Building a Vertically Integrated LFP Battery Supply Chain

Report Highlights

• A 2024, Preliminary Economic Assessment (PEA) on the company’s flagship Bégin-Lamarche project in Quebec, targeting a 23-year open-pit operation producing 900 ktpa phosphate concentrate, returned an AT-NPV8% of $1.6B, and a high AT-IRR of 33%, using US$350/t igneous phosphate concentrate vs the current spot price of US$315/t (five year range: US$140–US$700/t). PHOS is trading at just 2% of the NPV. Management plans to complete a feasibility study, advance permitting, and pursue strategic and financing partners, with production potentially starting in 2029.
• While advancing Bégin-Lamarche, PHOS is also developing two downstream facilities: a) a 190 ktpa phosphoric acid plant using 500 ktpa of concentrate from Bégin-Lamarche, and b) First Saguenay – a 10 ktpa iron phosphate plant, targeting 2026 operations (US$76M CAPEX, 10-year lease, tech partner secured). Both facilities will produce precursor material for LFP CAM. 
• The company has already entered into definitive offtake agreements for 200 ktpa of phosphate concentrate (22% of its proposed production), and 60 ktpa of phosphoric acid (32% of its proposed production).
• Since PHOS will require significant purchases from U.S. suppliers, the Export-Import Bank of the United States (EXIM) has offered up to US$170M in financing.
• Upcoming catalysts include infill drilling to upgrade resource confidence, a feasibility study and permitting for Bégin-Lamarche, progress toward commercial production at the iron phosphate plant, offtake agreements, and project financing.

Risks 

• Commodity prices
• Permitting and development 
• Access to capital and potential for share dilution
• There is no assurance that the company can advance all of its projects simultaneously

 *Subsequent to FY2025, PHOS raised $8M through equity financings

Price and Volume (1-year)

Portfolio Summary

Two advanced-stage phosphate projects in Quebec, an emerging battery metal hub in Canada. Phosphate is included in the critical minerals list of Canada

Igneous Phosphate 

Phosphate is a natural source of phosphorus, and is usually found in two sources: igneous and sedimentary deposits. The majority of global phosphate supply comes from sedimentary deposits, while igneous deposits account for only about 5% of total resources. Most igneous phosphate production comes from Russia, South Africa, Brazil, and Finland. Note that igneous anorthosite (PHOS’s target), which accounts for just 1% of global phosphate resources, offers higher purity than other igneous sources.

Igneous phosphate deposits produce high-grade phosphate concentrates (35% - 41% P2O5) vs sedimentary phosphate deposits (15% - 31% P2O5) 

Igneous phosphate has fewer harmful trace elements than sedimentary phosphate, making it ideal for LFP batteries

Igneous phosphate costs 2–3× more than sedimentary due to its superior purity, especially anorthosite, enabling near-total conversion to purified phosphoric acid for high-value markets beyond fertilizers

Morocco has the largest reserve-base of sedimentary phosphate, accounting for 68% of global reserves (Source: USGS). Igneous deposits are found in Russia, Brazil, Canada, Finland, and South Africa

Phosphate derivatives serve a wide range of industries—from fertilizers, which account for 90% of global demand, to advanced battery technologies

Merchant Grade Phosphoric Acid (MGA) from igneous phosphate rock converts efficiently into Purified Phosphoric Acid (PPA) for LFP batteries, while sedimentary-based MGA lacks the purity for PPA, and is mainly used in fertilizers

Product pricing ranges from US$300–350/t for igneous phosphate concentrate, US$800–1,000/t for MGA, US$2,000–2,500/t for PPA, and $10,000–15,000/t for LFP cathode active material (CAM).

Approximately 90% of phosphate rock is used for fertilizer production, while the remaining 10% supports industrial applications—of which, LFP batteries comprise about 5% and represent PHOS’s primary target market.

LFP batteries power rapidly growing markets like electric vehicles (EVs), and energy storage systems (ESS), with  expanding use in AI data centers, robotics, and automation. LFP batteries employ lithium iron phosphate (LiFePO4) as the cathode material. Phosphate makes up 50–55% of the cathode, and about 10–15% of the total battery weight.

