Frontier Lithium has reported high-grade results from the summer channel sampling program at its Pennock pegmatite in northwestern Ontario.
Highlights of the results include 3 metres grading 1.8% lithium oxide (Li2O) from channel 56, located 700 metres east of the main, high-grade blowout area of channel 45 along the Pennock dyke system; and 5.8 metres at 1% Li2O in channel 55, located 55 metres east of channel 56, the company said in a news release on Thursday.
Frontier’s vice president exploration Garth Drever, said the channel sampling was the company’s first opportunity to validate the spodumene-bearing Pennock dyke beyond the blowout area, with continuous channeling across the dykes.
“Despite being narrow at surface with widths less than 6 metres and requiring additional channeling and mapping prior to any drill testing, we are excited about the potential discovery upside outside of the project’s mining lease area,” he said.
Channel 45, a 1.5-km long pegmatite dyke was first channelled in 2019, with 16 metres grading 1.96% Li2O.
Pennock is located about 22 km northwest of Frontier’s main Spark and PAK deposits, just east of the Manitoba border.
Channel sampling at Pennock followed up on prospecting last year and was part of summer drilling at PAK in May. Exploration in channels 55 and 56 comprised chip sampling in the past when spodumene was identified, Frontier said.
The company also announced details of its stock option plan in which it granted 1.5 million stock options to certain employees, officers, directors and strategic advisors. The new options have five-year terms from the grant date and upon exercise entitles holders to buy one common share per new option at 74¢ per common share.
Frontier has also repriced up to 575,000 outstanding options, though it excludes options already held by directors and officers of the company and applies to existing options previously granted to certain employees. The existing options will be repriced from an exercise price of $2.10 and $2.30 per common share to 74¢ per common share.
The repricing is in response to market challenges in the lithium sector and a reduction in Frontier’s stock price.
A prefeasibility study for PAK, released in May outlined a 24-year conventional open pit operation with output of 12,520 tonnes of battery-quality lithium hydroxide per year, at all-in cash costs of US$7,433 per tonne of lithium carbonate equivalent.
After taxes, the project has a US$1.7 billion net present value (at 8% discount rate) and an internal rate of return of 24.1%. Capital expenditures include US$468 million for the technical grade concentrator and expansion capital of US$576 million for the chemical grade concentrator and chemical plant, with a 20% contingency.
PAK has probable reserves of 4 million tonnes grading 1.79% Li2O. The Spark pegmatite, located 2.3 km away, hosts probable reserves of 18 million tonnes at 1.5 Li2O and won the “2019 Discovery of the year award.” A resource update in March increased the resource at Spark by 30%.
Exploration is also ongoing at the adjacent Bolt deposit.
Shares in Frontier Lithium were down 1.3% to 76¢ on Friday at mid-day in Toronto, valuing the company at $172.9 million. Its shares traded in a 52-week range of 68¢ and $3.04.
