PMET’s lithium project is better than world-class Greenbushes, declares Brinsden

PMET Resources’ (ASX:PMT) boss Ken Brinsden had a “you heard it here first moment” on Tuesday night when making a presentation on the lithium stock to the Melbourne Mining Club’s Cutting Edge series at the Town Hall.

Actually, it wasn’t a first moment, as Brinsden actually made the same bold claim at the Resources Rising Star’s conference on the Gold Coast last week. So it can be said he wants the message to be heard.

He was talking about the group’s Tier 1 project with the Tier 1 name in Quebec – Shaakichiuwaanaan (formerly known as Corvette with the new name being an act of respect to the Cree Nation people on whose land the November 2021 discovery sits).

“In the end – I know it is a bold statement – the project is going to be proven to be better than Greenbushes,” Brinsden said.

That’s saying something because anyone will say that Greenbushes (owned by the Tianqi/Albemarle joint venture, with our own IGO owning an indirect 24.99% interest) is the best hard rock lithium mine in the world.

It was likely the only lithium project that was making money last year when spodumene concentrate prices sank as low as US$550/t. Prices have since recovered and got to a licence-to-print money level of US$3,000/t earlier this year.

The price has since come back to $US2,115/t level which is up by 36% in the year to date but down enough in recent times to see the stuffing knocked out of the lithium stocks.

The point here though is Brinsden wants the market in the $860m PMET (43.5c) to know that like Greenbushes, Shaakichiuwaanaan will be capable of thriving whatever the lithium price is (Brinsden’s personal call on the sidelines at the RSS conference was for US$2,500/t spodumene).

Brinsden knows more than most about the lithium market and the value of lithium projects, having built the Pilgangoora lithium mine in the Pilbara that now underpins the $13.7 billion PLS (formerly Pilbara Minerals).

He told the Cutting Edge gathering that there was not quite anything like Shaakichiuwaanaan globally from a geology perspective because the levels of fractionation during its formation is off the charts, giving rise to its potential to become three mines in one - lithium, caesium and tantalum.

There is a working three-in-one LCT mine in Manitoba (Tanco) but it does not have the scale of Shaakichiuwaanaan.

It is the by-product production of caesium and tantalum that would make a standalone Shaakichiuwaanaan lithium project (800,000tpa at a cost US$600/t) all that much more competitive with Greenbushes (A$380-A$440/t), maybe more so.

The overall resource grade at Shaakichiuwaanaan is 1.45% lithium, but 22 million tonnes of that is 2%.

“Today, that's better than Greenbushes (about 1.7%), and it's held up as the gold standard,” Brinsden said.

“And importantly, the grade of the tantalite, is also high (65% higher than Pilgangoora).

“In caesium, we are breaking the record books. There is no comparison.

“So far, we haven't closed it off.”

Brinsden said the caesium and tantalum should be considered as future co-products to the lithium rather than mere by-products.

Minerals 260:

Pierre Lassonde, the billionaire Canadian co-founder of the royalty power house Franco-Nevada, gave the mining world the Lassonde Curve.

It is a useful measure of the peaks and troughs in value that resource companies go through as they go from discovery through to first production.

It is kind of neat then that Minerals 260 (ASX:MI6) has been able to render the curve irrelevant as its pushes towards the development of its 6.2Moz Bullabulling gold project by pulling in $420m from Franco-Nevada ($390m from two royalty deals and $30m in straight equity).

In the normal course of events, MI6 would be sitting well and truly in the “orphan”’ part of the Lassonde Curve. It follows on from the discovery part of the curve when value creation is at its best.

The orphan phase is characterised by the value loss that can occur as the discovery is moved in to the feasibility study and financing stages which is pretty much where MI6 sits now with Bullabulling, 65km from Kalgoorlie.

But as suggested earlier, MI6 has managed to avoid the orphan phase by bringing in Franco-Nevada – Lassonde is now an emeritus co-chair of the C$70 billion firm he founded in in 1982 – as Bullabulling’s major backer.

MI6 managing director Luke McFadyen summed up Franco-Nevada’s investment by saying it “allows us to essentially skip the Lassonde Curve”.

“So we're not waiting for funding to advance; we actually have the funding already,” McFadyen told the Cutting Edge series.

“Royalties are relatively unique in Australia. They're not typically part of the funding stack that you see developers go down.

“It's really because of the assets. You need a long-life, high-margin, large-scale asset for royalty companies to make money.

“So what that means for us is our cost of capital is below the RBA rate. We are below 4% percent on our cost of capital.

“There's no other developer in this space that has this cost advantage.

“What that means is our valuation is much broader than what it would be if we were saying typical equity or typical debt.”

On the completion of the placements, a SPP, and the second leg of the Franco-Nevada royalty deals, MI6 will have about $633m of funding available (before transactions) costs.

That compares with the $855m capex requirement for Bullabulling’s development estimated in an earlier pre-feasibility study.

The PFS outlined a stepped production profile, starting off at 150,000/oz annually and growing to 200,000oz annually, with first production targeted for Q4 of CY2028.

Before then, the definitive feasibility study, with assumed projects enhancements, will land in the Q1 of CY2027, along with a final investment decision.

In all then, it has been a remarkable journey for the company, another one out of the Tim Goyder stable.

It was something McFadyen touched on at Cutting Edge.

He noted that 12 months ago the company’s market cap was $250m after its acquisition of Bullabulling and its then-2.3Moz resource.

“Twelve months later and the resource has grown by over 200% from the acquisition and the maiden reserve is now the largest reserve owned by a non-producer in Australia,” he said.

“We've completed a feasibility study. The DFS and construction of the village have commenced, and we entered the ASX200 a couple of months ago.’’