LFP batteries are safer, cheaper, and have a longer lifespan, but they may offer shorter run times between charges, and tend to be heavier

China dominates LFP battery production, though other countries are expanding their capacity. Sources indicate that LFP batteries account for 60% of the global battery market

For EVs specifically, LFP batteries currently make up 46% of battery packs, and are projected to exceed 60% by 2035, driven primarily by their lower cost, longer lifespan, and strong adoption in China

It is estimated that the global LFP battery market will grow from US$17B  in 2024, to US$73B by 2034, reflecting a CAGR of 16%, driven by increasing demand for electric vehicles, energy storage systems, and cost-effective battery solutions 

33 new PPA plants needed by 2030 to meet rising LFP battery demand

Five-year range: Sedimentary US$70–US$350/t; Igneous US$140–US$700/t

We have a positive long-term outlook on igneous phosphate rock and PPA prices, supported by growing demand for LFP batteries, and projected supply shortages 

PHOS gained control of the project in 2022

Bégin-Lamarche Phosphate Project (100% interest)

Location, Accessibility and Infrastructure

This advanced-stage project, covering 38,610 hectares, is located in Saguenay-Lac-Saint-Jean, Québec.

Approximately 70 km northwest of Saguenay, a regional hub and developed industrial area 

Excellent infrastructure in place including access to power, railways, deep-sea port (85 km driving distance), and a skilled workforce. Proximity to railway and port are key, as future production will likely be distributed to North American and European markets

Management has signed an MOU with the Port of Saguenay to secure industrial land and deep-sea access at the port for future logistics, and for its own phosphoric acid plant.

Mineralization, Resources, and PEA

The project hosts an igneous, massif-type anorthosite phosphate deposit within the Lac-Saint-Jean Anorthosite (LSJA) suite in Quebec’s Grenville Province. LSJA is the world’s largest igneous phosphate-bearing anorthosite complex. Besides PHOS’s projects, the area also hosts Arianne Phosphate’s (TSXV: DAN / MCAP: $33M) Lac à Paul deposit. Arianne has completed a facility study on Lac à Paul, and recently finished a pre-feasibility study targeting 350 ktpa of PPA with an initial CAPEX of US$1.65B.  The key difference between Lac à Paul and Bégin-Lamarche is proximity to port: Lac à Paul is 350 km driving distance from the Port of Saguenay and requires a new port, while Bégin-Lamarche is just 70 km away, and benefits from existing infrastructure, offering cost advantages.

Mineralization at Bégin-Lamarche is spread across three zones: 1) the Southern zone; 2) the Northern zone; and 3) the Mountain zone.  

A medium-sized, open-pit resource totaling 255.5 Mt at 6.96% P2O5 vs standard grades ranging from 4% to 15% P2O5 

In December 2024, PHOS completed a Preliminary Economic Assessment (PEA) for a 23-year, truck-and-shovel open-pit operation targeting 900 ktpa of phosphate concentrate. Metallurgical tests confirmed the concentrate is suitable for LFP batteries.

The resource estimate was based on 120 holes/29,762 m. We believe there is significant resource expansion potential as the deposit (2.5 km long x 0.1 to 0.2 km thick x 0.25 km at depth) remains open at depth

The PEA returned an AT-NPV8% of $1.6B, and a high AT-IRR of 33%, using US$350/t igneous phosphate concentrate. The project’s initial CAPEX is estimated at $675M

Qualified Persons: Gilles Laverdière, P.Geo. VP Exploration for PHOS, and Eugene Puritch, P.Eng., FEC, CET, President of P&E Mining Consultants Inc. 

Source: Company

Using the current spot price of US$315/t, the study returned an AT-NPV8% of US$1.1B

Management plans to complete a feasibility study, advance permitting, and pursue strategic and financing partners, with production potentially starting in 2029.

PHOS’s Proposed Downstream Facilities & Development Plans

The table and chart below outline a projected economic model for a four-step, vertically integrated value chain that transforms raw phosphate ore into high-value LFP (Lithium Iron Phosphate) precursor material (PCAM). The figures presented represent our preliminary assumptions, derived from our market studies, and analysis of comparable projects.

