Critical Elements Lithium in “Wait and See” Mode Ahead of Key Permit

• Critical Elements Lithium Corporation aims to develop the Rose lithium-tantalum mine and concentrator in Quebec's James Bay region.
• The project offers high purity, strong metallurgy, favorable economics, and easy access to roads and power lines.
• The company has received federal government approval in Canada for permitting.
• Recent financing attempts met market resistance despite being at a premium, leading to a drop in share price.
• The company is focused on strategic initiatives and aims to secure additional financing for engineering design, mill construction, and infrastructure development. Permit timing and ongoing discussions with potential strategic partners are key aspects of the company's progress.

About Critical Elements Lithium Corporation

Critical Elements Lithium Corporation (TSXV: CRE) is a mining company focused on developing its 100% owned Rose Lithium-Tantalum project in Quebec, Canada. The Rose project is expected to produce battery-grade lithium carbonate and tantalum concentrates over a mine life of 17 years. Critical Elements Lithium believes the Rose project has robust economics, high purity lithium, excellent metallurgy, and immediate proximity to key infrastructure.

Interview with Chairman Eric Zaunscherb

The Permitting Process

Critical Elements Lithium is currently awaiting a key mining permit from the Quebec provincial government to advance the Rose project. The company completed the federal permitting process in 2017 and received approval from the Canadian Environmental Assessment Agency. However, the provincial permitting process through Quebec's Ministry of the Environment has taken longer than expected.

According to CEO Jean-Sebastien Lavallée, the provincial permitting process involves multiple rounds of questions and answers between the company and regulators. So far, Critical Elements has gone through five rounds of responses and is still waiting for approval.

While the uncertain timing has caused frustration, Lavallée stressed that delays are not uncommon for mining projects in Quebec. The provincial permitting process simply does not have legislated timelines like the federal process. Lavallée remains confident the permit will be approved after another “day, week or month” of waiting.

In the meantime, the company has been having private strategic discussions with potential partners and off-takers. These conversations have continued despite the lack of news releases and definitive agreements. The company is limited in what it can disclose at this stage.

Latest Financing and Capital Needs

With the permitting process dragging on, Critical Elements recently completed a $30 million bought deal financing to fund critical path engineering work and maintain operations. Lavallée admitted the financing terms were not ideal, but necessary given the company’s position.

The funds raised will go towards detailed engineering and design work ($16 million), developing project infrastructure ($6 million), hiring an owner’s team ($1.5 million), and general working capital. Lavallée believes advancing engineering and design work could help boost the company’s valuation, which he says trades at a discount to peers based on NAV multiples.

The total capital cost estimate for the Rose project’s Phase 1 is approximately $341 million. Phase 2 would require roughly $402 million. The company aims to fund a large portion of this through strategic partnerships and off-take agreements. Discussions are ongoing, but Lavallée could not provide details.

Key Takeaways for Investors

• Permit approval will be a major catalyst – Keep close watch on any announcements related to Critical Elements receiving the provincial mining permit. This will kickstart more strategic discussions and could drive significant value creation.
• Financing risks remain – The latest bought deal was done at a discount and caused the share price to drop. Until an offtake deal or strategic partner is secured, financing risk persists.
• Rose project economics still compelling – Despite inflation and other risks, the Rose project still boasts solid economics and attractive estimated returns according to the 2017 feasibility study. Detailed engineering could further optimize the project.
• Lithium demand outlook remains strong – Major automakers and governments are committing to electric vehicle production and sales targets that will require substantial lithium supply growth in the years ahead. Critical Elements is well positioned to benefit.

Conclusion

With permitting progress imminent and lithium demand soaring, now may be the time for investors to do further due diligence on Critical Elements Lithium. The Rose project holds district-scale potential and first production could begin by 2025 if timelines hold. While risks remain, the company trades at favorable valuation multiples relative to peers. Patient investors could be rewarded for taking an early position ahead of further project milestones.