Towards the end of June Metal Energy Corp (TSX-V:MERG, OTCQB:MEEEF) closed on what looks to be a transformative lithium deal.
Following the acquisition of the SourceRock project, Metal Energy has now set its sights on becoming the first lithium brine producer in Ontario.
Ontario already has something of a track record in lithium exploration, but hitherto it’s been centered around the hard rock pegmatites at Georgia Lake.
Georgia Lake’s owner, Rock Tech Lithium, looks to be close to pressing the go-button on construction there, and when it does, Ontario will be well and truly on the map as a lithium producer.
Until now, though, lithium deposits in brine have been relatively unknown in Ontario.
But Metal Energy’s SourceRock project could potentially change all that.
SourceRock is right beside Georgia Lake, and is very likely influenced and connected to it.
“The sedimentary geology is a billion years old,” says James Sykes, the chief executive of Metal Energy.
“There’s been plenty of time for the fluid to interact with the rocks, to dissolve lithium-bearing minerals and sequester lithium into brines.”
But what exactly are we talking about here?
So far, Metal Energy has not drill tested SourceRock, so it’s hard to say anything with absolute certainty.
What is known is that brines are present, with significant quantity, pressure, and high concentrations of total dissolved solids (sodium, potassium, calcium and chlorine).
But previous operators have never analyzed the brines for lithium. SourceRock lies in a sedimentary basin that is on a regional scale equivalent in size to Chile's Salar de Atacama central salt body, the largest lithium brine-producing jurisdiction in the world.
That’s one tick in the box.
Metal Energy holds almost all of the ground covering the deepest parts of the sedimentary basin, , down to between 500 metres and 1,000 metres, where previous drill holes intersected supersaturated saline brines.
The supersaturated brines showed up as instantaneous formations of salt that appeared on the drill rods and drill core. Previous drill holes also intersected dissolved halite, comprising sodium chloride, and and sylvite beds, typical pathfinders to finding lithium in brines.
All the indications are there that SourceRock could be something substantial, and it’s not surprising that the company continues to pick up new ground around the project, with the most recent acquisition of 189 hectares announced on 17 July.
Accordingly, drilling is now being planned.
“We plan to drill this year,” says Sykes, “by December at the latest. We’ve got enough money in the bank for a proof-of-concept hole.”
Exactly when the drilling takes place depends partly on the results of consultations with local First Nations, and how the drill programme can be worked to fit in with moose-hunting season.
But when it does get underway, it ought to generate plenty of excitement amongst investors, who will be very aware of the binary nature of such exploration.
Because if Metal Energy does hit lithium brines at good grades and flow rates, it will be nothing less than transformational for the company and could move the share price up by several orders of magnitude.
At that moment, says Sykes, the company will know whether it has a direct lithium extraction, or DLE project, or a more traditional evaporation project. Either outcome would be welcome.
Meanwhile, the company will also continue working on its Manibridge nickel project, which in any other market would be attracting far more attention than it currently is. Manibridge is a nickel sulphide project – and there are precious few of those left now – with over 1% nickel intercepted in 34 of 36 drill holes in the most recent drilling campaign, over widths of between 0.5 metres and 25 metres, and averaging 8.8 metres.
Those are numbers that are worth taking seriously, and although Manibridge is no longer the main focus of the company, it represents a nice option on nickel and could in due course generate significant value.