Note how the product price increases at each stage, reflecting the value added through incremental OPEX and CAPEX

While advancing the Bégin-Lamarche project, the company is simultaneously developing two downstream facilities: a) a phosphoric acid plant, and b) an iron phosphate plant

190 ktpa Phosphoric Acid (MGA) Plant: The company is planning to build out a phosphoric acid plant at the Port of Saguenay, located approximately 70 km driving distance from the Bégin-Lamarche project. It recently completed an internal economic study, details of which remain undisclosed, but management has indicated the results were robust enough to move the project forward. The study assumes that 500 ktpa of the 900 ktpa concentrate expected to be produced at Bégin-Lamarche (as per the PEA) will be used to produce 190 ktpa of value-added phosphoric acid (100% P₂O₅) or 352 ktpa of merchant-grade acid (MGA: 54% P₂O₅).

Based on comparable projects, we estimate a potential CAPEX of approximately US$500M for the facility. PHOS has signed a technology license agreement with Prayon SA of Belgium, under which Prayon will grant PHOS the rights to use its technology to design, build, operate, and maintain the plant. Prayon is a well-established player in phosphate chemistry, with over 1,000 employees, and multiple production and R&D facilities across Europe and the U.S.

A feasibility study is planned for 2026. It is expected that Prayon will purchase the MGA produced at the facility, convert it into PPA, and sell it back to PHOS for use in the next step of its supply chain (described below).

10 ktpa Iron Phosphate Plant – "First Saguenay":  PHOS is developing a 10 ktpa iron phosphate plant, named First Saguenay, to produce LFP precursor cathode active material. The plant will source PPA from Prayon. PHOS has secured a 10-year lease on an existing industrial facility currently used for industrial steelwork, located 80 km from the Bégin-Lamarche project, and 120 km from Lac à l’Original. The facility is owned by Logistique Proco, a Quebec-based engineering and construction firm. An internal feasibility study estimates a CAPEX of US$76M to retrofit the facility and begin operations.

Planning a 190 ktpa phosphoric acid plant, using 500 ktpa of concentrate from Bégin-Lamarche

Partnership with Prayon of Belgium. 10 ktpa iron phosphate plant; leased site; PPA sourced from Prayon

First Saguenay facility is located 20 km from the deep-sea port of Saquenay. No new permits required 

Source: Company

PHOS has partnered with Ultion Technologies, a US-based private company specializing in the development and commercialization of battery materials, particularly LFP cathode active materials. Ultion will be responsible for the start-up and operations of the plant. The final product will be sold to manufacturers of LFP cathode active material (CAM) or battery cell makers.

Management expects to begin pre-production in 2026, with commercial production planned for Q1-2027. Next steps include finalizing offtake agreements, completing facility buildout, and commencing production. Since PHOS will require significant purchases from U.S. suppliers, the Export-Import Bank of the United States (EXIM) has offered up to US$170M in financing for these projects.

Achieves Fully North American LFP Battery Cell Production: Earlier this month, First Phosphate (PHOS) announced it produced commercial-grade LFP battery cells using 100% North American-sourced critical minerals, assembled by Ultion Technologies in Nevada. PHOS supplied phosphate and iron from its Bégin-Lamarche property, while lithium and graphite were provided by other juniors. This achievement highlights the potential for a fully localized LFP battery supply chain. 

Lac à l'Orignal Phosphate Project (100% interest)

This advanced-stage project, covering 79,663 hectares, is located in the Saguenay-Lac-Saint Jean region, northern Québec. 

As PHOS is exclusively focused on the above-mentioned initiatives, management has no immediate plans for this project. Located 110 km from Bégin-Lamarche 

Three phosphate showings have been drill-tested on the property: 1) the Lac à l'Orignal deposit; 2) Lac Vanel; and 3) Mirepoix. The current resource estimate covers only the Lac à l'Orignal deposit.

A small, open-pit resource totaling 49 Mt at 5.1% P2O5 vs standard grades ranging from 4% to 15% P2O5. The resource estimate was based on 56 holes/7,111 m

In 2023, PHOS completed a PEA for a 14-year truck-and-shovel open-pit operation, primarily producing 425 ktpa of phosphate concentrate. Metallurgical tests confirmed the concentrate is suitable for manufacturing PPA used in LFP batteries.

