Positioning to Capitalize on Surging Demand for EV Battery Metals

Grid Metals is a Canadian exploration and development company focused on lithium and nickel projects in Manitoba, positioning itself to supply key battery metals needed for the electric vehicle revolution. With over $10 million in cash, an experienced management team, and promising drill results at its lithium project, Grid Metals offers investors exposure to potential near-term lithium production and longer-term nickel development.

Donner Lake Lithium Project Advancing Towards Maiden Resource Estimate in 2023

Grid Metal's Donner Lake lithium project, located near the Tanco lithium mine, hosts high-grade lithium-bearing pegmatite dikes that the company believes can be economically mined. Grid has the option to acquire a 75% interest in the project and has been actively exploring and drilling over the past two years.

In 2022, Grid drilled two main pegmatite dikes called the Northwest Dike and the Main Dike, tracing mineralization along 600m and 800m strike lengths respectively. The company is aiming to produce a maiden resource estimate for Donner Lake by Q2 2023 based on about 5,000m of additional drilling focused on the Main Dike.

The drill results so far show consistent high-grade lithium intercepts, generally ranging from 1.5-1.8% Li2O over true widths of 3-4m. The mineralization starts from the surface and has been drilled to about 300m depths so far. The consistent visual spodumene crystals and assay results gives Grid confidence for continued step-out drilling at 70-90m spacings.

Fast Track to Production with Toll Milling Agreement

A key advantage for Grid is an existing toll milling supply agreement with the nearby Tanco lithium mine, Canada's only producing lithium operation. This provides Grid with a clear path to fast track Donlin Lake into production without having to finance and build its own processing plant.

The agreement provides for Grid to supply between 200,000 to 500,000 tonnes per year of lithium ore to Tanco's plant. To put this in perspective, Grid management believes a 5 to 7 million tonne resource grading over 1% Li2O would be sufficient to support a 10+ year mine life for toll milling.

With lithium prices around US$70,000/tonne in 2022, the high-grade Donner Lake project could potentially generate huge cash flow over a relatively short period. The toll milling option gives Grid flexibility to get into production in the next 2-3 years to capitalize on strong forecast lithium demand. This compares favorably to many lithium projects targeting production in the 2026-2028 timeframe.

Positioning to Supply Key Battery Materials Needed for the EV Revolution

The lithium-ion battery is the dominant technology powering the fast-growing electric vehicle market. Lithium, nickel, cobalt and graphite are critical raw materials needed to manufacture these high-performance batteries. Major global automakers like GM, Volkswagen and Mercedes are committing billions in capital to transition their fleets to EVs, targeting up to 50% EV sales penetration by 2030.

This massive disruption in the auto industry is creating unprecedented demand for secure and sustainable sources of battery metals. Grid Metals is positioning itself to be part of the solution, exploring for lithium and nickel resources that can be developed into mines feeding regional battery supply chains in North America.

In addition to lithium, Grid Metals sees strong long-term market fundamentals for nickel. Management believes nickel will be the top-performing battery metal over the next decade based on projected supply deficits as EV adoption accelerates. Grid's Makwa-Mayville nickel-copper-PGM project hosts a past-producing mine and shows potential to outline a significant new resource to advance towards production.

Proven and Experienced Management Team

Grid Metals is led by President and CEO Robin Dunbar, a geologist involved with the company since 1997. His over 25 years of experience in mineral exploration and development provides valuable continuity for Grid's projects in Manitoba.

Dunbar is supported by VP Exploration Dave Peck, a geologist with 25 years of experience including senior roles at major mining companies like Vale and Glencore. The technical team has collectively discovered major deposits around the world, providing the expertise needed to explore and develop Donner Lake and Makwa-Mayville.

Backed by Strong Financial Partners

In 2022, Grid completed a C$12 million financing with new institutional investors demonstrating confidence in the company's projects. This included lithium industry player Livent Corporation and Australian engineering firm Primero Group, specialists in lithium processing. The company is well-funded with approximately C$10 million in cash to advance its key lithium and nickel projects.

Grid Metals offers investors potential near-term cash flow from lithium production coupled with longer-term nickel resource growth. As the electric vehicle revolution accelerates, Grid is positioned to feed the battery metals supply chain from politically stable Canada. With progress on both the lithium and nickel fronts, Grid Metals is primed for a breakout year in 2023.

Is there an investment case?

Lithium Prices Remain Strong

As of February 2023, lithium prices are still around $70,000 per tonne, not far off the 2022 highs. This means the economics for Grid's Donlin Lake project are still highly favorable for potential near-term production. Many analysts see lithium demand outpacing supply over the next 5 years even with the raft of new projects coming online. Grid is well-positioned to take advantage of strong pricing.

Advancing Rapidly vs Peers

Compared to many lithium development peers that are 2-3 years away from initial production, Grid could have a maiden resource by mid-2023 and be in a position to commence commercial production through its toll milling agreement over a relatively short 1-2 year timeframe. This ability to generate cash flow quickly reduces Grid's financing needs.

Potential Low-Cost Producer

The high grades at Donner Lake combined with the low operating and capital costs of toll milling should allow Grid to be in the lowest quartile of the lithium cost curve. This will maximize margins and free cash flow in an elevated price environment. Many lithium projects are lower-grade hard rock or lithium clays/brines with higher operational risks.

Undervalued Based on Peers

Grid is currently valued at around a $30 million market capitalization. Lithium explorers and developers at a similar stage to Grid typically trade closer to a $100-200 million valuation. There is substantial upside for a rerating as Grid continues to de-risk Donner Lake and achieve milestones towards production.

Nickel Price Outlook Strong

In addition to near-term lithium production potential, Grid's nickel resources provide leverage to robust nickel demand and favorable long-term pricing fundamentals. This provides investors with a two-pronged exposure to key EV metals.

In summary, Grid offers investors quality lithium and nickel assets, near-term catalysts, seasoned management, and significant valuation upside as it progresses towards production. The company appears poised to create substantial shareholder value both in the current lithium bull market and over the long-term driven by EV metal demand.

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