Nemaska Lithium’s (TSXV: NMX; US-OTC: NMKEF) Whabouchi deposit has always had the grade, but now it’s looking to marry nature’s gift with a patented extraction process that could offer a market advantage.
Whabouchi, which sits 300 km northwest of Chibougamau and 30 km east of the Nemaska community in Quebec, is North America’s richest deposit, with an average grade of 1.49% lithium oxide (Li2O). It is also the second-richest deposit in the world, taking a back seat only to Talison Lithium’s Greenbushes project in Western Australia.
While Talison’s eye-catching 2.8% average grade and high tonnage at Greenbushes made the company an early takeover target when the lithium space heated in teh last few years, Nemaska believes that its deposit combined with its unique processing to create a viable project.
That process still needs to be firmed up in a 1,000-hour test as part of a bankable feasibility study due out early next year, but the results so far look promising, with experts confirming that the process works.
The process would reduce costs and yield higher-purity lithium. And if that sounds too good to be true, investors can be reassured by the fact that the process itself is not all that complex.
Nemaska stumbled upon the process when it reasoned that lithium should behave like sodium in an electrolysis environment. The membrane-electrolysis technology that Nemaska is testing for lithium is already an established technology in producing sodium chloride.
The process starts with lithium sulphates and removes impurities in the solution down to trace levels. A high-purity lithium sulphate is left over that travels into a membrane-electrolysis cell stack. In the cell stack the lithium sulphate separates at the anode and the cathode, leaving a high-purity, lithium-hydroxide solution.
The solution can be crystallized into powder — making it cheaper to ship — or bubbled with carbon dioxide to produce lithium carbonate. Both the carbonate and the hydroxide are 99.99% pure.
Producing lithium hydroxide has the company particularly excited, because demand for lithium hydroxide could grow by 30% each year over the next seven years, according to SignumBOX, a Chilean-based market intelligence firm.
The expected surge in demand for lithium hydroxide has to do with new battery cathodes, such as lithium iron phosphate (LFP), which use lithium hydroxide over lithium carbonate because of its better power density, longer life and enhanced safety features.
These qualities help make lithium hydroxide a premium product, and the 99.99% purity that Nemaska plans to produce is battery grade.
Outside of the high purity and the hydroxide production, another advantage of the process over traditional methods is that it doesn’t need soda ash, which is typically added to a lithium sulphate solution to precipitate the lithium carbonate. The process calls for removing impurities through polishing stages, which takes time and money.
Nemaska is working on proving the economic viability of its process, but there is still some skepticism about hard-rock lithium mining, when compared to the traditionally lower-cost brine production that comes out of South America.
But with Greenbushes in produciotn for 25 years and Canada Lithium (TSX: CLQ; US-OTC: CLQMF) getting its Quebec Lithium hard-rock project into production, there has been a shift in production towards the hard-rock side.
In 2009 brines accounted for 56% of production outside of China, with hard rock making up just 21%. Three years later hard rock accounted for 35% of production outside of China, with brines dipping to 45%. The shift can be largely attributed to Talison, which has ramped up production over this time.
Talison was acquired by Tianqi Lithium, which is the largest battery material provider in China, and had been Talison’s largest customer.
Tianqi owns 16.5% of Nemaska, although the stake could be diluted, as Nemaska recently announced that it was issuing 20.8 million units (made up of a stock and a half warrant) to raise $2.5 million. It expects to close the deal soon.
Building the mine, however, would cost more than that. A preliminary economic assessment on Whabouchi estimated it would cost $454 million to build the mine, which Nemaska will look to raise in the debt and equity markets.
Being in a remote part of Quebec could also attract regional development-type financing by the Quebec government.
Nemaska holds its own against these two established hard-rock producers, at least in terms of tonnage and grade. Whabouchi has 19.6 million tonnes of measured and indicated resources grading 1.49% Li2O. The Quebec Lithium deposit has 17.1 million tonnes grading 0.94%, and Greenbushes has 61.5 million tonnes grading 2.8%.