Resources Top 4: Ken Brinsden's Patriot recharges batteries with Volkswagen lithium deal

Patriot Battery Metals follows Canadian shares up on landmark Volkswagen lithium supply deal
Cosmos Exploration eyes early mover status in Bolivian lithium
Anax, Trek among no news gains

Your standout small cap resources stocks for Thurday, December 19, 2024.

PATRIOT BATTERY METALS (ASX:PMT)

The owner of the massive Shaakichiuwaanaan project in Canada’s James Bay region, an area of Quebec hailed as the next Western Australia for its hard rock lithium resource base, has inked a C$69 million deal with Volkswagen’s battery subsidiary PowerCo, which will take a 9.9% stake in PMT at C$4.42 a share.

In exchange it will enter a binding offtake commitment to supply 100,000t of lithium concentrate to PowerCo each year for a decade after opening the mine, around a quarter of its initial production capacity.

A 65% premium to the company’s 30-day VWAP and 35% premium to its 90-day VWAP, the investment is manna from heaven for the C$375 million capped lithium explorer after a 72% fall in its share price.

VW’s first direct investment in lithium raw materials is hugely encouraging for lithium juniors facing concerns about not only short-term lithium prices but slowing investment also in the EU and North American EV supply chains.

PMT boss Ken Brinsden spoke to Stockhead last night on the deal, which will place a quarter of the supply from the first stage of the major lithium development to Volkswagen and could see the companies combine on a lithium chemical refinery near the latter’s new gigafactory in Saint Thomas, due to open in 2027.

“If you’re a western OEM you don’t have much choice now, I think, but to continue to invest in the EV supply chain,” he said.

“China represents this incredible existential threat right now as to how good their product is and how price competitive it is.

“It’s not good enough to just stick your head in the sand and pretend that EVs are going to go away.

“They’re not because the rest of the world, but especially China and arguably the Koreans, are really focused on getting the right product in the market. It’s ultra-competitive and you’re going to have to compete.”

PMT, which could get financing post a final investment decision on the mine from PowerCo, saw its shares rise over 28% on Canada’s TSX-V exchange on Wednesday and over 15% on Thursday on the ASX.

READ: Carmakers power dreams of lithium revival as Patriot nabs C$69mn Volkswagen deal

COSMOS EXPLORATION (ASX:C1X)

PMT’s may be the headline lithium deal today, but an early mover into Bolivia’s lithium scene is also catching the eye.

Cosmos Exploration has announced an option to acquire 100% of EAU Lithium, which is licensed to use direct lithium extraction technology developed by $1.1bn capped German geothermal lithium play Vulcan Energy Resources (ASX:VUL).

A little caveat here. EAU has not secured any mineral tenure yet in Bolivia, but has targeted the country which is the sort of forgotten child of South America’s Lithium Triangle. It has an agreement with Bolivia’s state-owned lithium company, signed on December 3, that will enable EAU to test brings from at least three salars as a precursor to a long-term JV.

While Chile and Argentina are major lithium producers, Bolivia has yet to see the investment enjoyed by its more advanced majors.

That is despite it being regarded as hosting the largest accumulation of lithium resources in the world according to the US Geological Survey.

Cosmos says previous attempts to extract resources and convert them into chemicals through typical solar evaporation methods have been hampered by the high magnesium concentration in Bolivia’s salars.

The EAU-Cosmos deal brings together the team behind WA rare earths and phosphate hopeful RareX (ASX:REE) again in South America, with REE MD James Durrant among the directors of EAU and Jeremy Robinson, REE’s non-exec chair, on board as Cosmos’ exec chair.

“This agreement is an exciting step for Cosmos Exploration as we align ourselves with EAU Lithium and their existing partnerships with YLB in Bolivia and Vulcan Energy Resources,” Robinson told the market.

“EAU’s recently signed technology agreement gives them the opportunity to test lithium brines from Bolivia’s premier salt lakes using Vulcan Energy’s state-of-the-art Vulsorb technology.

“While the results of this testing will determine the next steps, the potential for this to progress into an industrialisation agreement in a joint venture for the processing of brines is a significant milestone in the sustainable development of Bolivia’s world-leading lithium resources.

“We are excited by the opportunity to partner with one of the world’s leading lithium and renewable energy developers to unlock one of the world’s greatest and hitherto largely untapped sources of lithium. This is a major step forward for Cosmos as we advance our critical minerals strategy and seek to deliver value to our shareholders in the clean energy sector.”

C1X is paying $150,000 for the option fee in exchange for a 12 month exclusivity window. The option can be executed by issuing shares equivalent to 50% of C1X’s post-completion issued capital and $525,000 in funding commitments, including a $300,000 payment to the founders and $225,000 to Vulcan.

Once exercised, EAU will have the right to appoint two directors to a maximum four person board. Vulcan shares fell 6.1%.

TREK METALS (ASX:TKM)

(Up on no news)

Tony Leibowitz-backed Trek was up on a wing and a prayer today, with 11 trades worth ~$18,900 moving the penny stock up ~14% late in the trading day to 2.5c.

Trek, which has the early Pilbara Minerals chair and backer on board as its chair and 5% holder, is primarily focused on looking for gold near Halls Creek, the site of the first major gold finds in WA.

Christmas Creek sits at the bottom end of the Halls Creek province in WA’s Kimberley region, where RC drilling at the Martin prospect returned 10m at 12.66g/t Au and 10m at 7.34g/t Au in October.

TKM says it is continuing to investigate two large gold trends which extend over 1km in a northeasterly orientation and around 1.5km in a southeasterly orientation.

“The broad, high-grade intercepts at Martin confirm the potential for a significant orogenic gold system and, together with previously acquired data, have given us significant momentum towards unlocking what we believe could be a very significant greenfields gold discovery,” CEO Derek Marshall said earlier this month.

“We are equally excited about the broader potential of the project and we are expecting the primary results from our recently selected anomalous composite soil sampling data. We will then undertake a process of ranking target areas for the next round of greenfields drilling in this extremely underexplored region of Western Australia.”

ANAX METALS (ASX:ANX)

(Up on no news)

The 80% owner of the Whim Creek copper mine and processing plant, alongside Bill Beament’s Develop Global (ASX:DVP), Anax released some rock chips on Wednesday ahead of its no-news gain today.

The company views the results, including up to 14.6% copper from the Evelyn South prospect, as evidence of the expansion potential as it tries to bring the historically producing mine back to life.

Evelyn already contains an indicated and inferred resource of 590,000t at 2.54% copper, 3.9% zinc, 0.98g/t gold and 41g/t silver for 14,900t Cu, 22,800t Znm 18,500oz Au and 778,600oz Ag.

The nearby Evelyn South was drilled back in 2007 by Jutt Resources, 50m underneath historic workings, but the structural controls have not been sighted, with Anax insisting it has not been adequately tested with the drill bit.

RC drilling is planned next year.

“The recent focus on exploration at Evelyn is delivering exciting new targets for future drilling campaigns scheduled for the first quarter next year. The high-grade mineralisation at the Evelyn deposit, which remains open down plunge, and very encouraging Geochem and rock chip results make this area a priority for identifying new resources to grow our project and processing hub,” ANX MD Geoff Laing said on Wednesday.

“The team continues to advance important and exciting exploration work in parallel with the Roc Global process to secure a strategic partner. Anax plans to produce near term copper while offering significant upside potential through advanced exploration and aggregation of Pilbara assets.”