Green Energy Metals Snapshot: Eight companies with large ambitions

Canada is rich with resources needed to fuel the electrification of modern society, and Canadian companies are rich with ideas for finding lithium, nickel, copper, cobalt, and PGMs wherever they are around the world.

AMERICAN MANGANESE

American Manganese (TSXV: AMY; US-OTC: AMYZF) is concentrating its efforts on recycling lithium-ion (Li-ion) batteries. If the company has its way, the batteries will be recycled and the lithium in them will last forever, thanks to its RecycLiCo patented process. The company says it is an environmentally friendly, hydrometallurgical solution for not only lithium but also cobalt, nickel, cobalt, manganese and aluminum. The process produces a high-quality feedstock that can be directly integrated into the remanufacturing of battery cathodes.

There are many benefits of RecycLiCo, the company says. Battery waste is recycled without mining. The process is economical, particularly when compared to the cost of exploration, drilling and mine development. RecycLiCo is a closed-loop hydrometallurgical process with no greenhouse gas (GHG) emissions, no landfill waste and low energy consumption.

American Manganese estimates that to smelt and recover a tonne of metal generates about 2 tonnes of carbon dioxide. Then only 40% to 60% of nickel and cobalt are recovered and none of the lithium. The base metals recovered need further processing and refining before they can be reused in batteries. The attraction of a hydrometallurgical way of recycling Li-ion batteries is its low energy consumption and low GHG emissions compared to conventional smelting.

American Manganese has conducted pilot plant studies on the RecycLiCo process and is ready to operate a 500-kilogram-per-day demonstration plant. Commercialization of the process is estimated to cost between $15 million and $20 million, and there is the possibility of licensing the process or joint development with strategic partners.

The company may have found its niche as a critical elements recycler, but it had its beginning as a mineral exploration company. It owns the historic manganese producer Artillery Peak in Arizona, where it received a U.S. patent to process low-grade electrolytic manganese. The 31-sq. km property is home to 20 past producers.

The company  has optioned the Rocher Deboule property in British Columbia, which includes the Victoria gold-cobalt mine, the Rocher Deboule copper-gold mine, and the Highland Boy copper-gold mine (all of which are past produces) to Longford Resources, which can earn a 60% interest. The Lonnie-Virgil niobium-rare earth element (REE) property in north-central British Columbia is wholly owned by American Manganese

American Manganese has a market capitalization of $209 million.

ARENA MINERALS

Arena Minerals (TSXV: AN; US-OTC: AMRZF) is developing an integrated approach to lithium brine production. Executive Chairman Eduardo Morales and his team have developed a proprietary brine process, which creates a solution of at least 30% lithium chloride from conventional evaporation ponds. In that form it can be shipped directly to lithium carbonate plants and battery-grade material can be produced without purification circuits.

The process results in lower capital expenditures, saves 40% to 70% on operating costs, makes a consistent battery-grade product with fewer process steps, and offers flexibility.

Arena’s Salar de Antofalla lithium project in Argentina is not yet in production, but the plan is to treat brine with a proprietary reagent, eliminating the use of lime. The concentration of lithium in the evaporation ponds would be at least 5%, which is a saleable concentration, the company says. Other evaporation ponds only reach about 1% lithium and are not marketable at that concentration. The evaporate from the ponds using Arena’s reagent can be fed to carbonate plants and a final battery-grade product made. Lesser grade evaporate can be fed to carbonate plants, but then the carbonate must be upgraded to meet the standards for batteries.

Geophysical surveys show a large aquifer saturated with brine beginning at 50 metres below surface. The aquifer is connected to surface brine hosted in shallower halites, and there is potential for a significantly larger resource, Arena believes.

The company has a second lithium project in Argentina, Sal de la Puna, for which permits for additional drilling and construction of a pilot plant have been received. Lithium-bearing brine starts at 140 metres below surface and has been drilled to at least 600 metres with grade that increase with depth. Pumping tests competed in 2019 averaged 533 milligrams (mg) per litre of lithium.

Thus far, only a small portion of the claim block has been drilled. A transient electromagnetic (TEM) survey done by the company suggested the possibility of expansion in four additional claims.

Arena closed the acquisition of Sal de Puna in July. The company has a strategic partnership with Ganfeng Lithium, which has agreed to invest US$7.8 million for a 35% ownership share in the project.

