Grid Metals (TSX: GRDM; US-OTC: MSMGF) agreed to supply China-controlled Tantalum Mining (Tanco) with cesium in exchange for exploration funding on the Donner and Falcon West projects in Manitoba.
Tanco is to provide a $300,000 advance for initial drilling at Grid’s Donner lithium project, which is expected to start in a few weeks, Grid said in a statement. Tanco is the world’s leading producer of cesium products used in the oil & gas and science industries.
Donner is one of four projects that Grid is focusing on in southwestern Manitoba. All are located on the traditional lands of the Sagkeeng First Nation, with whom the company has an exploration agreement. Donner’s high-grade Dyke project is known to host pollucite, an important mineral source of cesium.
If drilling is deemed successful by both parties, Tanco will pay an additional $900,000 for project development activities. In exchange, Tanco will have the right to buy 10,000 tonnes of cesium-bearing material from Grid at a predetermined price. Pricing for cesium material grading at least 5% caesium monoxide (Cs2O) will be US$1,500 per tonne, with deductions applied for transport.
“We believe this is a positive update as this agreement provides Grid an opportunity to extract value from its lithium projects, which were earlier put on the back burner because of the depressed lithium price,” Alina Islam, an analyst at Red Cloud Securities in Toronto, said in a note to clients.
Grid is in the process of finalizing an exploration drill program at its Falcon West lithium and rare metals property. Two other nearby properties, Makwa and Mayville, hold copper-nickel deposits.
Cash flow
Besides providing immediate funding and technical expertise for exploration and development, the supply deal opens the door for near-term cash flow from toll milling at Tanco’s cesium plant, which is located about 35 km away, Islam wrote. Tanco is owned by a unit of China’s Sinomine Resources Group.
The agreement “provides the foundation to kickstart cesium exploration with the objective of near-term cash flow generation through toll milling,” Grid CEO Robin Dunbar said in the statement. “Our proximity to the only cesium operation in the western world is a unique feature of the Tanco collaboration.”
Cesium is a rare earth metal that is defined as a critical mineral by the U.S. and Canadian governments. It’s commonly used to help drill oil, and is also used in atomic clocks, photoelectric cells, vacuum tubes and radiation monitoring equipment.
Exciting news about Grid Metals! This cesium supply deal with Tanco could really boost their exploration projects. Looking forward to seeing how this unfolds!