Grid Metals Looks to Beat Peers to Production with 2025 Target at Manitoba Lithium Project

• Grid Metals has an advanced-stage lithium project in Manitoba with a resource of 7 million tons at 1.39% lithium.
• The project benefits from proximity to existing infrastructure like mills and concentrate producers, reducing capex.
• The goal is to have a Preliminary Economic Assessment by Q1 2024 and be in production by 2025 due to fast permitting in Manitoba.
• There is potential to expand resources at depth and explore additional targets nearby.
• Government funding and strategic partnerships could help finance the low capex to production without significant dilution.

About Grid Metals

Grid Metals is a mining company focused on exploring and developing lithium and other critical mineral projects in Manitoba, Canada. Their main asset is the Donner Lake Lithium Project, located in the Bird River greenstone belt approximately 150 km northeast of Winnipeg. Grid has a 75% interest in the Donner Lake project and operates it under a joint venture agreement with a fund controlled by Waratah Capital Advisors.

The company has arranged access to process feed from Donner Lake at the True North mill where they hold a lease agreement. Grid also has a memorandum of understanding with Tantalum Mining Corporation of Canada Limited, operator of the nearby producing Tanco lithium mine, one of only two lithium producers currently active in Canada.

In addition to Donner Lake, Grid owns 100% of the Falcon West Lithium Project and the PEA-stage Makwa-Mayville nickel-copper-PGM-cobalt project. The company's southeastern Manitoba properties are situated on the traditional territory of the Sagkeeng First Nation. Overall, Grid Metals is focused on exploring and developing critical mineral projects to supply the growing electric vehicle and clean energy markets.

Interview with Chief Development Officer, Brandon Smith

Lithium Developer Leverages Infrastructure to Fast-track Production

Grid Metals Corp is advancing its Donner Lake lithium project towards production in Manitoba by 2025. The company aims to capitalize on rising lithium demand from the electric vehicle and battery storage industries by leveraging existing regional infrastructure to minimize capital costs.

The Donner Lake project already hosts a significant lithium resource close to processing capacity, setting it apart from early-stage lithium explorers. By refurbishing an existing mill, Grid avoids the $300 million-plus price tag associated with building a new lithium processing plant. The projected $50 million capex, including a 30% contingency buffer, dramatically improves the economics.

“From an equity dilution perspective versus $200-$300 million, it makes a big difference where you're going to finance that in Canada as well,” said Brandon Smith, Grid Metal's Chief Development Officer.

Leveraging Established Regional Infrastructure

A key differentiator for Grid is the ability to process Donner Lake material at the True North complex, an existing gold mill just 85km from the project. Refurbishing the gold circuit for lithium flotation concentrates will cost significantly less than constructing a new dedicated facility.

“The bones are there, and it's a unique opportunity for us,” Smith explained.

Grid Metals has also signed an MOU with nearby Tantalum Mining Corporation of Canada (Tanco), one of only two operating lithium mines in Canada, to assess processing Donner Lake material. However, Smith indicated the profit share economics are currently more favorable with the True North option.

Permitting Key to Fast Production Timeline

Another critical advantage is Manitoba’s expedited permitting process that allowed a predecessor mine to go from discovery to mining permits in under three years – far quicker than other jurisdictions.

Grid Metals is aiming to submit its mining permit application in mid-2024. Approval is expected by early 2025, dovetailing with the completion of feasibility-level engineering studies. This could allow Donner Lake to be in production by 2025 to seize opportunities from rising lithium demand.

“If you are in production then you can capitalize on...extremely good economics for however short they are,” Smith said. “You can run the numbers - adding a couple thousand dollars per ton to the spodumene price which is where it was six months ago...and do that on 75,000 tonnes and it's a big number.”

Significant Resource to Support Production

Donner Lake already hosts a 7 million ton resource grading 1.39% lithium, offering scale to support a modest 75,000 ton per year mine output. The deposit also shows positive signs of expanding at depth.

“The main dyke is getting thicker and better grade at depth. We hope to put a few holes deep this winter just to prove this thing keeps going. It's not going to have an 8-year mine life; it's going to be 10-12 years plus,” Smith commented.

Grid also sees resource upside regionally, with drilling planned to test targets at the early-stage Falcon Lake lithium prospect which hosts a historic deposit.

Funding Production Without Dilution

Between federal investment tax credits, strategic innovation grants and provincial infrastructure programs, Grid estimates 30-40% of the Donner Lake capex could come from government funding. Securing an off-take agreement or strategic partner to pre-pay production in exchange for supply could cover additional costs. This would minimize equity dilution from external capital raises.

“You could do this and not raise a massive amount of shares to get into production,” Smith said.

With permitting underway, Grid plans to spend this winter infill drilling at Donner Lake to upgrade resources to the indicated status required for feasibility studies. Concurrently, initial regional exploration is slated to gauge resource expansion potential. Results will feed into a Preliminary Economic Assessment targeted for completion in Q1 2024. This will provide markets with a first look at the economics of leveraging existing infrastructure. The study will pave the way for a full Feasibility Study by early 2025 to finalize production plans and financing ahead of the targeted first material output in 2025. Upcoming permitting and economic studies represent potential share price catalysts.

“Wrapping economics around what we have is important because no one else is doing a reconfiguration. No one else is using a Brownfield site,” Smith concluded. Demonstrating robust returns from a modest capex could prove Grid’s infrastructure-leveraged advantages as it races towards production.

Investment Thesis for Grid Metals

• Fastest projected lithium production timeline in Canada due to Manitoba's streamlined permitting
• Leverages existing regional infrastructure saving $250M+ in capex vs. stand-alone project
• Attractive base case economics further optimized by expected rising lithium prices
• Initial 75,000 tpa production scalable over 10-12 year mine life as resources expand
• Potential for additional regional deposits offer resource growth upside
• Project financing achievable with government & strategic partner funding
• Share price torque from near-term permitting, economic studies and exploration newsflow

With an advanced lithium project and a clear path to production in Manitoba by 2025, Grid Metals offers a unique take on capitalizing on rising battery materials demand. The stock could appeal to investors seeking resurgent lithium exposure but with skepticism about unproven early-stage exploration projects. By addressing infrastructure and permitting risks upfront, Grid aims to deliver attractive returns as electric vehicle adoption accelerates lithium consumption over the coming decade.