's disco out. Not up. That's excellent. I'll just try to summarize for people here. So it's, uh, Using direct lithium extraction is becoming a pragmatic reality. It's reached the technology has reached the point now where

it's ready for production scale, and it looks like we're going to be seeing it, uh, in the next few years. And, uh, I do think it's a good idea for me to sit down with the CEO or the chief technical officer of and get a better feel for what's going on there because I have a lot of questions about it. So overall, I appreciate your guys. Time today. It was, we did. Thanks Jordan. We did quite a, quite a deep dive into a number of different topic areas and that's, uh, that's not easy and it's impressive. The amount of, uh, knowledge you've accumulated about these companies. It was really interesting. Thank you. Thanks very much for having us Jordan really appreciate it. Cheers. If you

enjoyed this video, please consider supporting me on Patrion with the link at the end of the video, or snag something off the merch shelf below. I'm also active on Twitter and Reddit. You can find the details of those in the description. And I look forward to hearing from you.

2021-02-28 11:20

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