Patriot Lithium expands into copper with Zambia project

Battery metals junior Patriot Lithium (ASX: PAT) plans to add copper to its portfolio through an agreement with Array Metals and Natural Resources allowing it to earn an 80% interest in the Katwaro project in west-central Zambia.

This diversification move complements Patriot’s North American lithium exploration work, despite a temporary setback at its Gorman lithium project in northwestern Ontario, due to land access issues. Gorman lies just northwest of Frontier Lithium‘s (TSXV: FL; US-OTC: LITOF) PAK project. 

“While negotiations to drill at Gorman continue, the board has decided to expand our project portfolio into other jurisdictions,” executive chair Hugh Warner said in a release on Thursday. “The company believes that the Katwaro copper project will complement our lithium assets and provide jurisdictional diversity, with respect to native title/sovereign risk and alternative weather windows for exploration.”

Amid Patriot’s Zambia move, lithium prices remain low, with the price of battery-grade lithium hydroxide having fallen to US$9,800 per tonne on Friday from US$22,275 a year ago and around US$85,000 a tonne in late 2022, according to The Wall St. Journal. But Rio Tinto‘s (NYSE: RIO; LSE: RIO; ASX: RIO) bid to buy Arcadium Lithium (NYSE: ALTM; ASX: LTM), confirmed this week, has renewed interest in lithium stocks.

Patriot will pay Array Metals $25,000 for an exclusive 12-month option period. If the option is exercised, a special purpose vehicle (SPV) will be established, with the project transferred to it after a $250,000 payment to Array Metals.

Over the following 48 months, Patriot Lithium will fund exploration and feasibility studies as part of the agreement.

Located near Mumbwa, the Katwaro copper project spans 4 sq. km and includes a historical open-pit mine with copper-bearing meta-sediments.

Zambia, Africa’s second-largest copper producer, has the ambitious goal of more than quadrupling the country’s output to 3 million tonnes by 2031. This would require bringing into production multiple exploration projects the government is currently identifying.

Authorities announced this week plans to keep majority stakes in “promising” mining permits through a special purpose vehicle (SPV), as part of an ongoing mapping exercise in the country. 

The mine minister, Paul Kabuswe, initially unveiled the SVP in late-August, saying it would control at least 30% of all critical minerals production from future mines 

BMO global commodities analyst Colin Hamilton said the minister has since been quoted in interviews saying the figure might be 45%.

“It now appears that the scope of this SPV has increased such that it can take a majority stake in promising mining licenses at its own discretion. The endless changes to Zambia’s mining regulations represent a significant risk to the country’s original aim of quadrupling the country’s copper output,” he wrote.

Subsidiaries of First Quantum Minerals (TSX: FM) and Barrick Gold (TSX: ABX; NYSE: GOLD) are responsible for the majority of Zambia’s copper production, accounting for nearly two-thirds of the total output in 2023.

Patriot Lithium shares were flat on Friday, and traded at A4¢ piece, valuing the company at A$4.5 million. Its shares traded in a 52-week range of A3¢ to A23¢.