Frontier Lithium CEO buoyant after Mitsubishi deal for Ontario project even as metal tanks

Frontier Lithium (TSXV: FL; US-OTC: LITOF) and Mitsubishi are partnering to develop the roughly $1.5 billion PAK Lithium project and hydroxide plant in northern Ontario, the companies said on Monday. Frontier shares jumped.

The Japanese conglomerate is investing an initial $25 million for a 7.5% stake in a Frontier subsidiary with an option to increase to 25% after a definitive feasibility study due this year, Frontier CEO Trevor Walker said in an interview with The Northern Miner.

Shares in Sudbury, Ont.-based Frontier Lithium soared 22% to $1.12 apiece in Monday afternoon trading in Toronto, valuing the company at $255 million. They’ve traded in a 52-week range of 41¢ to $2.74.  

The partners aim to build Ontario’s first integrated lithium mining and processing operation with the continent’s highest-grade spodumene resource even as prices for the battery metal have plunged to a fraction of their value a year ago. Mitsubishi may help secure debt financing for the project, which is the Tokyo-based company’s first investment in lithium mining. The conversion plant’s technology is being developed by a Frontier technical director with a decade of experience with a large Chinese lithium hydroxide producer, Walker said.

“Lithium producers are making really strong margins and profits even though the price has tanked,” Walker said by phone. “We don't sweat the volatility of the market. We see three to four times growth in the market from now over the next 10 years.”