“I will tell you how to become rich… Be fearful when others are greedy. Be greedy when others are fearful.” - Warren Buffett (picture: Logra)
Two days after Far Resources Ltd. recently announced completion of its phase-2 drilling program on its Zoro Lithium Property in Manitoba, Björn Junker from Goldinvest.de noted in a readworthy article:
"The lithium market appears to have entered a new phase. Some would call it over-saturation. Others just realize that more realism is coming in slowly. Until recently, only the mention of "lithium" was sufficient to propel unknown stocks into airy valuation heights overnight. Meanwhile, the really interesting news appear to be fading without a trace. This is what happened at Far Resources Ltd. (CSE: FAT; FRA: F0R) a few days ago, when the company published a report with the very technical title "Completion of the Phase II Drill Program".
Yesterday, the same happened again. Far Resources announced assays from rock chip samples at Dyke #7. And this came by full surprise, because actually assays from the recently completed drill program at Dyke #1 are eagerly awaited (at least by shareholders). The market does not care much about lithium assays any longer, although fundamentally nothing changed in the lithium supply-demand picture. This phenomenon, or market discrepancy, could turn out as a great opportunity. As Benjamin Graham once put it: "To be an investor, you must be a believer in a better tomorrow." Probably his most famous quote also appears to fit perfectly here: "Buy 1 Dollar for 50 Cents" (i.e. buy assets worth 1 Dollar for 50 cents or less.)
While Far Resources has been focussing on Dyke #1 with its phase-1 and phase-2 drilling, there are 6 other known lithium-bearing pegmatite dykes on the property, all of which were sampled historically (that is to say in the 1950s, when lithium demand and prices were very low as the potential use of lithium in batteries for electric vehicles was first discussed decades later).
Although it´s clear that modern assay technology differs materially from what was possible 60 years ago, yesterday´s assay results came as a pleasent surprise, because Dyke #7, the eastern-most pegmatite from the principal Dyke #1, was believed to be the lowest-grade dyke on the property with only 0.46% and 0.5% Li2O. Recently, Far Resources sampled this dyke and reported grades yesterday, which are 194% and 482% higher than the historic results, or 1.35% and 2.91% Li2O, respectively:
Keith Anderson, President and CEO, commented in yesterday´s press-release:
"We continue to be pleased with the lithium contents of our pegmatite dykes on the Zoro property. New assays from Dyke 7, like those from other known pegmatite dykes on our optioned ground, are significantly higher as compared to historic assays. These data will help to build confidence in our evolving geologic model which will guide exploration as we move forward with future drill programs and geologic mapping and prospecting integrated with LIDAR surveys. With this in mind we anxiously await assays from our recently completed drill program."
As aforementioned, Far Resources announced the completion of phase-2 drilling at Dyke #1 last week. Moreover, the company also provided quite interesting clues (before the receipt of the soon expected assays from the lab), which indicate the potential for an impressive discovery as all 7 holes intersected the spodumene-bearing pegmatite Dyke #1, whereas 2 holes clearly caught the eye:
Hole #10 intersected a wide interval of the pegmatite over remarkable 53.7 m.
Hole #12 intersected coarse-grained spodumene crystals (up to 15 cm large!) over 12.2 m (i.e. a potentially very high-grade zone may just have been discovered, whereas coarse mineralization typically indicates very favorable metallurgy).
Both lengths and grades could turn out world-class, when official lab assays will be announced soon. Keith Anderson (President and CEO of Far Resources) explained in the press-release of April 25:
"We are pleased with the results of the Phase 2 drill program and encouraged by the 53.7m of spodumene-bearing pegmatite intersected in drillhole FAR17-010. This intersection confirms the potential for very wide drill intercepts of spodumene-bearing pegmatite beginning at depths of 120m below surface. The consistent coarse spodumene crystals in hole FAR17-012 shows that Dyke 1 can host very significant widths of high-percentage spodumene."
With a current market capitalization of $5 million CAD, Far Resources aims to delineate a maiden resource estimate in order to catch up to other hard-rock lithium explorers and developers, which currently enjoy significantly higher market valuations, e.g.:
Georgia Lake Lithium Deposit in Ontario, Canada
Rock Tech Lithium Corp. (TSX.V: RCK; $0.91 CAD; market capitalization: $25 million CAD)
Indicated Resource: 3.2 million t @ 1.1% Li2O
Inferred Resource: 6.3 million t @ 1% Li2O
(Reported at a cut-off grade of 0.6% Li2O)
Note: Channel sampling program ongoing.