Arena is also acquiring the Pampa Union copper property in Chile’s Antofagasta mining region. The company is earning an 80% interest from Chilean chemical company SQM. Over 23,240 metres of reconnaissance drilling have been completed on the property in addition to geophysical and seismic surveys. Two porphyry targets have been discovered with argillic-phyllic alteration signatures. Drill core assayed up to 0.2% copper. There are two targets permitted and ready for follow-up drilling.

Arena also holds 5.8 million shares of Astra Exploration, a newly formed private exploration company. That represents about a 40% interest in the company, which now holds the Pampa Paciencia epithermal gold property, also in the Atacama region in Chile.

Arena Minerals has a market cap of $68 million.

BATTERY MINERAL RESOURCES

Battery Mineral Resources (TSXV: BMR) is focusing on several green metal opportunities — copper, cobalt, lithium and graphite. The company has chosen assets in stable jurisdictions, with existing infrastructure, and, in many instances, with historical production.

The company’s first priority is to resume production at the Punitaqui copper-silver-gold mine, 120 km south of the city of La Serena and the port of Coquimbo in Chile. The mineral processing plant is centrally located to treat ore from the San Andres, Cinabrio, Cinabrio Norte, and Dalmacia deposits. The properties are located in a classic iron-ore-copper-gold (IOCG) and mantos-style copper belt.

Mining began at Punitaqui in 2007 under Tamaya Resources. The project was taken over by Glencore in 2010, then by Xiana Mining, which shut it down in April 2020. Battery Mineral Resources assumed ownership earlier this year.

The total acquisition cost, indebtedness, and costs to restart production is about US$30 million. The company paid US$15 million for the property. It is spending about US$5 million on a drill program, technical report and maintenance. The cost of redevelopment for the underground mine and pastefill plant would be between US$5 million and US$8 million, the company says. The restarted project could generate earnings before interest, taxes, depreciation and amortization (EBITDA)of as much as US$50 million a year, and Battery Mineral could use the funds to test other projects.

The processing plant is designed for 3,000 tonnes per day and could be expanded to 4,000 tonnes per day. It has a conventional flowsheet design with crushing, grinding and flotation to produce a copper-gold concentrate. Tailings management will transition to pastefill to extend the life of the containment facility. And the project has access to underground water sources and a local supplier.

Drill results from Punitaqui released in September included hole SAS-21-03, which returned 11 metres grading 1.39% copper, including 8 metres of 1.63% copper. Hole 04 intersected 16.7 metres grading 1.37% copper, including 11.7 metres of 1.64% copper, and a second interval of nine metres at 1.75% copper. Hole 07 returned 3.4 metres grading 2.1% copper and a second interval of 4 metres at 1.56% copper. Hole 08 cut 5.3 metres grading 1.39% copper and a second interval of 3.8 metres of 1.85% copper.

The upside at Punitaqui is the 25 km mineralized corridor in the region. Several other copper occurrences have been identified and will be drilled.

Once Battery Mineral has a profitable mine in its portfolio, the company plans to turn its attention to the many past-producing cobalt-silver properties it controls in Canada.  The properties could become a “hub and spoke” development with a centralized mill in Gowganda in northeastern Ontario, and fed from the McAra, Iron Mask, Cobra, Island 27 and other potential mines in Ontario as well as the Fabre cobalt-silver property in Quebec.

The company released its first underground resource estimate for the McAra project in March 2020. McAra has 34 million indicated tonnes grading 1.47% cobalt and 10.28 grams silver per tonne for  1.1 million lb. of contained cobalt and 11,260 oz. of contained silver. There is also an inferred resource of 5,000 tonnes grading 1.94% cobalt and 10.84 grams silver per tonne containing 214,000 lb. of cobalt and 1,650 oz. of silver.

Gowganda is the site of four historic silver-cobalt mines (Bonsail, Miller Lake-O’Brien, Millerette, and Capitol), which produced 60.1 million oz. of silver and 1.3 million lb. of cobalt from 1910 to 1989. Based on recent drilling, the historic mines near Gowganda that Battery Mineral hold contain an estimated 3 million oz. of silver.

The company has chosen high priority drill targets for a phase two program, which recently started. Near Gowganda it will drill the East, Bald Rock, Sydney Creek, and McAra South zone. Fabre West will also be tested.

