Categories: Energy
Topics: General Energy

Li-FT Power (CSE: LIFT) CEO Francis MacDonald on Preparing to Drill 60,000 Meters Across a Portfolio of Lithium-Bearing Pegmatites in Canada’s Northwest Territories

 

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the CEO of Li-FT Power — Mr. Francis MacDonald. Francis, I must admit I was not familiar with the Li-FT story but I am very, very intrigued now. How are you today?

Francis MacDonald: I'm doing very well. I am calling in from Lugano, Switzerland, which is where I'm based these days. And I'm not surprised you haven't heard much about Li-FT because we haven't really been pushing a lot on the marketing front so far and getting the story out there. 

It's really a pretty exciting story to tell, and I think you can see that… and so, excited to put it on people's radar.

Gerardo Del Real: Well, listen, I’ll tell you what, when we got involved with Patriot Battery Metals over a year and a half ago, the thing that attracted me to Patriot was the land package, the scale, the lack of exploration for lithium. And I kind of figured that if they made a discovery of significance, they were going to be able to make multiple discoveries of significance. 

Obviously, that's played out the way that that's played out. And I still think, frankly, there's a lot of runway there. When I looked at Li-FT, I looked at the share structure. I want to get into that because I absolutely love the way it's structured. But I looked at the potential for scale here, and I looked at some of the historical results — and it checks a lot of boxes for me.

Before we get into that, can you give people just a brief primer on your background, and then let's talk land package and scale?

Francis MacDonald: Sure, I'm an exploration geologist by experience and training. I spent the earlier part of my career with Newmont, and that was doing early stage exploration in the Canadian Arctic. 

Then, I went on to West Africa and then East Africa. That was about eight years with Newmont. And then, I was a co-founder of a company called Kenorland Minerals, which is a North America-focused project generating company. 

This was really a holistic start. We started it with a bit of seed financing and a lot of our money, and we were just staking ground, trying to do deals with people. And we built it into a successful business. We did earn-in agreements with Barrick, Newmont, Sumitomo, Freeport, Antofagasta. Over the years, and after this year, it’ll be about $100 million that was put up by partners to go out and do exploration.

The other part of that is we built Kenorland into a cash flow positive business that's making money out of mineral exploration. Kenorland had to pay tax last year because we were making money — more money than we were spending. And you don't see that very often. Kenorland has turned into a beast of a company; $30 million budgets this year.

Li-FT got started in Kenorland, partly, and it was because we had some ideas about lithium pegmatites in James Bay. This was before the Corvette discovery, before lithium prices really blew up. And how I got interested in lithium was I was looking at different deposit types in Canada and looking at how much drilling or how many drilled meters go into a deposit to get it to a feasibility study. 

We were really focused on gold. So for a gold deposit, a quartz vein hosted gold deposit in Canada, which is pretty typical, it's about 500,000 to 2 million meters of drilling to get it to a feasibility stage.

Then, I started looking at these lithium pegmatites and the Whabouchi deposit — which some people might be familiar with — which was Nemaska Lithium in James Bay. It took 50,000 meters of drilling to get it to feasibility. 

So when you look at the return on exploration dollars, the returns of finding a lithium pegmatite are exponential compared to finding a new gold deposit. That's kind of what led to looking for lithium in James Bay, and that's how the company got started — with a greenfields exploration concept.

Gerardo Del Real: Well, that's how the company was started. You definitely are no longer in the greenfields category, at least not as it relates to the Yellowknife project. Tell me about that project.

Francis MacDonald: Sure, so Yellowknife has become the flagship for the company. What the project is, it's a portfolio of 13 spodumene pegmatites. And these were discovered in the 1950s, and they've been worked in the 60s, 70s, and 80s. And then, they kind of fell off everybody's radar. 

The Yellowknife project is outside the city of Yellowknife, which is the capital city in the Northwest Territories. About 40,000 people live there, and the pegmatites, half of them, are really accessible. They're within 60 km of the city of Yellowknife, and they're accessed by a two-lane paved highway. So in terms of logistics, it's quite favorable.

The other thing about the project area itself is that it's relatively well located to get to rail, which, if we're in the lithium space, we know that getting a concentrate to rail is very important. It's quite a bit closer than a lot of the other Canadian spodumene projects. 

So when you look at transport infrastructure, the Yellowknife project is really one of the best located, relative to transport infrastructure, in Canada.

Gerardo Del Real: You mentioned the 13 pegmatites. Tell me about the average grades there. And then, I want to talk accessibility and metallurgy, which we talked a bit off air. 

As I dug into the mineralogy and I looked at the metallurgy and the historic recoveries from the late 80s, I was impressed by the fact that that looked very favorable. But before we get into that, can we talk about what the average grades that you're targeting are?

Francis MacDonald: Sure. The grades… I’m going to start off with one of the most incredible things about this project is that there's almost 100% outcropping exposure of these lithium pegmatites. You can go on Google Earth, you can zoom into these things, and you can see them on Google Earth. 

They just stick out of the ground. They're just big, white veins that crosscut the landscape. And so when you have exposure like this, there are two things that are important that you can discern — and that's size potential and grade.

To talk about the grade part of it, because there's 100% outcropping exposure, people have done a lot of systematic work on those outcrops. And there has been detailed channel sampling across all of the outcrops on 25 to 50 meter spacing. There's been detailed spodumene percentage mapping where they cleaned off a meter by meter square of the outcrop and were estimating how much spodumene was there.

