Grid Metals: A lithium sleeper in Manitoba

I like to see insiders buying.

Patrick Murphy is a Director of Grid Metals (GRDM.V) and, functionally, represents the Australian investors who bought 27% of Grid back in 2022. I wrote about this at motherlodetv.net. Murphy himself “has specialised in deploying capital in the raw materials and mining industries for his entire career and leads AMCI’s battery metal initiatives.” Spending $46,000 to buy 420,000 shares in the public market is very much a personal endorsement of the Grid management and operations from a knowledgeable and fully informed investor.

Which makes a lot of sense given that Grid has been motoring along executing its exploration and development strategy for its two Manitoba lithium projects. CEO Robin Dunbar is very much a “get’er” done executive.

Having a 43-101 compliant lithium resource of 6.81 million tonnes ("MMt”) (Inferred) grading 1.39% Li2O at Donner Lake was great news but that lithium-bearing rock had to be processed. Fortunately for Grid there are two processing facilities within reasonable trucking distance of Donner Lake. The Tanco lithium-cesium-tantalum mine and concentrator is just down the road and might operate for Grid on a toll milling basis. But another opportunity presented itself in the form of a disused gold mill, the True North mill 85 kilometres down a road from the Donner Lake property.

The question being, could it be converted to lithium production at a reasonable cost?

Grid retained Primero, an Australian “a global leader in lithium process engineering” (and, incidentally, part of the Australian investor group) to undertake a scoping study of the suitability and costs associated with converting the True North mill. The results of that study were press released October 25.

In that release Dunbar stated,

The work completed by Primero has outlined a low capital intensity project and has quantified operating and capital costs. This study gives us confidence to move forward with the lease agreement for the True North Mill. The True North Lease Agreement gives Grid access to a permitted mill and tailings facility within trucking distance of our Donner Lake lithium resource. We believe that with the True North Mill lease, the Donner Lake lithium project can be one of the next producing lithium projects in North America.

Mill capacity is estimated to be 450,000 tonnes per annum of lithium feed for the production of spodumene concentrate. Given that Donner Lake has a 6.8 million tonne inferred resource, the True North mill should be sufficient to process the material for the first few years of the mine’s life. Total milling costs of C$316.14/t spodumene concentrate produced and, of course, there are mining and transport costs as well. However, although the price of lithium has retreated recently, there is still plenty of margin, particularly for a product produced in a very safe jurisdiction.

(The election of an NDP government is usually viewed as a negative for the mining sector, however, the new NDP Premier of Manitoba is on record as saying, “"Not only do we have the critical minerals -- lithium, cobalt, silica, nickel and so on -- but we can produce those resources with higher labour standards, higher environmental standards and greater respect for human rights compared to any other jurisdiction in the world…Those are important jobs that are the backbone of those communities, and we'd like to see more opportunities like that here in Manitoba." CTV News, May 23, 2023 )

The weird reality in Canada, at the moment, is that we have a Prime Minister who revels in announcing new “battery factories” with multi-billion price tags. Where the lithium is going to come from is an open question. But Manitoba is a very good answer.

Nothing moves quickly when it comes to developing a mine and reconfiguring a mill, however, with Grid, we are seeing steady progress. Steady progress is not sexy. The market has been letting Grid drift lower. Low enough that a seasoned mining investor like Patrick Murphy with full access to all the inside information put up his own money to add to his already significant position.

My sense is that Murphy is savvier than I am. So his investment is making me consider adding to mine.

[Disclaimer: This is not investment advice. I am not an investment professional. I am down about 30% at the moment. I will write about companies that I hold. I will disclose any holdings. Do your own due diligence. Do it hard. Call the CEO.

I currently hold shares in GRDM.V and while I have no plans to sell anytime soon I reserve the right to take profits as they arise.]