Frontier Lithium, Mitsubishi enter joint venture for Ontario lithium mine development
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Mar 4, 2024
Emma Jarratt

The deal, which gives Mitsubishi an initial 7.5-per-cent project stake, will help advance Frontier’s plans to start building the mine site in 2025

Mitsubishi is buying a $25-million, 7.5-per-cent stake in Frontier Lithium’s PAK Lithium mining project, according to a joint statement from the companies today. Photo: Frontier Lithium

The deal, which gives Mitsubishi an initial 7.5-per-cent project stake, will help advance Frontier’s plans to start building the mine site in 2025

Mitsubishi is buying a $25-million, 7.5-per-cent stake in Frontier Lithium’s PAK Lithium mining project, according to a joint statement from the companies today.

The investment is part of an agreement between the two companies to form a joint venture partnership to advance both a proposed lithium mine, located 175 kilometres north of Red Lake, Ont., and a planned lithium chemicals conversion facility.

Under the terms of the agreement, Mitsubishi will have the option to increase its ownership stake in the PAK project up to 25 per cent (and get a corresponding 25 per cent off take from the project) upon completion of the definitive feasibility study. For Frontier Lithium, the investment gives it the short term cash flow needed to advance the project.

“This process has been going for a while to really do the due diligence,” says Bora Ugurgel, senior manager of investor relations at Frontier Lithium, in an interview with Electric Autonomy.

“We really landed on Mistubishi because there’s overwhelming alignments on the strategy, the culture and what we want, they want to build something meaningful. This is their first investment into lithium and it’s in Canada and is to our project. It speaks volumes.”

The agreement comes on the heels of Canada and Japan signing a memorandum of co-operation last October. In the past two years, Mitsubishi also invested in a copper project in Yukon and a nickel project in northern British Columbia.

“You’re going to see more of that uptake of Japanese investment into Canada. It makes Canada investable again on critical minerals because we had not seen that in a while,” says Urgugel.

Terms of the deal

Frontier Lithium will serve as the manager of the joint venture and contribute all the assets in exchange for a 92.5 interest in the joint venture.

In total, Frontier Lithium is pricing the development of the PAK mine and the lithium refinery facility at around $US1.1 billion in CapEx.

The initial $25 million from Mitsubishi will go into enhancing the engineering studies =in phase one of the project, which is to do with getting the mine up and running.

Phase two of the project will be focused on creating the chemicals.

In today’s announcement, Frontier and Mitsubishi also say they will work closely together to pursue project financing to fund the project’s capital costs.

The goal is to have the first tranche of the funding completed by 2025. After that things could move quickly.

“Our game plan is to start building the mine site in 2025, then to build the chemical plant…that will start in the second half of 2027,” says Urgugel.

“We’re going to produce concentrates [from the mine] first and then chemicals after. Right now our timeline carries that we will start producing concentrates in 2027 and chemicals in 2029.”

Future investments

Given the size, cost and importance to Canada’s EV supply chain, Frontier Lithium’s project will need more financial and partner support to fulfil its potential.

Urgugel says the provincial and federal governments have yet to contribute any funding to the projects, but “they’re up to bat” next.

As well, with 75 per cent of the PAK project offtake still available for the market, there is an opportunity for more OEMs to secure their supply.

“We still have a meaningful path downstream…to give out to OEMs,” says Urgugel.

Overall, Urgugel says the Mitsubishi joint venture is not only positive for Frontier, but sends an important market signal he hopes will be replicated.

“We’ve seen the car battery manufacturers getting incentivized, the OEMs getting incentivize, yet there has not been the money flowing up onto the mine sites and chemical production,” says Urgugel.

“So, this JV, it fills that void.”

Exclusive: Frontier Lithium planning demonstration lithium chemical plant near Sudbury

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