Fate of an Australian lithium star hinges on one Canadian ridgeline

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Fate of an Australian lithium star hinges on one Canadian ridgeline

By Simon Johanson

Hot lithium prospect Patriot Battery Metals’ boss has overseen the miner’s meteoric ascent as the world pivots away from internal combustion engines to electric vehicles. But the last two years have also delivered their fair share of speed bumps to Patriot and its chief executive Blair Way just as the demand for battery materials has accelerated.

Originally from Canada and trained as an exploration geologist, Way came to Australia more than 30 years ago and decided to stick around, spending his early career in Queensland working in the construction mining industry for Korea Zinc, Clive Palmer’s Queensland Nickel and Oceana Gold.

Patriot Battery Metals chief executive Blair Way at the company’s Corvette lithium tenement.

Patriot Battery Metals chief executive Blair Way at the company’s Corvette lithium tenement.Credit:

“I started at the majors, worked my way to the mid-tiers and ended up at the juniors,” he says, chuckling at the reverse trajectory his career has taken. “It’s been quite a ride.”

Patriot’s existence as a dual Canadian and Australian listed company hinges on one 50-kilometre stretch of ridgeline called Corvette, a prominent spine of rock surrounded by shallow glacial lakes in the remote James Bay region of Northern Quebec in Canada.

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That single spur, the company reported in its maiden findings this week, contains the largest lithium pegmatite deposit in the Americas and the eighth largest globally – a valuable resource given that vehicle manufacturers across China, Europe and the US are scrambling to secure supplies of the mineral crucial to powering long-life batteries.

The boom in demand has upended the outlook for lithium and fuelled the prospects of mining explorers and entrepreneurs like Way.

Investors piled into the sector late in 2020 as electronic vehicle sales took off, setting up a wild ride that elevated prices to an all-time high in November last year around $130,191 a tonne, before they crashed 70 per cent to a low of $35,911 in April.

“Only two years ago we were struggling to finance Patriot at 16¢ a share,” Way says. In June 2021, the miner had a market capitalisation around $9 million. Now it’s worth about $1.4 billion.

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Patriot’s Canadian stock traded between 20¢ and 50¢ from 2020 until late 2022, before beginning to rise sharply, spiking as high as $C17 in March this year. It’s been a bit volatile since, but is still trading today at elevated prices around $C13.

“It’s a function of the property we’re delivering,” Way says of the company’s rapid rise.

Workers assembling lithium batteries at a factory in China’s Zhejiang province.

Workers assembling lithium batteries at a factory in China’s Zhejiang province.Credit: AP

It wasn’t always so. Initially, the company struggled to prove the resource’s size and value. “It was tough to raise the initial financing to get the funds to do the drilling,” Way says.

“We were able to finance our exploration in Canada through our Australian investors. Australians understand lithium better than Canadians. They just get hard rock mining,” he says.

Patriot’s rapid ascent has also attracted the attention of short sellers. The company was hit by a Night Market Research short report in July that prompted the ASX to issue a trading halt on its stock and ask the company for an explanation.

The short sellers claimed Patriot’s management “over-touted” the Corvette lithium deposit and delayed revealing details about the size of the resource multiple times.

Australia has the world’s greatest known reserves of lithium.

Australia has the world’s greatest known reserves of lithium.Credit: Bloomberg

“Resource speculation has flourished under Patriot’s opaque disclosures,” the report said, arguing its stock rally can in part be attributed to promotions by an opaque marketing outlet which other tier-1 explorers would avoid.

It also accused the company of generating “implausible” buyout rumours, including by Chris Ellison’s Mineral Resources and Pilbara Minerals.

“With the highly anticipated resource estimate approaching, we think Patriot is near a speculative peak,” the report said. “We think the stock is at risk of a painful correction.”

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At the time, Patriot hit back saying it was taking legal advice and dismissing Night’s report as misleading, although it acknowledged it had used agencies to help it with “market awareness” – as the short sellers claimed – a practice Patriot said was “not uncommon” among microcap stocks.

“We knew the shorters were putting positions on us,” Way says. “They take a punt and don’t always look at the underlying value. It sometimes works. In this case, it’s not working so well.”

Short sellers are not the only ones interested in the company. This week, the world’s largest lithium producer Albemarle Corporation paid $C109 million ($124 million) for a 5 per cent share of Patriot, a tie-up that Way describes as a “neat fit.”

“We’ve had many interested parties and are receptive to discussions,” Way says. “We’ve always had a desire to work the property ourselves, and we have the capital to do that.” The desire to retain control won’t be disrupted by Albemarle’s presence on the register, he maintains.

“We had approaches that wanted to make significantly more investment, up to 20 per cent, but that’s just short of a takeover.”

Albemarle’s interest is a symptom of lithium’s growing stature as Biden’s Inflation Reduction Act supercharges America’s clean energy economy, ramping up incentives for US companies to provide the critical minerals and production needed to secure America’s supply chain.

The Charlotte-headquartered Albemarle is strategically buying stakes in early-stage projects as it manoeuvres to lock in future supply for its lucrative lithium production business. The tie-up will lead both companies to explore the viability of a downstream lithium hydroxide plant in Canada or the United States, to process the mine’s output.

Alexander Thompson, Albemarle’s vice president of lithium resources, says the company wants a hands-on understanding of Corvette’s potential and the opportunities it presents for North America’s battery materials supply chain.

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The same early mover advantage saw Albemarle recently sink $US20 million ($30 million) into a subsidiary of Lithium Power International which has exploration tenements near one of the world’s best hard rock lithium mines, Greenbushes in Western Australia. The company already owns a half share of Greenbushes, which it uses to supply its Kemerton lithium hydroxide plant.

While lithium is a relatively plentiful substance, it is difficult to find deposits with the correct metallurgical and chemical composition that can be extracted efficiently.

“We have something that is very large. It’s getting to be on par with some of the big deposits you see in WA,” Way says.

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