Battery Mineral also holds a high-grade cobalt-copper-gold property in Idaho. This is the only permitted primary cobalt deposit in the United States, according to the company. Work there has outlined a 2 km long by 700-metre-wide target area of anomalous copper-cobalt mineralization. The best of the underground channel samples assayed 0.7% cobalt, 2.12% copper and 0.58 gram gold per tonne from the central part of the target area.

In addition, Battery Mineral has a pair of lithium properties in the United States. The Amargosa project lies about 130 km west of Las Vegas, Nevada, and the Franklin Wells project is located 15 km north of Death Valley Junction in California.

The company also has two brownfield graphite opportunities — Geuman and Taehwa — in South Korea. Both have exploration targets, but the Geuman deposit has a 43-101 compliant resource of 1.6 million indicated tonnes grading 6.6% carbon and 5.6 million inferred tonnes grading 5.5% carbon.

Battery Mineral Resources has a market capitalization of $80 million.

CYPRESS DEVELOPMENT

Cypress Development (TSXV: CYP; US-OTC: CYDVF) is working on a feasibility study for its 100%-owned Clayton Valley lithium project located between Reno and Las Vegas in Nevada. The study is due in the first or second quarter of 2022. The company acquired its claims in 2016 immediately east of Albemarle’s Silver Peak lithium producer, North America’s only lithium brine operation.

The Clayton Valley property contains a large flat-lying claystone occurrence with minimal overburden and no interbedded waste rock. Lithium is found in illite and montmorillonite clays to a depth of at least 150 metres below surface. An open pit mine is to be built without drilling and blasting. The ore will be scraped from the surface.

The company updated the prefeasibility study earlier this year and estimated a capital cost of US$493 million to mine 15,000 tonnes per day and produce 27,400 tonnes of lithium carbonate-equivalent annually over a 40-year mine life.

The prefeasibility study indicated that the project has an after-tax net present value, at an 8% discount rate, of US$1 billion and an internal rate of return of 25.8% based on a lithium carbonate price of US$9,500 per tonne.

Production would be based on a probable reserve of 213 million tonnes grading 1.13% lithium for 1.3 million contained tonnes of lithium carbonate-equivalent. The total indicated resource is 1.3 billion tonnes grading 0.9% lithium for 6.3 million tonnes of lithium carbonate-equivalent.

A conveyor will move ore from the pit to an agitated tank leaching plant followed by direct extraction of lithium from the solution to produce lithium hydroxide at the site. Potential by-products include rare earth elements (REE). The study suggested a 2,500-tonne-per-day sulphuric acid plant featuring energy co-generation be built at the site to minimize the use of external power sources.

Metallurgical testing with diluted sulphuric acid demonstrated a lithium recovery of 86.5% with only 126.5 kilogram (kg) per tonne for acid consumption. The company has also successfully tested the use of hydrochloric acid and sodium chloride brine as a leach solution. The second option makes filtration and the washing of tailings easier and requires less process water. However, chloride-based leaching has its trade-offs with respect to power and acid supply.

To advance the Clayton Valley project, Cypress has leased a site for a pilot plant 160 km south of the project, in Nevada’s Amargosa Valley, and will begin testing chloride-based leaching in the third week of October. The company issued one million shares in exchange for a direct lithium extraction (DLE) licence for Chemionex’s Lionex process. A US$3 million water rights deal also has been reached, and permitting activities continue.

In addition, Cypress owns the Gunman zinc-silver property, about 150 km south of Elko in Nevada. Cypress has optioned the project to Passinex Resources, which can earn an 80% interest.

Cypress Development has a market cap of $177 million.

GRID METALS

Grid Metals (TSXV: GRDM; US-OTC: MSMGF) is focused on growing its Canadian projects for battery metals. Its efforts so far are concentrated on properties in Manitoba and Ontario as the company sets its sights on meeting rising demand for green energy metals.

Makwa-Mayville is an advanced stage project consisting of two nickel-copper-platinum group metals (PGM) deposits. Grid Metals owns 100% of Makwa and 89% of Mayville. A preliminary economic assessment done in 2013 was based on the indicated resource for both deposits of 33.8 million tonnes grading 0.27% nickel and 0.37% copper. The total inferred resource was 4.8 million tonnes grading 0.19% nickel and 0.43% copper.

