Why Canada will be important to the lithium market: As the EV and battery
Storage revolution accelerates across North America (NA), we believe Canada is
positioned to capitalise on its resource abundance and mining friendly, low carbon
intensity operating environment, emerging as an important producer of lithium to both
local and EU markets.
Located on the doorsteo or the worlds second largest auto market: #y sales
in NA have lagged China (and Europe), but we believe recent electrification targets/
nancial commitments by auto OEns and dovemments point to sionincant arowth
potential this decade (CGe 33% CAGR to 2030 to ~8m units vs. 2021 global sales 6m).
Domestc production high on the agenda: The lea estimates that china controls
~80% of global battery raw material refining capacity (Fig. 6). Western governments/
industry players aim to reduce reliance on overseas supply of key materials and develop
localised supply chains. The US has introduced a number of government-backed
programs and legislation (Inflation Reduction Act) and entered into multilateral alliances
to advance localised supply chains/critical mineral production.
Several emerging projects in the US, but might not be enough to deliver supply
independence: To date, >USs25bn in investment in US battery manutacturng capacity
has been announced (2021 57GWh to 2030 687GWh), with Ontario/Quebec now also
an emerging EV/LiB hub with >US$12bn recently committed. We estimate implied NA
Les demand could increase > .000% to ~630xt in 2030 vs, Cce 2022 alba/ demano
of 632kt). While we highlight a number of advanced lithium projects in the US (Fig. 9),
our analysis suggests that even it all potential domestic US production were to double
demand would sull exceed supply by >40% by 2030,
Acavity in Canada is ramping up = we see strona potenual tor muladle new
discoveries/ proiect developments: We highlight a growing number of active
development and exploration protects, which we believe could see canada emerge
as an important lithium producing nation in the medium-longer term. In our view,
sustainability credentials (i.e.. hydropower) and cost benefits (proximity to end users)
of Canadian lithium supply is likely to be of strategic value to the EV/battery supply
chain.
"Canada Watchlist" highlights companies with advanced
development projects, active resource dall-outs, and new discovery potential
Initiating coverage:
Sayona Mining (SYA-ASX: A$0.22, M'cap: A$1.9bn | HOLD, A$0.21 target, Reg
Spencer): Near-term (1H'23E) SC production (160ktpa) from relatively low capex
restart at NAL (Quebec) with JV/offtake partner Piedmont Lithium. Large resource
_base, with medium-term growth potential through completon or partially constructed
conversion plant and Northern Hub at the high-grade Moblan project.
Green Technology Metals (GT1-ASX: A$0.76, M'cap: A$190m | SPEC BUY, A
$1.50 target, Tim Hoff): GT1 is progressing the Seymour (resource 9.9Mt@ 1.04%)
and Root projects in Ontario, with an aggressive drill program (50-60Mt exploration
target). The company will seek to fast-track Seymour development before developing
Root and exploring options for downstream processing.
Patriot Battery Metals Inc. (PMET-TSXV: C$6.35, M'cap: C$532m | SPEC BUY,
C$9.75 target, Katie Lachapelle, Reg Spencer): Tier 1 resource potential at the
Corvette discovery in Quebec, within a large, untested land package. Resource potential
at the V6, Cs, Vi cordors Detore regional potential could see corvette among the
largest in NA and a global Top 10 deposit.
Critical Elements Lithium Corp. (CRE-TSXV: C$1.72, M'cap: C$344m | SPEC
BUY, C$3.50 target, Katie Lachapelle): Progressing the advanced Rose Project,
Quebec, through permitting ahead of Stage 1 development of SC. We see potential for
stated darneshos and Sade 2 dans incun downstm JU conversion