Ontario-focused Frontier Lithium aspires to become Canada’s ‘lithium champion’

With a project focused on one of the hottest commodities tied to mass adoption of EVs, Frontier Lithium (TSXV: FL; US-OTC: LITOF) is working towards completing a resource update and prefeasibility study for its PAK project in northwestern Ontario by the first quarter of 2023. 

The prospective lithium pegmatite project is 170 km north of the famed Red Lake gold camp in an emerging lithium mineral district in the Canadian Shield dubbed the ‘Electric Avenue.’ 

Having already outlined one of the largest and highest grade spodumene resources in North America, the project has the potential to transform Frontier into Canada’s ‘lithium champion,’ as significant investor, president and CEO Trevor Walker tells The Northern Miner in an interview. 

The company’s exploration effort have traced the deposit over a strike length of 500 metres and to a depth of 300 metres, with the actual width varying between 10 and 125 metres. 

In March, the company reported a resource update, quadrupling the indicated resource at Spark to 14.4 million tonnes grading 1.4% lithium oxide, up from the previously estimated 3.3 million tonnes grading 1.59%, after the company conducted two drill programs last year covering 3,269 metres. Spark also hosts an inferred resource of 18.1 million tonnes grading 1.37% lithium oxide (the current average global resource grade). 

Frontier is currently completing delineation and infill drilling, with two drill rigs deployed to the Spark deposit. The company has completed 11,150 metres of drilling in 34 holes as of Sept. 11. 

The junior’s exploration program continues to report drill intercepts that rank among the widest and highest-grade globally. On Oct. 11, it said that results from another four holes demonstrated grades well above the current mineral resource estimate of 1.38% lithium oxide. 

The Oct. 11 results averaged 1.57%, 1.92%, 1.74%, and 1.55% lithium oxide over significant widths ranging from 124.1 to 326.6 metres. 

“We continue to cut long intervals of high-grade lithium in infill drilling on the Spark pegmatite,” Walker says. “The current drill campaign is focused on upgrading inferred open-pittable resources at Spark as we work towards completing the prefeasibility study.” 

As with previous results released in July, some holes ended in pegmatite. As the current two-drill rig program is focused on the central portion of Spark at depth while the company prepares the upcoming prefeasibility study, Frontier plans to extend those holes later. 

The project has a measured and indicated resource of 21.64 million tonnes averaging 1.56% lithium oxide and an inferred resource of 20.87 million tonnes averaging 1.42% lithium oxide. The deposit remains open at depth and along the strike. 

In addition to the PAK deposit, the project also hosts the Spark deposit, estimated to contain 14.4 million indicated tonnes at 1.4% lithium oxide and 18.1 million inferred tonnes at 1.37% lithium oxide. Two other pegmatite occurrences — Bold and Pennock — have been found in the area. Channel sampling returned 1.51% and 1.96% lithium oxide, respectively. 

In a note to clients, Canaccord Genuity Capital Markets mining analyst Katie Lachapelle said Frontier’s high-grade hits point to a higher overall indicated grade when the company updates the resource early next year. 

The four deposits outlined to date at Frontier Lithium’s PAK deposit, Ontario. Credit: Frontier Lithium.

She also expects inferred resources will grow, with drilling indicating that the Spark deposit is still open in all directions. 

Management’s focus has now shifted to defining the limits of the pegmatite and deepening some initial holes (from earlier in the program). 

Based on the consistency of infill drilling to date, Lachapelle said she expects the majority of Frontier’s existing mineral resource at Spark to be upgraded and included in the mine plan in the future, which could result in a mine life extension of about 14 to 18 years. The analyst only includes 18 million tonnes of the current resource in her mine plan at a 1million tonne per year processing capacity. 

Phased approach 

In response to a tight lithium market and positive outlook for the energy metal, Frontier plans to accelerate production via a phased approach. Initially, it plans to sell spodumene concentrate from a mine and mill operation, followed by a second phase of expanded production to produce lithium chemicals. 

The phased approach will be reflected in the upcoming prefeasibility study, Walker says. 

In February 2021, Frontier released a preliminary economic assessment for PAK, forecasting a 26-year mine life with the potential to establish a hydrometallurgical chemical plant at an unidentified port in the Great Lakes. 

At an 8% discount rate, the study projected PAK would generate a post-tax net present value of US$974 million and an internal rate of return of 21% using a base price of US$13,500 per tonne of lithium hydroxide. The study envisioned an initial capital cost of US$685 million, a strip ratio of 3.6 to 1 and an average annual production of 23,174 tonnes of lithium hydroxide. 

“There’s a significant upside to the project, given the rising demand for lithium and the record price levels of US$70,000-plus per tonne for certain lithium products,” said Walker. 

Frontier’s PAK property is one of Canada’s more advanced lithium projects. Last May, it received $363,000 in funding from the Ontario government to help the company demonstrate its lithium extraction process through a pilot project. 

Five months later, the company said that the pilot produced battery-quality lithium hydroxide monohydrate from the PAK deposit. 

Earlier this year, Frontier concluded a pilot-scale campaign to produce 500 kg of spodumene concentrate that will be used to pilot a hydrometallurgical conversion process. It used a 7,800-kg sample of composite material from the Spark (89%) and PAK (11%) deposits. 

It averaged 1.57% lithium oxide and 0.8% iron oxide. The Spark material is fine-grained, necessitating desliming, magnetic separation and gravity concentration before flotation. 

Late in October, Frontier announced a $20-million bought deal financing to be underwritten by a syndicate led by RBC Capital Markets and Goldman Sachs. 

“Canada has never seen Goldman Sachs come in on a small financing like this. So that speaks to the importance of the project and the strategic nature of the asset in the Great Lakes region,” Walker said. 

It further highlights the importance of building the local supply chains with PAK positioned in the Great Lakes region of North America, close to the northern U.S. and southern Ontario, which are vital manufacturing hubs on the continent. 

The executive complains the enterprise is undervalued compared to pegmatite competitors in Australia. 

“We’re really about a quarter of the in-situ resource values. We see tremendous upside for our company. Frontier is Canada’s lithium champion controlled out of North America by local hands,” Walker said. 

Despite coming off its recent high of $3.89, at $1.99, the company’s shares are still up 59% over the past 12 months. It has a market cap of $422.5 million.