The company expects to complete an updated preliminary economic assessment for Makwa-Mayville later this year. It will include better nickel and cobalt recoveries than the earlier PEA, trade-off studies on mining, and a new exploration agreement with the Sagkeeng First Nation.

The Mayville property also hosts four known lithium-bearing dykes that Grid has identified. The mineralization contains high-grade spodumene with tantalum, cesium and rubidium. Drilling in 2018 returned 3.4 metres assaying 1.8% lithium oxide (Li2O5) beginning 75.5 meters downhole. The results were typical of other holes drilled at the time. The strike length of the pegmatite dyke has been traced over 775 metres.

Grid’s 100%-owned Bannockburn nickel project near Matachewan in Ontario also contains copper, palladium and cobalt. The current goal is to outline a bulk tonnage nickel sulphide deposit in the B zone. The company completed eight infill drill holes in the zone earlier this year. The first hole intersected 196.5 metres averaging 0.28% nickel, including a 112-metre section averaging 0.32% nickel with 48 metres of 0.24% nickel. Drilling identified a strike length of 600 metres. The company says the mineralization is similar to the Main zone at Canada Nickel’s Crawford nickel deposit.

Grid hopes to define an open pit resource of at least 100 million tonnes containing at least 200,000 tonnes of nickel in sulphide at Bannockburn. Additional metallurgical studies will be done for the B zone to confirm that a premium high-grade nickel concentrate could be produced.

The East Bull Lake PGM project 80 km west of Sudbury in Ontario is also 100% owned by Grid. The company made the discovery in December 2020 when hole EBL20-13 intersected 119 metres averaging 0.75 gram palladium per tonne, 0.21 gram platinum per tonne, 0.04 gram gold per tonne, 0.08% copper and 0.05% nickel (1.13 grams palladium-equivalent per tonne), including 48 metres of 1.85 grams palladium-equivalent, 14 metres of 2.97 grams palladium-equivalent, and 3.7 metres of 4.54 grams palladium equivalent.

Grid compares the geological and geophysical characteristics at East Bull Lake to the Lac des Iles palladium mine in northwestern Ontario and to the Arctic platinum project in Finland. It will continue drilling, particularly the Parisien Lake zone, where hole EBL21-09 recently returned 37.6 grams palladium per tonne, 6.68 grams palladium per tonne and 21.3% copper over 0.54 metre with a 2-metre interval averaging 10.7 grams palladium per tonne and 5.87% copper.

In early October, Grid signed an option agreement to acquire a 100% interest in a previously undiscovered spodumene and lepidolite-bearing pegmatite property — the Campus Creek property — located 250 km northwest of Thunder Bay in Ontario. Grab samples from outcrops have returned good grades of lithium and anomalous amounts of cesium, rubidium and tantalum. Geological sampling is underway.

Grid Metals has a market capitalization of $10 million.

HORIZONTE MINERALS

Horizonte Minerals (TSX: HZM; US-OTC: : HZMMF) owns 100% of two advanced nickel projects and hopes the area will become a new nickel district in Brazil’s Para state.

The Araguaia nickel project is at the feasibility stage with an amended 43-101 report dated April 2021. The company plans to produce 52,000 tonnes of ferronickel containing 14,500 tonnes of nickel annually over a mine life of 28 years.

The initial 28 years of open pit production will generate after-tax free cash flow of US$1.6 billion. After taxes, the net present value (NPV), at an 8% discount rate, would be US$691 million with an internal rate of return (IRR) of 27%. The initial capital requirement is US$443 million, and the project would pay for itself in three years.

Plan throughput could be doubled with the addition of a second rotary kiln electric furnace (RKEF) to double output. In that case, the mine life drops to 26 years, generating an after-tax cash flow of US$2.6 billion with an estimated NPV of US$741 million and IRR of 30.7%. Construction of the second kiln would cost US$251 million and could be financed through operating cash flow. The payback period would be about four years.

