Summit believes the EV metals thematic will ‘break’ commodity cycles and is hitching a ride
Special Report: Summit Minerals’ chief executive officer Gower He expects critical minerals associated with EV to ‘break the typical supply and demand cycle for commodities and is positioning the company to best capitalise on the opportunity.
Speaking at a recent investor webinar, He – who took the lead role in mid-October – said that while supply of the minerals used in electric vehicles (EV) were previously dominated by China, the looming supply shortage brought about by increasing global demand for transport electrification had brought Western countries on board the train.
“This is very different from your typical commodity cycle supply and demand,” he said.
“This is more of a government-driven mandate, which means that demand for lithium will not go away, and it is up to everybody in the value chain to make sure that there is enough supply to meet that demand in China, Europe, Asia, North America and Australia.”
As such, he believes that lithium, copper, REEs, nickel and cobalt are core for the portfolio of any forward-facing explorer.
He pointed out that lithium usage in EV batteries is remarkably consistent and that the increasingly popular lithium-iron-phosphate (LFP) chemistry, which are safer and have a longer life than the common nickel-cobalt-manganese chemistry, has the greatest lithium content at about 11%.
Meanwhile, between 45-60kg of copper is required for each EV depending on their size, which three times the amount required for a traditional Internal Combustion Engine (ICE).
“REEs are very important for the magnets in the motors of these EVs, and of course nickel in the NCMs, which increase the range, while the cobalt is the stabiliser,” he added.
When queried by investors about Summit Minerals’ (ASX:SUM) broader strategic plans, He said the company had plans in place for the next 36 months in terms of how to elevate SUM from junior explorer up to a brownfields player with a potential maiden resource.
He said that with the battery metals market – especially lithium – experiencing very high demand for the foreseeable future, the company wanted to prioritise its existing projects and any new acquisitions to fill out its strategic window over the next 12-36 months.
“We will be assessing based on the demand-supply, pricing cycle, locations of project, geopolitical factors, all those will come into the formula when we determine which commodity to prioritise development,” he added.
This will allow the company to focus its capital on projects that will deliver the best returns.
SUM already has several projects in its portfolio that grant it coverage over a range of critical minerals.
These include the Castor lithium project in Quebec’s James Bay region, the Phillips River lithium project in Ravensthorpe, WA, the Stallion REE project east of Kalgoorlie, and the Ahmed antimony project in Morocco.
On Castor, He said the company was fortunate to have a good team on the ground to carry out its prospecting program given the wildfires that cut short the exploration window.
Along with the LiDAR surveying that identified over 230 outcrops of pegmatite, SUM is excited to move ahead with the project.
“The North American lithium supply chain is really here and they are catching up in terms of development from their Asian neighbours who have been doing this for the last 10 years,” he pointed out.
“A lot of new gigafactories, OEMs, chemical converters are being plotted along lines to give the world a diversified type of supply chain.
“As these come onboard, the real shortage becomes the raw material and how to get it in the right timing for these guys.”
In answer to a query about when the company will start drilling at Castor, He said that assays from the prospecting and the LiDAR results would play a major part of that decision.
“After that we will look at any additional programs as we need for the field expedition and also we need to engage First Nations, drill permits, etc. and also the winter season,” he added.
“All these will go into our overall timeframe, it is very exciting times we think but we don’t want to be overexcited and miss things or cutting things short.
“We want to do the shareholders justice by giving the project its deserved attention. So we want to make sure everything is ticked right before we start the drilling program.”
While Castor has captured investor interest, SUM’s other projects have also seen considerable work.
At Phillips River, the company has already completed high resolution surveys and is currently preparing to carry out soil sampling over the project.
“We are quietly confident that we could be dealing with some good results, and it is often not easy to get our exploration manager Jonathan excited and he was quite excited about this program,” He noted.
However, SUM’s most advanced project is undoubtedly the Stallion REE project, which has already seen two phases of drilling and some promising leach tests.
“What we are planning on next is possibly doing more met tests to determine an interim maiden resource and then decide on the next phase of drilling and see where we take the project in terms of development timeframe,” He said.
“Interesting enough, this already has an existing historical uranium resource on it – it was previously held by Manhattan.
“It is a very unique project, the best of both worlds and so the runway could be quite interesting.”
When asked if SUM will acquire more ground in the James Bay region, He answered in the affirmative.
“James Bay is a very exciting and busy area, so if we had opportunities to increase the holdings, the existing projects or new ones, of course we would,” he said.
“But we are not purely limited to James Bay. We want to consider projects across the globe.
“It really depends on the project and how it fits with our long term goal and where we can provide value to unlock for our shareholders.”
This article was developed in collaboration with Summit Minerals, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.