Q2 maps 28-year lithium operation at Cisco

Q2 Metals (TSXV: QTWO; US-OTC: QUEXF) estimates that developing its Cisco lithium project in Quebec would require $2.93 billion (US$2.11 billion) in initial capital, according to its first preliminary economic assessment (PEA).

The proposed open pit would produce 1.7 million tonnes of spodumene concentrate annually over 28 years, the company reported Tuesday. Cisco is about 600 km north of Ottawa, in Quebec’s Eeyou Istchee James Bay region.

“We are focused on advancing Cisco toward becoming a prominent new source of lithium to meet anticipated future demand around the world,” CEO Alicia Milne said in a release. “Delivery of this PEA marks a major milestone and turning point as we transition from pure exploration to establishing Cisco as a key component of Canada’s broader critical minerals strategy and a major contributor to the local and regional economies.”

The assessment gives Q2 a starting point for weighing construction financing against the deposit’s potential. Its next challenge will be to establish enough geological confidence and engineering detail to support a development decision.

Shares of the company rose 5.6% to $1.70 in Toronto on Tuesday afternoon, valuing the company at about $411 million. They’ve traded between $1.07 and $3.43 over the past year.

Early economics

The PEA estimates after-tax net present value of $13.5 billion at an 8% discount rate and a 39% internal rate of return. It assumes US$1,647 per tonne for concentrate grading 5.5% lithium oxide, before shipping from Quebec.

All-in sustaining costs are estimated at $454 per tonne of concentrate before royalties, on a Quebec port basis.

The May 26 estimate contains 297.4 million inferred tonnes grading 1.36% lithium oxide, containing 4.06 million tonnes of lithium oxide. The assessment relies entirely on inferred resources, which are too uncertain to be classified as mineral reserves.

Q2 had $70.9 million in cash at Aug. 31, up from $16.6 million at February’s end, according to its latest financial filing. It completed a $70-million bought-deal financing in May.

The cash gives Q2 room to fund exploration and study work. The company has no producing assets or operating revenue and acknowledged in the filing that developing mining and processing facilities would require substantial additional funding.

Drilling continues

Q2 extended mineralization 100 metres north in results reported Oct. 7. Hole CS26-096 returned 134.5 metres grading 1.2% lithium oxide from surface. The interval is a drilled length; true width hasn’t been determined.

The company’s work program has combined drilling between existing holes to improve resource confidence with tests beyond the known deposit. Environmental baseline studies and further processing tests are part of that development work.

The deposit is 6.5 km from the paved Billy Diamond Highway, which connects south to Matagami’s rail infrastructure and onward to ports. That access offers a route to customers, although a mine would still need its own infrastructure and approvals.