The Araguaia project is construction ready, having received both its mining licence and power-line licence. The project has been de-risked, and negotiations are underway for long-lead time items. Horizonte is also negotiating for key operating inputs such as electricity, logistics and consumables. A syndicate of five international financial institutions have approved a senior secured project finance facility of up to US$346.2 million for the ferro-nickel project

Horizonte’s second advanced project is Vermelho. It could be a producer of 25,000 tonnes of nickel and 1,250 tonnes of cobalt per year. Again, this would be an open pit but with high pressure acid leaching (HPAL) of ore. The test work is done for producing a battery-grade product, and additional revenue would be generated by a fertilizer (kieserite) by-product. The company is advancing the Vermelho project to the feasibility stage.

The base case preliminary feasibility study, also completed in April 2021, put the initial capital cost at US$652 million, which could be paid back in just over four years. Net cash flow would be US$7.3 billion over the life of the project. The after-tax NPV, at an 8% discount, would be US$1.7 billion, and the IRR 26.3%.

Vermelho has a considerable upside should the nickel price go from US$16,400 per tonne to US$19,800 per tonne. The capital requirement would remain the same, but the project would pay for itself in 3.6 years and generate $9.5 billion over the mine life. The after-tax NPV in that scenario would be US$2.3 billion and the IRR would be 31.5%

Measured and indicated resources at Vermelho are 145.7 million tonnes grading 1.05% nickel and 0.05% cobalt. These resources contain 1.5 million tonnes of nickel and 77,300 tonnes of cobalt. All measured and indicated resources within the pit designs are classified as probable reserves. The inferred resource is 3.1 million tonnes grading 0.96% nickel and 0.04% cobalt, containing 29,000 tonnes of nickel and 1,400 tonnes of cobalt.

Horizonte believes both Araguaia and Vermelho will be low-carbon producers. They have access to hydroelectric power and will share infrastructure because of their relative proximity to each other.

Horizonte also owns the Serra do Tapa nickel project, about 90 km north of the Araguaia project. A 2016 mineral resource estimate outlined 70.3 million measured and indicated tonnes grading 1.22% nickel and 0.05% cobalt for 857,000 contained tonnes of nickel. The inferred resource stands at 2.7 million tonnes grading 1.14% nickel and 0.06% cobalt for 31,000 contained tonnes of nickel. There are currently no field activities at the property.

Horizonte Minerals has a market capitalization of $139 million.

NICKEL 28 CAPITAL

Nickel 28 Capital (TSXV: NKL; US-OTC: CONXF) owns 8.5% of the Ramu mine, the only nickel-cobalt producer in Papua New Guinea. The operator, Metallurgical Corp. of China, owns the rest. Nickel 28 obtained its share in 2019 with the acquisition of Highlands Pacific Ltd. When Nickel 28 repays Highlands’ share of the mine development costs, the company will own 11.3%

The Ramu mine is located near Madang, on the north coast of the country. Production has exceeded design capacity for the past three years. Guidance for 2021 calls for 33,000 tonnes of nickel and 2,900 tonnes of cobalt. Production attributable to Nickel 28 is 2,900 tonnes of nickel and over 600,000 lb of cobalt per year.

The mine has proven and probable reserves of 54 million tonnes grading 0.88% nickel and 0.09% cobalt. The measured and indicated resources stand at 145 million tonnes grading 0.84% nickel and 0.09% cobalt, and the inferred portion is 21 million tonnes averaging 0.9% nickel and 0.1% cobalt. The area of the defined resources covers less than 15% of Ramu’s exploration licence.

Equally important to Nickel 28 is its portfolio of prospective nickel-cobalt properties in which it has royalties. Some of them are in Canada (Dumont, Turnagain, Triangle, Rusty Lake, Professor and Waldman, North Canol, and Sunset). Two (Sewa Bay and Star Mountains) are in PNG, and two are in Australia (Nyngan and Flemington).

In Canada, Nickel 28 Capital has a 2% net smelter return (NSR) royalty on the Turnagain nickel-cobalt property in British Columbia and a 1.75% NSR royalty on the Dumont nickel-cobalt property in Quebec.

In Australia, the company has a 1.5% gross revenue royalty (GRR) on the Flemington cobalt-scandium-nickel project, and a 1.7% GRR on the Nyngan scandium project.

Nickel 28 expects that rising nickel and cobalt prices will increase its cash flow from the Ramu mine, and should they go into production, its royalty properties would provide a steady income stream.

Nickel 28 Capital has a market cap of $80 million.

