Critical Elements banks on Rose’s tantalum and lithium

“You know, when you find a mine in your life, you are lucky,” says Jean-Sébastien Lavallée, president and CEO of Critical Elements (CRE-V), which is advancing a bankable feasibility study on the Rose tantalum-lithium project in Quebec’s James Bay region. 

Lavallée, a third-generation miner and geologist by training, is striving for that good fortune by putting the property that he vended to Critical Elements in 2009 through his family-owned, Val-d’Or-based consulting firm into production as early as mid-2014. 

Believing so much in the prospect, Lavallée, who joined Critical Elements — formerly First Gold Exploration — as a director in 2009, took over the company’s reins a year later and recruited new technical muscle to steer the project forward. 

Over the past three years Critical Elements has drilled over 26,000 metres, published two resource calculations, a preliminary economic assessment (PEA) and is finalizing an environmental impact study and offtake discussions. 

Confident with the PEA released last November, the junior jumped straight into a feasibility study so that it could bring the project on stream and benefit from the rising demand for tantalum and lithium.

The company states there has been growth in the past year for battery-grade material in hybrid-electric vehicles, electronics and energy storage, owing to renewable energy policies in China, Japan and the U.S. 

The current spot price in China for battery-grade lithium carbonate ranges from US$6,290 to US$6,600 per tonne, up from US$6,000 used in the company’s 2011 PEA. 

There is also a growing need for tantalum, with certain rules — such as the Dodd-Frank Act in the U.S., which forbids companies from using tantalum that was illegally extracted in the Democratic Republic of the Congo, or adjoining countries — increasing the appetite for ethically sourced, or “conflict-free” tantalum, Lavallée explains. 

Once in production, the company says the Rose mine should be “the first new significant producer of tantalum in over twenty years.” 

According to the PEA, the 4,600-tonne-per-day open-pit operation should deliver 452,000 tonnes of lithium carbonate and 3.5-million lb. tantalum pentoxide (Ta2O5) over its estimated 17-year life. 

The mine carries an after-tax internal rate of return of 25% and a net present value of $279 million, using an 8% discount rate and prices of US$118 per lb. Ta2O5 and US$6,000 per tonne lithium carbonate. 

The project hosts 26.5 million tonnes of 0.98% Li2O and 163 parts per million (ppm) Ta2O5 in indicated, and 10.7 million tonnes of 0.86% Li2O and 145 ppm Ta2O5 in inferred. 

Critical Elements aims to wrap up the feasibility study by March 2013, and start construction by the middle of that year, with production targeted for mid-2014 or mid-2015, Lavallée says.

Meanwhile, it is arranging project financing for the $268-million project and finalizing offtake agreements with lithium carbonate and tantalite buyers. 

Lavallée estimates that the contract for tantalum will be in place in the next two to three months, and for lithium, within six months.

While the offtake agreements should cover a portion of the project’s start-up costs, the company anticipates receiving some funding from the provincial government. 

“We’ve got big support from the Quebec government. We have been working with the Quebec government for two years to prepare project financing, and expect to get some debt from them,” Lavallée says. 

He adds that the project is well-located, with access to road and power, and that “we are very lucky.”

Lavallée and his father — who heads the family consulting business, and isn’t part of Critical Elements — together own 12 million shares, or 11% of the junior.

The company recently closed at 23¢, within a 52-week range of 9¢ to 27.5¢. It has 110.7 million shares outstanding.