About Grid Metals Corp.
Grid Metals Corp. (TSXV: GRDM OTCQB: MSMGF) is exploring for, and developing lithium projects in Manitoba Canada. The Donner Lake Lithium Property has the potential for near-term production through toll milling at Canada’s only producing lithium mine (the Tanco Mine) located nearby.
Resource drilling, metallurgy and permitting are underway. The Company also has a PEA stage Ni-Cu-PGM property located in the same area as Donner Lake.
Manitoba Canada is an attractive jurisdiction for resource development with excellent infrastructure, hydroelectric power and a mining-focused economy. Southeastern Manitoba is becoming a hub for the development of critical metals.
Summary
Grid Metals has two lithium properties in southeast Manitoba. Donner Lake Lithium is a 75%/25% joint venture with Lithium Royalty Corporation. The Company also has the 100% owned Falcon West Property in SE Manitoba which has numerous lithium showings.
Grid’s management and exploration team are experienced. The Company raised funding in 2022 and has a strong treasury. With rapidly developing projects in lithium and nickel, the Company is positioning itself for the unfolding battery metals super-cycle.
The Company is drilling resources at two high-grade dykes where the dominant lithium mineral is spodumene. The Company expects to have a maiden resource completed in mid-year 2023. They have also signed an MOU for ore testing, bulk sampling and toll milling with the nearby Tanco Mine which is currently Canada’s only lithium producer.
The toll milling arrangement with Tanco could enable a faster timeline to mining and cash flow for the Company which will enable them to benefit from an elevated lithium price. The Company will apply for an Advanced Exploration Permit in Q1 2023 which would enable a bulk sample to be processed at the Tanco Mine.
The Falcon West Property is at an earlier stage. There are several lithium-bearing pegmatites in a ~1 km area where historical drilling has occurred. These pegmatites are located at a major geological contact and Grid has acquired the mineral rights. Falcon West, also with good infrastructure and road access.
Their Makwa Mayville Ni-Cu-PGM-Co Project is located in the same locale as the Donner Lake Lithium Property. Makwa Mayville has over 40 million tonnes of open pit resources and a PEA was completed for the project in 2014. The Company expects to announce an updated mineral resource for Makwa Mayville in the first half of 2023 and will also be conducting more drilling. The goal is to expand the known resources to where it contains over 200,000 tonnes of nickel and other metals.
Their projects in Manitoba may be able to take advantage of the demand from EV and battery manufacturers created by the USA’s Inflation Reduction Act which was passed in 2022. EV automakers that purchase a certain amount of the critical metals used in the manufacturing of EV's qualify for consumer buyer incentive from the US Federal Government. Critical metals from Canada qualify as domestic for purposes of the IRA.
Grid is positioned to embrace ESG credentials for its properties. The Company is focused on maintaining a working relationship with first nations groups in Manitoba and Grid will seek to leverage the advantage that Manitoba provides with its abundant sources of green hydroelectric power.
Thesis
Grid Metals has a number of catalysts that will occur in 2023. Most notably Grid is a discovery stage company with growing resources and has a realistic view of what constitutes an economic mineral deposit.
At Donner Lake Lithium, a steady stream of exploration results will be released in the first half of 2023. This will be concurrent with metallurgical testwork and permitting progress for the bulk sample. An initial resource estimate will then be calculated based on the drilling to date.
The Company will also be announcing progress towards the bulk sample and toll milling arrangement with the Tanco Mine.
On the base metal side, there will be significant developments including a new mineral resource calculation and additional drilling during the year. Grid is focused on growing its Makwa Mayville resources which may attract a strategic partner to assist in the funding and development of the project.
Sector Dynamics
There is increasing international focus on the effects of climate change and the relationship to carbon emissions. A major portion of carbon emissions comes from the transportation sector and the shift to the adoption of electric vehicles in response to lowering vehicle emissions.
China, the E.U. and the U.S. are now leaders in the adoption of EV's. Lithium and nickel are two of the most important metals used in EV batteries. The demand for lithium, nickel cobalt and copper amongst other metals are forecast to grow significantly over the coming decade due to the adoption rate of EV's globally.
Demand for critical metals from North America is expected to rise due to the recently enacted Inflation Reduction Act in the U.S. that stipulated that EV manufacturers could be eligible for consumer price credit for purchasing EV's if a sufficient amount of the critical metals are sourced in the U.S. or nations with favourable trading status.
Significant new amounts of critical metals will be required in the next 5-7 years. While there is considerable supply response coming, the case for elevated critical metals prices is strong due largely to environmental and delays in permitting of new projects.
Risks
Like all business ventures, there are inherent risks that may affect the future viability of Grids’ business. Some of the main risks are:
Exploration and Commodity Risk: Projects depend on the exploration results to deliver sufficient tonnes and grade to deliver resources that have economic potential. Concurrently commodity prices may not be sufficient to justify the development of any particular project.
Permitting Risk: Grid's projects are located in Canada. There are a variety of factors that may hinder, delay or prevent the permitting, construction or operation of a particular project. These include environmental factors, species at risk or objections from First Nations or other community groups.
Technical Risk: Exploration and development of mining projects is a highly technical undertaking. The Company may not be able to access sufficient technical expertise to adequately advance its projects.
Capital and Market risk: The markets for commodities and equities will fluctuate. Downturns in lithium and nickel prices may affect the Company’s ability to access sufficient capital to advance its projects.
