Back in 2018, I attended a presentation for a company called Piedmont Lithium (Nasdaq:PLL) when very few investors were paying much attention to the lithium sector.. At the time, Piedmont shares were trading around $10 and the stock had very little trading volume. Piedmont CEO Keith Phillips did a good job of presenting the story of a company that was on its way to developing the next lithium mine in the United States during a decade in which the electric vehicle revolution would kick into high gear.

In 2018, there were many forecasts showing lithium demand soaring throughout the 2020s. As it turned out, in the last couple years lithium demand outpaced even the most aggressive forecasts. Red hot lithium demand amid relatively tight global supply led Tesla CEO Elon Musk to state that producing lithium was a “license to print money” during the company’s Q2 earnings call earlier this year.

According to Benchmark Mineral Intelligence, the world will need ~60 new lithium mines at an average size of 45,000 tonnes each in order to meet global demand over the next decade -- even after accounting for recycled lithium. Lithium demand is set to increase more than 6x in the next decade and the United States still has only one producing lithium mining operation.

We are still at the ground floor of the electric vehicle revolution, the world isn’t even close to producing the amount of lithium required for electric vehicle battery production over the next 15 years.

We are going to need to build a lot more mines.

The United States is facing a massive supply shortfall of critical minerals (copper, cobalt, lithium, nickel, etc.) just as the electrical vehicle revolution is reaching ‘escape velocity’. The impending shortfall and mounting concerns over the security of the critical minerals supply chain has motivated the US and Canadian governments to enact a series of legislation to support and incentivize the production of critical minerals within North America.

The “Inflation Reduction Act” (IRA) incentivizes production of critical minerals within North America by offering an up to $10,000 consumer tax credit for the purchase of electric vehicles with batteries made from critical minerals sourced from either the US or a partner country (US, Australia, etc.). In addition, the Canadian province of Quebec recently implemented a 30% critical minerals exploration tax credit. This applies to eligible expenditures related to the exploration of copper, tin, lithium, nickel, cobalt and other critical minerals.

The recent government support in the US and Canada has created a very favorable environment for the exploration, development, and production of critical minerals that are integral to electric vehicle batteries and green energy more broadly.

One of the biggest junior mining stories of 2022 has been Patriot Battery Metal’s Corvette Lithium Pegmatite discovery in the James Bay Region of Quebec. At the beginning of the year shares of Patriot Battery Metals (TSX-V:PMET, OTC:PMETF) were trading around $.50, eight months later the stock is above $6.00 and PMET is one of the best performing stock above $100 million market cap in the Canadian resource sector in 2022. 

Patriot Battery Metals Inc. (Daily)

The catalyst for PMET’s meteoric rise is the discovery of a more than two kilometer high-grade lithium pegmatite ore body that appears to be ideally situated for an open pit mining operation. Drill results at Corvette have consistently demonstrated a lithium mineralized ore body that is continuous, robust, and high-grade. While it’s too early to discuss just how large Corvette could end up being, dimensions outlined by drilling to date makes it possible to envision an ore body that could ultimately contain more than 100,000,000 tonnes at an average grade of more than 1%-1.5% LiO2. Patriot is still making new discoveries that indicate the Corvette Property could hold multiple deposits including near-surface high-grade ore bodies that could be amenable for a starter pit operation early in the mine life.

The Corvette discovery has brought a great deal of new attention to the James Bay Region of Quebec for its lithium pegmatite endowment. Also known as hard-rock lithium deposits, pegmatite lithium deposits can contain extractable amounts of a number of elements including lithium, tin, tantalum and niobium.

Piedmont Lithium’s North Carolina project is a lithium pegmatite deposit. Piedmont is targeting 160,000 tons per year of spodumene concentrate production that will convert to 22,700 tons per year of battery-grade lithium hydroxide. This production will come from a 44.2 million tonne resource with an average grade of 1.08% LiO2.

Pegmatite lithium deposits are becoming more sought after globally because the lithium from pegmatites can be used to create lithium carbonate or lithium hydroxide, the latter is becoming more desirable by battery producers.

