Lomiko Metals (TSXV: LMR; US-OTC: LMRMF) has ambitions to become a billion-dollar company, says Gordana Slepcev, the company’s chief operating officer.
The Canadian junior is exploring for graphite and lithium — critical materials needed for the global transition to a greener energy future. Both graphite and lithium are used in the lithium-ion batteries in electric vehicles (EVs) and are essential to North America’s expanding EV market and green energy sector.
Lomiko’s current focus is on its 100%-owned flagship La Loutre graphite project in southeastern Quebec, about 180 km northwest of Montreal.
The project “has the potential to provide low-cost, high-quality natural graphite needed to make spherical graphite for the anodes of lithium-ion batteries,” Slepcev said.
“La Loutre is close to major industries along the east coast of North America and is less than 200 km from the port of Montreal, perfectly positioning it to supply graphite for EV supply chains in North America and Europe.”
According to forecasts by Benchmark Mineral Intelligence, demand for graphite from the battery sector is expected to rise 30% annually over the next decade. However, the market analyst said it expects a global graphite deficit starting in 2022 that would grow to 8 million tonnes by 2040.
The 28.7-sq.-kmLa Loutreproperty lies in the middle of several other graphite projects in a mineralized area called the Grenville Trend. These include the Lac-des-Iles mine and mill, the only graphite mine currently operating in North America, about 50 km northwest of La Loutre, that was acquired by Northern Graphite (TSXV: NGC; US-OTC: NGPHF) from Imerys Group in December; and the Matawinie graphite project, owned by Nouveau Monde Graphite (TSXV: NOU; US-OTC: NMGRF), approximately 100 km to the northeast.
Slepcev says that La Loutre benefits significantly from existing infrastructure and great geology. “It is easily accessed via highways, is powered by inexpensive, low-carbon hydroelectricity, and we believe we can develop a modern, environmentally responsible critical minerals operation in the region.”
Graphite at the project occurs at two mineralized zones: the Electric Vehicle zone and the Battery zone, approximately 400 metres to the south of Electric Vehicle. To date, Lomiko has drilled 49 holes (6,942 metres) on Electric Vehicle and 62 holes (8,218 metres) on Battery.
A preliminary economic assessment for La Loutre in August envisioned an open-pit mine producing 97,400 tonnes of graphite concentrate over a 15-year mine life for a total life-of-mine production of 1.4 million tonnes of graphite concentrate. All-in sustaining costs are expected to average $406 per tonne of graphite concentrate over the mine's life.
Initial capital costs were pegged at $187.1 million, with $29.8 million budgeted for sustaining capital over the mine life. The study estimated the after-tax net present value to be $147.1 million, based on an 8% discount rate and $916 per tonne of graphite concentrate, with an after-tax internal rate of return of 21.5%, and a payback period of just over four years.
The early-stage study was based on 23.2 million indicated tonnes grading 4.51% graphite for 1 million tonnes contained graphite and inferred resources of 46.8 million tonnes grading 4.01% graphite for 1.9 million tonnes graphite. The mineral resource estimate used a cut-off grade of 1.5% graphite.
The study “positions La Loutre as a potentially very profitable mine, particularly given the expected rises in graphite prices,” said Slepcev. “The operation will also be an environmentally responsible mine that will dry the tailings and co-dispose of them with the waste rock instead of using a traditional tailings storage facility.”
Further drilling on the project, she added, “will increase the quality of the mineral endowment and upgrade the resources to the measured and indicated category. We are now carrying out permitting for a planned exploration program and expect to release an updated resource estimate in the fall of this year.”
Lomiko plans to conduct 18,700 metres of drilling comprising 114 infill holes (16,700 metres) and 13 extension holes (2,000 metres) along strike to confirm the shape and extent of the orebody. The drilling is expected to start in the first half of this year.
“Following the drilling and resource upgrade, we will start a prefeasibility study on the project that we expect to complete by the second quarter of 2023 and will include plans for a carbon-neutral mine,” Slepcev said.
The company, she continued, currently has about $3 million in the treasury and recently raised $2.85 million in private placements “so is well-funded to complete our planned work program for this year.”
Lomiko’s other asset is the 102.5-sq.-km Bourier lithium property in the James Bay region of Quebec, about 450 km northeast of Val-d’Or.
Under an earn-in agreement with Critical Elements Lithium (TSXV: CRE; US-OTC: CRECF) signed in April 2021, Lomiko has the right to earn an initial 49% interest in Bourier by paying $39,600 in cash, issuing 5 million common shares of Lomiko to Critical Elements Lithium, and spending $1 million on exploration, of which $435,900 was to be incurred or funded by Dec. 31, 2021.
In January, an amendment to the agreement allowed Lomiko to carry forward and add a shortfall of $199,500 to exploration expenditure in 2022 in addition to the $594,400 that the company is required to incur or fund by Dec. 31, 2022.
Once completed, Lomiko will then have the option to increase its interest in Bourier from 49% to 70% by paying an additional $198,100 in cash, issuing a further 2.5 million common shares, and spending $1.59 million on exploration.
Critical Elements Lithium will retain a 2% net smelter return (NSR) royalty on Bourier, of which Lomiko can purchase 1% for $1.59 million. Critical Elements will remain as project operator while Lomiko completes its earn-in.
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