Li-FT Power's Yellowknife Lithium Project - Fuelling the Future of Electric Vehicles

• Lithium explorer Li-FT Power believes it has identified a major lithium deposit near Yellowknife, Northwest Territories, Canada, called the Yellowknife Lithium Project (YLP), that could be comparable in value to the Diavik diamond mine
• CEO Francis MacDonald is pushing for an aggressive timeline to develop the YLP by 2030, citing the pressing need to replace economic benefits as NWT diamond mines close
• The proposed YLP would be close to Yellowknife and existing infrastructure, but this proximity could also pose community relations and environmental challenges
• The NWT government appears receptive to expediting the YLP given the "perfect storm" of factors, but regulatory approval in the targeted 2-year timeline would be unprecedented

The Growing Opportunity in Lithium Mining

The rise of electric vehicles (EVs) is driving an unprecedented boom in demand for lithium, a critical component in the lithium-ion batteries that power EVs. Global EV sales more than doubled in 2021 to 6.6 million units, and analysts project the market could reach 66 million units annually by 2040. This growth is fueling a lithium supply crunch that has sent prices soaring over 400% in the past year. While concerning for EV makers, it presents a compelling opportunity for lithium miners and investors positioned to capitalize on this demand.

The Lithium Supply Challenge

Today, lithium is primarily produced via hard rock mining of mineral deposits like spodumene or through the extraction of lithium brines. However, existing production capacity is failing to keep pace with projected demand. The International Energy Agency warns that, based on current trends, lithium supply will need to increase 40-fold by 2040 to meet clean energy targets.

New projects face daunting challenges in terms of lead times, costs, and environmental opposition that threaten to constrain supply growth. Industry data shows new lithium mines take 15-17 years on average to progress from discovery to production. Overcoming these hurdles will be critical to enable the EV revolution.

An Emerging Lithium District in Canada's North

Against this backdrop, a promising new lithium district is emerging in Canada's Northwest Territories (NWT) that could help ease the supply bottleneck. Li-FT Power has identified 13 potential lithium deposits on its properties east of Yellowknife, with early drilling confirming some of the highest lithium grades in the world. The Company's flagship project, the Yellowknife Lithium Project (YLP), is generating excitement.

As Li-FT Power CEO Francis MacDonald explained in a recent presentation, "It looks like the potential is there...at least another Diavik," referring to the region's largest diamond mine. "We're looking at least 20 years of mine life...based on the conceptual amount of lithium we think is here."

The company is targeting a highly compressed timeline to production, envisioning the YLP in operation by 2030. While acknowledging the process is still in its early stages, MacDonald pointed to unique advantages that could enable an accelerated development timeline relative to other projects.

The Key Advantages

The first is location. The YLP properties are in close proximity to Yellowknife and key infrastructure like the Ingraham Trail highway, a critical factor for the transport-intensive lithium industry. "For lithium, it's really essential to have existing infrastructure, just because the physical product that we ship out of the area, there's just so much of it," noted MacDonald. "These lithium deposits would just not work if they were out in the middle of nowhere with no road."

The second is strong government and community support, a crucial consideration for mining projects in Canada's north. The NWT government is facing a looming economic crisis with the impending closure of its diamond mines and appears highly motivated to fast-track new mining projects.A

s MacDonald states, "There's a recognition that in the Northwest Territories, there does need to be more mining...It's a kind of perfect storm of factors that are all coming together around the year 2030 from a whole bunch of different perspectives - the global lithium market, the Northwest Territories, but also from a project timeline perspective. It's all kind of falling around that year 2030."

Potential Risks & Challenges

The YLP is not without risks, however. The 2-year targeted timeline for permitting would be unprecedented in Canada's north, where even expedited assessments have taken 5 years. Regulatory delays are a constant threat.

The proximity to Yellowknife also cuts both ways - while enabling infrastructure access, it also elevates the risk of community opposition. "A lot of times, mines are out in far-flung places that no one actually sees," MacDonald acknowledged. "There's more of a human impact when you're close to a city like this." Extensive consultation and environmental study will be required.

The other key risk is the rapid advancement of new lithium extraction technologies that could undermine the economics of conventional hard rock mining over the longer-term. MacDonald specifically pointed to initiatives by Exxon Mobil and other oil majors to extract lithium from oilfield brines."If you have a company like Exxon that's committing $10 billion to figuring out how to do this, that does pose a technological risk for hard rock lithium," he noted. "We can't afford to wait 15-17 years to get this done."

The Investment Thesis for Li-FT Power

• High-grade lithium resource with multi-decade potential. Early results suggest a lithium deposit that could support a mine life of at least 20 years with a resource value comparable to the Diavik diamond mine.
• Uniquely advantaged project location. Close proximity to Yellowknife and key infrastructure like highways is a major advantage in terms of development timelines and costs.
• Favorable government and community backdrop. The NWT government is highly motivated to support new mining projects to offset the impending economic impact of diamond mine closures in the region.
• Potential 2025 catalyst. Completion of environmental assessment and permitting by 2025 would be a major de-risking catalyst for the stock and signal the YLP is on track for the targeted 2030 production start.
• Attractive valuation with further re-rate potential. Li-FT Power trades at a discount to producer comparables, reflecting its earlier-stage development, but the valuation gap could narrow as the company continues to derisk the YLP.

Conclusion

The opportunity in lithium is being driven by powerful long-term demand trends that are still in their early innings. While not without risks, Li-FT Power's Yellowknife Lithium Project boasts compelling advantages in its high-grade resource, ideal location, and alignment with government priorities.

For investors with a long-term outlook, the company offers significant upside potential as it works to prove out the scale of its deposit and advance development. Positive drill results or clarity on permitting timelines could serve as near-term catalysts for the stock. While a speculative investment, Li-FT Power is well-positioned for the coming lithium boom.

Lithium Macro Thematic

The NWT lithium opportunity sits at the confluence of several powerful macro trends that are transforming the global economy and reshaping the investment landscape.

The first is the accelerating shift from fossil fuels to clean energy, exemplified by the exponential growth of the EV market. Governments across the world have set aggressive targets for phasing out internal combustion engine vehicles, ensuring demand for lithium-ion batteries will remain robust for decades to come.

The second is the increased focus on security of supply for critical minerals and battery metals. The pandemic and war in Ukraine have exposed the vulnerabilities of far-flung supply chains, prompting Western governments to prioritize the development of domestic mining industries. Canada's abundant mineral resources make it a favored jurisdiction for investment.

The third is the revolution in mining technology that is unlocking previously uneconomic deposits and enabling the more sustainable extraction of critical commodities. Advances in exploration, ore processing, and environmental remediation are ushering in a new era for the mining industry.

As Li-FT Power CEO Francis MacDonald captured the opportunity: "It's a kind of perfect storm of factors that are all coming together around that year 2030 from a whole bunch of different perspectives - the global lithium market, the Northwest Territories, but also from a project timeline perspective."