Lithium Co.’s Drill Results Spark Interest

Source: Streetwise Reports  (10/19/22)

Frontier Lithium Inc. announced the latest group of drill results from its Spark Deposit in northwestern Ontario. The firm reported it intersected 326.6m of pegmatite averaging 1.92% lithium oxide (Li2O), which included a 50m high-grade zone of 2.98% Li2O. Canaccord Genuity Corp. (Canada) advised in a research update that the positive results achieved in Frontier’s Phase XII drill program once again demonstrate grades that are well above the current mineral resource estimate of 1.38% Li2O.

The Catalyst

Frontier Lithium advised in its most recent news release that it is currently utilizing a phased approach to preparing a Preliminary Feasibility Study (PFS), which should be ready in Q1/23. The company indicated that during Phase 1, it will focus on mine advancement and mill development with the objective of producing premium-grade spodumene concentrates.

Canaccord presently maintains a “Speculative Buy” rating and a CA$4.75 per share target price for Frontier Lithium Inc. This target price is a 114.932% increase from the current price of CA$2.21.

During Phase 2, the firm said it will concentrate its efforts on raising mine and mill production volumes in order to supply its downstream refinery with materials needed to produce lithium chemicals intended for use in the energy storage and electric vehicle (EV) battery market.

The completion and delivery of the PFS may prove to be a positive catalyst going forward. In the October 11, 2022 research note, Canaccord Analyst Lachapelle stated that strong existing and future demand for concentrate provides a solid basis for a phased approach to development.

Lachappel commented, “The consistency of Frontier’s high-grade hits leads us to believe that there is a strong likelihood that the company will report an indicated resource with a higher overall grade. We also expect the updated mineral resource to include new inferred material, with drilling indicating that the Spark deposit is still open in all directions.”

Lachapelle noted that “Frontier Lithium currently trades at 0.48x NAV (net asset value), which we believe is an attractive discount to peers at 0.64x NAV.” Canaccord presently maintains a “Speculative Buy” rating and a CA$4.75 per share target price for Frontier Lithium Inc. This target price is a 114.932% increase from the current price of CA$2.21.

Resource Expansion Potential

Recent drill results show room for further resource growth at the company’s Electric Avenue District property.

Frontier Lithium’s V.P. of Exploration Garth Drever commented, “Our modeling beneath the central indicated resource appears solid, and drilling to the west continues to intersect significant pegmatite zones, and the Spark deposit remains open in all directions and zones of elevated tantalum and cesium along with lithium are being delineated.”

Lachapelle pointed out that Canaccord’s valuation for Frontier was predicated upon the extraction and processing of material produced by only a 23Mt resource, which is far below the firm’s total current resource, which has grown to 42Mt grading 1.54% Li2O and “is among the largest in North America and highest grade.”

Lachapelle continued, “Based on the consistency of infill drilling to date, we expect 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 ~14-18 years (18Mt currently included in our mine plan; 32Mt current resource, ~1Mtpa processing).”

Company Operations

Frontier Lithium is a lithium exploration and development company based in Sudbury, Ont., Canada. The company is focused on the development and production of battery-grade lithium hydroxide and lithium salts for the North American EV battery and energy storage markets. Its wholly owned PAK Lithium Project is located in the premier Electric Avenue lithium mining district in northwestern Ontario.

The PAK project includes the PAK Deposit, which has a Measured, Indicated, and Inferred resource of 9.3 MT averaging 2.06% Li2O, and the larger Spark Deposit, which is located just 2.3 km away from PAK and has an estimated Indicated resource of 14.4 MT averaging 1.40% Li2O and an Inferred resource of 18.1 MT averaging 1.37% Li2O.

The property hosts what is believed to be one of the highest-grade large-tonnage hard rock lithium resources in North America. The company’s plans call for “a fully integrated operation from open pit mining through to chemical production (LiOH, 23kt per year).”

Share Structure, Ownership, and Coverage

Frontier Lithium has a diversified investor base. In aggregate, the firm’s management, directors, and advisors own about 25% of the company’s total outstanding shares. Institutional and private investors together account for about 20%, and the remaining 55% is owned by public shareholders.

The company has a market cap of CA$462.26 million with 213.02 million shares outstanding, and the firm’s shares trade in a 52-week range between CA$0.88 and CA$3.89.

Currently, Frontier Lithium is covered by Analyst Katie Lachapelle of Canaccord Genuity and newsletter writers Christ Temple and Clive Maund. Please click “See More Live Data” in the data box above to view more coverage. 

Frontier Lithium Inc.’s shares trade on the TSX Venture Exchange under the symbol “FL” and last closed for trading at CA$2.17/share on October 18, 2022. The company’s shares are also listed in the U.S. on the OTCQX under the symbol “LITOF” and under the designation “HL2” on the Frankfort Stock Exchange in Germany.

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