The other thing that was done was these six bulk samples in the 1980s; that was for metallurgy. But they also got grades out of each one of those samples. And they were 230 kg samples, so fairly representative. And what all of that information is saying is that there's economic grades on surface.

The grades that were estimated in the 70s were 1.4% across the whole project area, which is relatively high grade. And then, there have been 23 diamond drill holes across all of the portfolio as well. And what the drill holes are saying is that the grades and thicknesses are similar at depth.

Gerardo Del Real: Tell me about the metallurgy because I was equally impressed by that.

Francis MacDonald: Yeah, sure. The 1980s, this was done in a company called Equinox Resources, which was one of Ross Beaty's first companies. Ross Beaty is a well-known Canadian mining entrepreneur. They collected six bulk samples for metallurgy, 230 kg each, and they were able to produce a spodumene concentrate between 5% and 6% within overall recovery of 80% on the lithium content. 

This was done by gravity and flotation. There were no DMS studies — or Dense Medium Separation studies — that were done. These pegmatites look amenable to DMS just based on the crystal sizes that we're seeing. That is all positive.

Also, the iron content of the concentrate was low; it was 0.7%. And within the metallurgy study, they said that they thought that they could get the iron content even lower just by putting a magnetic separation at a different point in the flow sheet. 

Like you're saying, it is definitely very positive metallurgy, and we're going to go out and take bulk samples this summer and really dive into that metallurgy with some modern data.

Gerardo Del Real: I understand that the outcropping lithium pegmatites have widths up to 35 meters; up to 1,800 meters in length in the main area. But you have a total strike length, I think, of, what, something like 10 km with an average width of roughly 15 meters?

Francis MacDonald: Yeah, exactly. Like you said, the pegmatites are outcropping. They're up to 1.8 km long, up to 35 meters wide in some places. There are 13 pegmatites in the portfolio but there are 7 that are significant and that we're going to be drilling this year.

That's where the meat of the potential is. And then, the 6 other ones in the portfolio, those are really long-term option value. Some of the widths are good on these; 12 meters wide on an outcrop. And so we probably should put a drill on that at some point because grades are also high at over 1.5% and up to 2.2%. 

The portfolio has a lot of depth, and some of these things could turn into bona fide discoveries at some point as well.

Gerardo Del Real: What's your market cap looking like, and how much of that is backed by cash right now?

Francis MacDonald: We are sitting around about a C$330 to C$340 million market cap, and we've got about C$45 million in cash. So we started deploying some of the cash that we have in the treasury. We are currently drilling in Quebec and getting ready for a big drill program at the Yellowknife project, which is scheduled to start June 1st.

Gerardo Del Real: Timing is perfect. How many shares outstanding?

Francis MacDonald: It's about 39.2 million shares outstanding, so it's pretty tight right now. And of those shares, about 50% are in founders' hands. There’s about 13% that's institutional; Kenorland Minerals, my previous company, owns 2.6%, and management and directors at 5.1%. And then, the rest is in retail. About 27% is what we think is in retail hands right now.

Gerardo Del Real: You're cashed up… you have a tight share structure… your market cap is, roughly, I want to say, C$330 to C$340 million, give or take a bit. Is that accurate?

Francis MacDonald: Yep, that's right.

Gerardo Del Real: Excellent. I want to focus on Yellowknife for the purpose of this conversation. But as you mentioned, there's a lot of depth in the portfolio that merits a further conversation… and I absolutely want to invite you back on to have that conversation. 

But if you're able to hit the kind of widths with the kind of grades that — I can't say it “looks like” you have because these things are outcropping… you've already sampled them… they're right at surface… it's just a matter of whether they pinch and swell at depth — then I think your market cap, obviously, has a lot of room to the upside. 

It's a story I'm definitely watching. Anything to add to that, Francis?

Francis MacDonald: No, I guess the catalyst coming up will be a drill program starting June 1. And the strategy, I would say, is not necessarily a standard strategy. But we're planning to go out and just hammer this with about 60,000 meters of drilling within the next 10 months. 

The justification for that is exactly like you just said… we've got all of the information on surface; these things stick out of the ground. And if you took any section of those pegmatites — and that was the only thing that you saw — it would justify drilling two or three holes underneath it to see what was there. 

And so we're just doing that across the whole portfolio, and we're going to drill enough that we should have enough drilling for an Inferred resource estimate. And so that’s the plan… is just to go out and drill enough, bang these things off, come out with a resource estimate. 

We're telling people halfway through next year. And we're also starting bulk sampling for metallurgy this summer; we're starting environmental baseline studies. And all of that will feed into a PEA that is basically initiating right now for the data collection. That will come out at some point probably around the end of next year.

Gerardo Del Real: There are two types of lithium companies: there are lithium companies that are just hoping and waiting for the recovery in the lithium space as this consolidation nears its end and hoping that the tide lifts all boats. 

And then, there are companies like the Patriots, like the Li-FTs, that have a deep robust treasury and plan on, obviously, allocating that treasury towards aggressive drilling and resource definition. 

I’ve got to compliment you and the team for being the latter. Those are the companies that really pique my interest. And look, I think it's going to be, obviously, a fun second half of the year, Francis. I'm looking forward to having you back on.

Francis MacDonald: Thanks for having me and definitely looking forward to coming back on as well.

Gerardo Del Real: Awesome. Thanks again for your time. Appreciate it.

Francis MacDonald: Thanks a lot.