February 24, 2023 (Investorideas.com Newswire) As demand for lithium iron phosphate batteries is rising, Peter Epstein of Epstein Analysis takes a take a look at new participant First Phosphate.
Many readers have gotten extra conscious that lithium iron phosphate [LFP] batteries are rising in reputation amongst electrical car makers together with Ford, Volkswagen, BMW, Mercedes-Benz, and Stellantis N.V. This comes after business chief Tesla selected the LFP configuration as its go-to battery for standard-range autos around the globe.
There are tradeoffs in utilizing LFP chemistries, nevertheless quickly rising market penetration clearly exhibits that OEMs are snug with the professionals and cons. LFP batteries last more (extra recharge cycles) and are safer (fewer fires!), however have a decrease driving vary than extra highly effective lithium-ion batteries utilizing nickel and cobalt.
What initially attracted customers to LFP is its decrease value, however since these batteries have develop into so well-liked, tens of billions of {dollars} are being invested into bettering the battery density whereas sustaining the fee benefit. As vary profiles develop, reaching a tipping level of say 300 km/cost, vary nervousness will begin to disappear.
The month-to-month worth of phosphate rock (from Morocco) traded as excessive as US$320/ton within the fourth quarter of final 12 months however has declined modestly to US$300/ton, up rather a lot from about US$71/ton in April 2020 when COVID hit North America. This sturdy enhance is noteworthy within the context of nations around the globe including phosphate to their lists of vital supplies.
As spectacular as the rise in phosphate rock costs is, it ought to be famous that the worth hit US$450/ton within the 4th quarter of 2008 and remained at that degree for six months. Adjusted for inflation, that is like a worth of US$640/ton in as we speak’s {dollars}.
Relating to vital minerals, supplies, and metals, few are extra vital to the human situation than phosphate. Shortages can result in meals riots and hunger in low-income areas of the world. There isn’t any substitute for phosphate within the manufacturing and consumption of meals and fertilizers. Globally a handful of corporations find yourself controlling 90%+ of mined phosphate rock.
These gamers have dominated the fertilizer sector for many years. They take sedimentary-hosted phosphate from mines and focus it into industrial-grade phosphoric acid. Nevertheless, a by-product of this course of is hazardous waste containing undesirable radioactive supplies and heavy metals.
This waste, amounting to nicely over a billion tons throughout the globe, must be safely saved indefinitely.
First Phosphate
A brand new junior miner within the fertilizer/phosphate market is First Phosphate (PHOS:CSE), listed on the Canadian Inventory Trade [CSE] on February twenty second below the ticker: PHOS. It has a distinct sort of phosphate, practically 50 million tons of an igneous [hard rock] deposit with a sexy 5.2% phosphorus pentoxide [P2O5] grade.
Simply 5% of phosphate deposits are held in igneous rocks, and simply 1% in the kind of geology First Phosphate has. This is essential as a result of igneous rock has a lot decrease concentrations of deleterious components, enabling a big portion of it to be upgradable [purified] to the very highest grade of phosphoric acid.
First Phosphate is exclusive in different key methods as nicely. As an alternative of promoting its phosphate rock at an early stage of the multistage means of refining run-of-mine ore to premium purified phosphoric acid [PPA], the corporate hopes to work with specialty chemical corporations to advance mined materials to a lot higher-value finish merchandise.
That method First Phosphate can retain a big share within the earnings of premium LFP battery-related supplies. Administration doesn’t plan to make the cathodes that go into the batteries however needs to provide world-class PPA to promote to corporations that blend it with iron sulfate and lithium hydroxide to make a vital element of the battery cathode.
For instance, Israel’s ICL Group, a number one specialty minerals firm, plans to construct a US$400 million “LFP cathode energetic materials (CAM) manufacturing plant” in St. Louis, Missouri.
PPA from First Phosphate in Quebec, Canada could be readily accessible when business manufacturing begins in three to 5 years.
Even nearer than St. Louis, Ford is constructing a US$3.5 billion LFP facility in Michigan that might be reachable from Quebec inside a day by rail.
First Phosphate is just not like peer phosphate or fertilizer corporations who’re [or hope to be] simply phosphate or potash miners. As an alternative, they plan to vertically combine in a considerable method, with the assistance of highly-skilled, cutting-edge know-how companions.
The corporate is working with very capable parties together with; Queens College, SGS Canada, P&E Mining Consultants, the Port of Saguenay, Laurentia Exploration, Groupe Conseil Nutshimit-Nippour, TFI Worldwide, and Agrinova. Administration has assembled a six-person advisory board of specialists in areas together with; geology, earth science, PPA manufacturing applied sciences, company operations, and monetary planning.
Canada and the USA [Dept. of Energy + Dept. of Defense] are offering low-cost authorities loans and free cash grants to kickstart the constructing of recent EV and lithium-ion battery crops in Quebec/Ontario and throughout the U.S.
Administration, led by CEO John Passalacqua might be making use of for quite a lot of these funding applications by itself and together with companions. With the overwhelming majority of the globe’s LFP battery manufacturing happening in China, new sources of phosphate merchandise from Canada will get pleasure from excessive demand for clear logistical & geopolitical causes.
Along with issues about China, readers ought to observe that over 80% of phosphate provide has historically come from Russia, North Africa, and the Center East, areas that might over time discover extra in frequent with China/Russia/Saudi Arabia than the U.S. and Canada.
Close to-Time period Catalysts
This 12 months is poised to be a busy and productive one.
A Preliminary Econ. Evaluation [PEA] ought to begin pretty quickly and be accomplished by year-end, together with a metallurgical examine and the analysis of potential PPA manufacturing companions.
A number of phosphate rock off-take agreements might be in hand within the second half of 2023 and PPA pilot plant testing can be scheduled. See a extra detailed checklist of near-term catalysts under.
Lately First Phosphate has been saying successes in ongoing exploration actions round the principle deposit. For instance, a number of floor seize samples of as much as 19% P2O5 have been discovered. Metallurgical testing signifies an anticipated apatite grade of no less than 38% P2O5 at > 90% restoration.
A brand new discovery was made on Goal 3 whereby the outcomes of 38 seize samples produced a number of assays > 10% P2O5 (double the useful resource grade). In one other space as much as 20.5% P2O5 seize samples have been reported, a number of the highest-grade phosphate samples ever within the Saguenay-Lac-St-Jean area of Quebec.
Administration notes that (topic to much more work) titanium oxide and iron oxide concentrates might be viable co-products of the P2O5. For added exploration particulars and extra information on the blue-sky potential, please assessment the most recent [February] corporate presentation.
Readers are inspired to take a look at First Phosphate’s web site and most up-to-date press releases. With an enterprise worth {market cap + debt – money} of below $20M, and just a few (if any) pure-play phosphate juniors with tasks in Tier-1 jurisdictions like Quebec and targeted completely on LFP batteries to select from, it is a firm that might see a ton of curiosity from traders on the lookout for new battery steel bets.
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