TASEKO MINES

The Gibraltar copper-molybdenum mine 65 km north of Williams Lake in British Columbia is the cornerstone of Taseko Mines’ (TSX: TKO; NYSE: TGB) growth strategy. The operation is a low carbon intensity project benefitting from hydroelectric power.

Production began in 1972, but former owner Boliden suspended mining in 1998 due to low copper prices. Taseko purchased the property the following year, but it was not until 2004 that the operation was modernized and restarted. Three major expansions have created a mine and 85,000-tonne-per-day mill with an annual output of 135 million lb copper.

At a cut-off grade of 0.15% copper, Gibraltar has  proven and probable reserves of 488 million tonnes (including ore stockpiles) grading 0.25% copper and 0.008% molybdenum. The mine life is about 17 more years.

The total measured and indicated resources (including reserves) are 907 million tonnes grading 0.25% copper and 0.007% molybdenum. The inferred portion is 53.5 million tonnes grading 0.21% copper and 0.004% molybdenum.

In 2014 Taseko acquired the advanced-stage Florence Copper project 100 km southeast of Phoenix in Arizona. This is a particularly green project, the company says, as it is being developed with in situ recovery. A water-based solution is injected into the deposit, the metal dissolves, and the copper-laden solution is pumped to the surface. It is currently operating as a phase one production test facility (PTF).

Taseko invested $25 million into the PTF and solvent extraction/electrowinning (SX/EW) plant. It went into production in December 2018 with 24 wells. Eighteen months of testing provided the company with operational data, confirmed project economics, and produced high-quality copper cathode within stringent environmental guidelines.

Compared to conventional open pit mining, Florence Copper will consume 71% less energy, 93% less fresh water, and produce 83% fewer carbon emissions.

Taseko says it will take an initial capital expenditure of US$227 million to reach commercial operation at a rate of 85 million lb. of copper annually over a 20-year mine life. The state has already issued a draft aquifer protection permit, and the company continues to advance its application for the underground injection control permit. Discussions with potential joint venture partners are also ongoing, as are Taseko’s efforts to raise the necessary capital.

Using a 0.05% total copper cut-off, probable reserves at Florence Copper are 313 million tonnes at a grade of 0.35% copper, for 2.5 billion lb. of contained copper. Reserves are contained within the measured and indicated resource of 389 million tonnes grading 0.33% copper for 2.8 billion lb. of copper. There are also 300 million lb. of contained copper within the 57 million inferred tonnes averaging 0.24% copper.

Taseko has two more advanced exploration projects in British Columbia — Yellowhead copper-gold and Aley niobium.

The Yellowhead project has the potential to be a 90,000-tonne-per-day open pit with about 15 billion lb. of contained copper. A 43-101 technical report was completed in 2020 indicating the project would have a life of 25 years after an initial capital investment of $1.3 billion.

Yellowhead has measured and indicated resources of 1.2 billion tonnes grading 0.25% copper and 0.028 gram gold per tonne, plus 99 million inferred tonnes grading 0.024% copper and 0.026 gram gold per tonne. A cut-off of 0.15% copper-equivalent was used to calculate the resource.

The Aley niobium project in the northern part of B.C. is seen as a potential growth project. Niobium is used mostly in high-strength, lightweight and corrosion resistant steel. Taseko acquired the project, which contains one of the world’s largest niobium deposits, in 2007.

The Aley deposit has proven and probable reserves of 84 million tonnes grading 0.5% niobium oxide (Nb2O5) contained within 113 million tonnes of measured and indicated resources of 286 million tonnes grading 0.37% niobium oxide. The reserves are believed to contain 188 million kilograms (kg) of recoverable niobium.

Taseko is also the 100%-owner of the New Prosperity copper-gold project 125 km southwest of Williams Lake in B.C. It is opposed by the Tsilhqot’in First Nation on whose land it is located. The project has been idled almost two years by mutual agreement of Taseko and the Tsilhqot’in government. That ban on work is due to expire at the end of 2021.

Using a cut-off of 0.14% copper, the New Prosperity deposit has measured and indicated resources of 1 billion tonnes grading 0.24% copper and 0.41 gram gold per tonne. Within that material, the proven and probable reserves are 831 million tonnes grading 0.23% copper and 0.41 gram gold per tonne, containing 3.6 billion lb. of recoverable copper and 7.7 million oz. of recoverable gold.

Taseko Mines has a market capitalization of $690 million.