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Price Performance (1-year)
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Lithium and nickel-copper-PGM projects in Manitoba, including two with resource estimates (MM and Donner). MM is an advanced stage nickel-copper-PGM project
Donner could become the next permitted lithium project in North America. In 2023, Manitoba was ranked among the top three mining jurisdictions in Canada
Grid owns a 75% interest, with the remaining 25% owned by a Toronto-based asset manager that also owns 20% of GRDM's equity.
Location, Accessibility, and Infrastructure
This 6,956-hectare property is located in the prolific Winnipeg River pegmatite field in southeastern Manitoba. This area is home to the Tanco Mine at Bernic Lake, one of only two lithium spodumene producers in Canada, along with Sayona Mining’s (ASX: SYA) NAL mine in Quebec.
The Winnipeg River pegmatite field hosts the Tanco mine, and several pegmatite deposits
Around 60% of globally mined lithium currently comes from hard-rock resources, with the remaining 40% sourced from brine deposits
Determining the more economically attractive deposit type is challenging; while pegmatite deposits typically offer higher-grade lithium with lower CAPEX, they often yield lower operating margins
The project hosts a relatively small, high-grade open-pit and underground resource totaling 95 Kt Li2O/234 Kt LCE
Source: Company
Resources are spread across two deposits – the Northwest dyke (0.70 km/length x 4 m/width x 0.25 km/depth) and the Main dyke (1.10 km/length x 3 m/width x 0.30 km depth
Initial metallurgical results returned promising lithium recoveries (70%)
We believe there is resource expansion potential as both deposits remain open in multiple directions, and multiple soil anomalies remain untested
Donner is located 35 km north of the Tanco mine, and 85 km south of the True North mill
GRDM has a binding agreement with 1911 Gold Corporation (TSXV: AUMB) to lease and reconfigure their True North mill for producing lithium concentrate. Additionally, GRDM has an MOU with the Tanco Mine. Both processing options are within trucking distance from Donner. Although the company is considering both options, management believes that structuring a definitive deal with Tanco could significantly reduce the project’s CAPEX compared to using True North.
Grid has the potential to transport future ore to these facilities, thereby enabling faster progress towards production at a relatively low CAPEX
The True North mill, valued at over $200M, represents the savings GRDM anticipates by transporting their ore to this facility
A recent scoping study has confirmed the feasibility of reconfiguring the True North mill to process lithium ore from Donner. Based on the current resource, the project can produce 75 Ktpa of spodumene concentrates for 10+ years, at milling costs of $316/t (excludes mining and transportation costs) vs the current spodumene spot price of US$1,150/t.
The project's initial CAPEX is estimated at $50M, significantly lower than the hundreds of millions required by comparable projects that need to construct their own processing facilities
The study did not include additional details regarding the project’s economics, such as NPV or IRR. However, for context, we have provided NAL’s economics below.
Based on a production rate of 190 Ktpa of spodumene (which is 2.5 times the proposed amount from Donner), a 2023 feasibility study on NAL yielded an AT-NPV8% of $1.4B, using US$1,352/t spodumene
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Management anticipates a mining permit in 2025
Based on discussions with management, they plan to complete a Preliminary Economic Assessment (PEA) once lithium prices recover. The project's production timeline will be contingent upon lithium prices. Ideally, we believe the project can advance to production within six to 12 months of obtaining a mining permit.
135 km northeast of Winnipeg. Connected to provincial highways
This project consists of the advanced-stage Makwa and Mayville deposits (30 km apart), located in the Bird River greenstone belt. The Bird River greenstone belt has similarities to the well-known Ring of Fire belt in Ontario, known for their copper/nickel/PGM deposits
Power is available at Makwa, while Mayville can access a transmission line located 12 km west of the property
Water is available from the Bird River, located south of Makwa. The property covers 50 km of prospective strike length (30 km at the nickel-rich Makwa, and 20 km at the copper-rich Mayville)
Two open-pit resources. Mineralization is open at depth
Makwa hosts a nickel dominant deposit with minor copper, palladium, and cobalt. The property was mined (open-pit) by Falconbridge Nickel Mines from 1969 to 1976. In total, 475 holes/87,772 m has been drilled from 1929 to 2022, including an 18-hole drill program completed by GRDM in 2022.
Mayville hosts a copper dominant deposit, with nickel, palladium, and cobalt. In total, 221 holes/45,000 m has been drilled from 1923 to 2023.
Medium-grade open-pittable indicated resources totaling 263 Mlbs nickel, 317 Mlbs copper, plus 450+ Koz of precious metals
A PEA completed in 2014 focused on two conventional open pits (one at Mayville and one at Makwa) and a flotation mill (8,300 tpd producing copper and nickel concentrates) at Mayville, indicating a 14-year mine life. We are not presenting the economics here as they are outdated.
In 2023, GRDM expanded its land holdings in the area by acquiring adjacent ground to the MM project
On this new land package, prior work has identified 7 Mt of resources across three near-surface deposits: Page, Ore Fault, and New Manitoba
GRDM plans to drill the Mayville copper-dominant trend this fall, focusing on the untested Mayville East Trend
GRDM aims for an 80-100 Mt global resource for the project, and is exploring a hub-and-spoke development model. For conservatism, we are valuing the project based on its existing resources.
Management and board own 3% of GRDM’s equity. Institutions own 37%
Healthy balance sheet
Juniors with higher grades generally exhibit a higher EV/lb. Nickel juniors with low-medium grades are currently trading at $0.1/lb
Applying $0.1/lb to MM’s resources, we arrived at a fair value estimate of $0.18/share
For valuing Donner, we are utilizing a DCF model. A comparable valuation is not appropriate given Donner's significantly lower CAPEX and accelerated path to production.
Our DCF valuation on Donner is $0.23/share
Using a sum-of-parts approach, we are assigning a fair value estimate of $0.42/share on GRDM
We are resuming coverage with a BUY rating, and a fair value estimate of $0.42/share. Upcoming catalysts include drilling at MM, permitting, and favorable sentiment towards junior companies focused on EV metals. We believe government initiatives across North America to secure reliable domestic supplies of critical minerals are aligned with Grid's development strategy.
We are assigning a risk rating of 5 (Highly Speculative)
We believe the company is exposed to the following key risks (not exhaustive):