PAK Lithium Deposit in Ontario, Canada
Frontier Lithium Inc. (TSX.V: FL; $0.40 CAD; market capitalization: $52 million CAD)
Measured & Indicated Resource: 7.9 million t @ 1.58% Li2O, 104 ppm Ta2O5, 0.04% Cs2O and 0.31% Rb2O
Inferred Resource: 0.3 million t @ 1.2% Li2O, 103 ppm Ta2O5, 0.06% Cs2O, and 0.36% Rb2O
(Reported at a cut-off grade of 0.4% Li2O)
Note: "Access to the Property is available year-round by chartered ski or float equipped aircraft from Red Lake, Ontario (175 km) to the south of Pakeagama Lake. The project is located in a relatively isolated area of northwestern Ontario where infrastructure is absent except for a winter road, which services the communities of Deer Lake, Sandy Lake, and North Spirit Lake." (Source: Frontrier Lithium Inc. Technical Report May 2016)
Rose Lithium-Tantalum Deposit in Québec, Canada
Critical Elements Corp. (TSX.V: CRE; $0.77 CAD; market capitalization: $113 million CAD)
Indicated Resource: 26.5 million t @ 0.98% Li2O and 163 ppm Ta2O5
Inferred Resource: 10.7 million t @ 0.86% Li2O and 145 ppm Ta2O5
(A minimum mining width of 2 m (true width) and a cut-off grade of 0.75% Li2O were considered for the Mineral Resource Estimate.)
Note: The conclusions of the PEA indicate the operation would support a production rate of 26,606 t of high purity (99.9% battery grade) Li2CO3 and 206,670 pounds of Ta2O5 per year over a 17 year mine life (estimated after-tax IRR of 25%; estimated NPV of $279 million CAD at an 8% discount rate; payback period estimated at 4.1 years). Pictures of spodumene/lepidolite drill cores from phase-2 of exploration at the Rose Deposit (source: Critical Elements Corp.):
Phase-1 Drill Results of Dyke #1 on the Zoro Lithium Property in Manitoba, Canada
The initial 7 holes in late 2016 successfully confirmed historic drilling at Dyke #1. Each hole intersected lithium-bearing spodumene mineralization over intervals of up to 28 m, with 2 holes terminated in mineralization. Based on the results, it appears that lithium grades and pegmatite widths are strongest in the northwest portions of Dyke #1, as shown by the wide and high-grade intersection in hole #7 (1.1% Li2O over 23 m). Further exploration, including additional drilling, will focus in this area of the dyke. At the south end, hole #1 intersected multiple thin pegmatite intervals, possibly due to faulting, returning 1.49% Li2O over 2 m.
The average Li2O grade of all 7 holes exceeded 1%. For example, the Mt. Cattlin Project in Australia (Galaxy Resources) hosted an average resource grade of 1.08% LiO2.
In 1956/1957, when lithium prices and demand were very low, a total of 78 shallow holes were drilled at Zoro by Green Bay Uranium Ltd., identifying 7 pegmatites. About 60% of these holes were drilled into Dyke 1, delineating a (historical) “reserve estimate” of 1.8 million t averaging 1.4 Li2O. Historic drilling was shallow to only test for near-surface mineralization, however it was noted that the pegmatites thicken at depth and remain largely untested below 200 m from surface.
Recently, the Fraser Institute ranked Manitoba as the world´s second-best jurisdiction for investment based on their Investment Attractiveness Index. The Zoro Lithium Property also benefits from nearby infrastructure (power line: 4 km; road: 11 km; airport: 12 km; rail: 34 km).
“Although lithium metal prices were first reported in trade publications in 1952, demand was very low. From 1952 to 1974, lithium prices remained flat in terms of current dollars; in terms of constant dollars, however, prices decreased. The potential use of lithium in batteries for electric vehicles was first discussed in the Minerals Yearbook in 1972. The downward trend in lithium metal prices reversed in 1974.“ (Joyce A. Ober in USGS 1999)
Far Resources Ltd.
Unit 114B – 8988 Fraserton Court
Burnaby, BC V5J 5H8 Canada
Phone: +1 604 805 5035
Shares Issued & Outstanding: 58,671,556
Canadian Symbol (CSE): FAT
Current Price: $0.085 CAD (05/02/2017)
Market Capitalization: $5 million CAD
German Symbol / WKN (Frankfurt): F0R / A2AH8W
Current Price: €0.06 EUR (05/03/2017)
Market Capitalization: €4 million EUR
Report #6: "Impressive Lithium Drill Results on the Horizon?"
Report #5: "Drills Back in Action at the Zoro Lithium Property in Manitoba: Confidently Awaiting Second Round of Drill Results"
Report #4: "Savvy lithium explorer getting ready for phase-2"
Report #3: "Far Resources drills 23 m of 1.1% Li2O and gets ready for 6 additional pegmatites"
Report #2: "Far Resources gains momentum with drill results pending from its Zoro Lithium Project in Manitoba"
Report #1: "Drill Results Pending From a Potentially World-Class Hard-Rock Lithium Project"
Disclaimer: Please read the full disclaimer within the full research report as a PDF (here) as fundamental risks and conflicts of interest exist. The author holds a long position in Far Resources Ltd. and is being paid, on a monthly basis, a retainer from Zimtu Capital Corp., which company also holds a long position in Far Resoures Ltd.