Due to its high lithium content, spodumene is considered the most important lithium ore mineral. A typical run of mine ore can contain 1-2% Li2O, while a typical spodumene concentrate suitable for lithium carbonate production contains 6-7% Li2O (75% - 87% spodumene). Historically, Australia has been the leading producer of spodumene.

The location and scale of Piedmont’s North Carolina lithium project is attractive enough that Tesla inked a spodumene concentrate supply agreement with Piedmont in September 2020. Unfortunately, lithium production in North Carolina has been delayed and it is unclear when project construction will be complete and commercial production will commence. The reality is that Piedmont’s Carolina Lithium Project is a drop in the ocean of what the electric vehicle industry needs in terms of lithium supply. North America needs at least a dozen more mines the size of Carolina in order to meet demand over the next decade.

This leads us to Quebec and the lithium exploration renaissance currently taking place in the James Bay Region thanks to Patriot Battery Metals. At Corvette, PMET has discovered a principal spodumene-bearing pegmatite body of significant size that has been traced by drilling over a distance of at least 2.0 kilometers. This pegmatite ore body boasts high grades of lithium and tantalum. This characteristic is similar to lithium pegmatite deposits found in Australia and Brazil. Among the most profitable lithium deposits in the world, they have a fairly straightforward metallurgy, and produce a ~6-7% Li2O spodumene concentrate (which is suitable for lithium carbonate production).

The best in class Quebec focused lithium exploration and development company is clearly Patriot Battery Metals. However, the market has caught on and awarded Patriot a C$700 million fully-diluted market cap. While Patriot could certainly still double or triple from today’s valuation, I was looking at other ways to benefit from the development of the James Bay Region of Quebec for critical minerals exploration and extraction.

A battery metals focused junior explorer that caught my attention is called Infinity Stone Ventures (CSE:GEMS, OTC:TLOOF). With three properties in close proximity to PMET’s Corvette Property, Infinity’s Taiga and Camaro projects are directly adjacent to Corvette. Working to identify new pegmatites on the properties, Infinity Stone’s team has begun an initial sampling and mapping program across 21 known pegmatite occurrences on the properties.  The company anticipates having an update out next week with all the preliminary findings from the exploration program, including images and mapping.

Additionally, the Hellcat project was staked by Infinity Stone and is proving to be one of the most promising with the exploration team identifying multiple pegmatites with high spodumene potential. 

The potential for a new lithium discovery near what is quickly becoming the best lithium discovery of the last several years has me intrigued by the potential of Infinity Stone’s projects near Corvette. However, the company also has a number of other battery metals projects in Quebec and Ontario that it is in the process of advancing.

A rough timeline of news flow that investors can expect in Q4 2022:

  • Assays from Galaxy Lithium project (next 30 days)
  • Update from Camaro exploration program in James Bay, adjacent to PMET (next week)
  • Potential further acquisition of more land in James Bay near PMET
  • Sending of 150kg sample of Spodumene to lab in Boston for Metallurgy (next week)
  • Rockstone drilling program to begin (next two weeks)
  • Magnetics to be flown on Zen-Whorberi (next two weeks)
  • Assays from Camaro project (45 days)
  • Drilling at Zen (November)
  • Magnetics at Galaxy (November)
  • Rockstone Assays (December)

Infinity Stone insiders own more than 25% of outstanding shares. The largest shareholder (~17%) is Chairman Michael Townsend who has been a regular buyer of GEMS shares on the open market throughout 2022, purchasing more than $700,000 in stock in the last six months alone:

The recent market turmoil has delivered a ~50% decline in GEMS shares back near important support at $.20:

Infinity Stone Ventures Corp (Daily)

I used the recent share price weakness as an opportunity to initiate a new position in GEMS.

At today’s US$13 million market cap (~75.8 million shares outstanding), Infinity Stone offers significant upside potential with multiple ways for shareholders to benefit from a new battery metals discovery in one of the best jurisdictions for battery metals mining globally. 

Disclosure: Author owns shares of Infinity Stone Ventures Corp at the time of publishing and may choose to buy or sell at any time without notice. Author has been compensated for marketing services by Infinity Stone Ventures Corp. 

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