The PEA returned an AT-NPV5% of $511M, and a relatively low AT-IRR of 17%, using US$367/t igneous phosphate vs the current spot price of US$315/t. The project economics are less attractive than Bégin-Lamarche due to smaller tonnage, and lower grades

Management and Directors

Brief biographies of the management team and board members, as provided by the company, follow: 

John Passalacqua – CEO & Director 

Mr. Passalacqua is an international business strategist with over 35 years of extensive technology and capital markets experience. In 1998, he gained the title of a top 50 international business strategist on the early internet. Mr. Passalacqua is involved in private and public market planning for companies in nascent, visionary industries.

Armand MacKenzie – President

Mr. MacKenzie was raised in traditional Innu territory, and has practiced law for 15 years, and was chief legal advisor on land rights for the Innu Nation. He was special advisor/negotiator on the drafting and adoption of the UN General Assembly Declaration on the Rights of Indigenous Peoples. Mr. MacKenzie has been a mining executive for the last 15 years.

Bennett Kurtz – CFO & Director

Mr. Kurtz is principal of Kurtz Financial Group. He has experience in financing public companies and taking private companies public. Mr. Kurtz has multi-faceted business experience in finance, management, sales, marketing and administrative functions including business analysis, public business unit segmentation, internal and external analytics.

David Dufour – Executive Vice President

Mr. Dufour has over 30 years-experience in the development and the management of high-growth business in Saguenay, Quebec. He has worked as land surveyor, project manager and director of economic development. Mr. Dufour also worked in economic development for the Government of Quebec.

Gilles Laverdiere, P. Geo - Chief Geologist  

Mr. Laverdiere is a geologist with more than 40 years of experience in mining exploration. Gilles has planned and supervised drilling projects in Quebec and elsewhere. He was President and CEO of HMZ Metals Inc. Gilles has served as a senior executive and board member of many public mining companies.

Laurence W. Zeifman – Non-Executive Chairman 

Mr. Zeifman is an audit partner of Zeifmans LLP, a mid-sized Toronto public accounting firm. He has four decades of experience in public accounting and serves as chair of Nexia Canada, the Canadian division of the eighth largest international accounting network.

Peter Nicholson – Independent Director

Mr. Nicholson is a recognized leader in Canadian tax assisted investments, with a specialized focus on philanthropic tax planning and tax reduction, and the mining industry. Through work with numerous donors, foundations, institutions, and boards, He has helped generate over $350M for client donations.

Financials 

Strong balance sheet. Subsequent to FY2025, PHOS raised $8M through equity financings 

• PHOS expenses, rather than capitalizes, all mineral exploration costs; if capitalized, its assets would be >$16M.
• The company has raised over $29M in equity to date
• Source: FRC / Company

Valuation and Rating

In-the-money options can bring in $4.64M

Our Discounted Cash Flow (DCF) valuation on PHOS is $1.15/share, based on a 25-year operation, assuming  annual production of 300 ktpa of PPA (100% P₂O₅), with an initial CAPEX of US$1B

For conservatism, and to account for project execution and financing risks, we used a relatively high discount rate of 15% vs our usual  10–12% for North American projects

Our valuation is highly sensitive to various key inputs

Based on our review of the company’s projects, management’s vision, and development strategy, we are initiating coverage with a BUY rating, and a fair value estimate of $1.15/share. Our valuation is based solely on a DCF model, as we are not aware of any direct comparables with a similar development strategy, stage, and cost structure.

In conclusion, we believe PHOS offers rare exposure to a vertically integrated, North American LFP battery supply chain backed by high-purity igneous phosphate—critical for meeting EV and energy storage demand. With a strong PEA, multiple downstream projects underway, and strategic offtake and financing agreements already in place, PHOS is advancing toward becoming a key domestic player in the LFP battery market.

Risks

We are assigning a risk rating of 5 (Highly Speculative)

We believe the company is exposed to the following key risks (not exhaustive):

• Commodity prices
• Permitting and development 
• Access to capital and potential for share dilution
• Dependence on partners for project execution
• There is no assurance that the company can advance all of its projects simultaneously