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By Team Ace Investors
Company Overview
Winsome Resources (ASX: WR1) is a lithium-focused exploration and development company with four project areas in Quebec, Canada. The Company has an established portfolio of leading exploration lithium projects in the James Bay Region of Quebec Province, Canada, an area renowned for its world-class infrastructure and support for mining developments, as well as exclusive rights to explore and subsequently purchase its most recent project, Decelles. Three of Winsome's projects – Cancet, Adina, and Sirmac-Clappier are 100% owned by the Company. The Company has exclusive rights to explore and subsequently purchase its most recent project, Decelles, located near Val-dÓr, also in Quebec. The Company's most advanced project, Cancet provides a shallow, high-grade lithium deposit and is strategically located close to established infrastructure and supply chains. It is located 155km East of Radisson, within a favorable geological setting with a well-mineralized spodumene-bearing pegmatite, and demonstrated that a very high recovery at course crush size is achievable. Additional targets have also been identified to the west and east, potentially significantly increasing lithium tonnage.
The Adina lithium project was mapped in 2016, with successful maiden drilling of 10 holes, covering 1,726m completed in 2018. A pegmatite ridge indicated a 2km potential strike. The initial drilling returned several well mineralized, albeit narrow intervals of mineralization, warranting additional field prospecting and mapping. The project offers a co-development opportunity with Cancet. The Sirmac-Clappier project is made up of 39 claims for a total area of 1,931 Ha, high-grade outcropping lithium hosted in spodumene-bearing pegmatites. The asset is located less than 3km from an existing high-grade deposit. The project is in a favorable location close to a major mining town and airport infrastructure, with road and power infrastructure traversing the property. The Company has also recently expanded its lithium footprint in Quebec, with exclusive option agreements to acquire and explore 669 claims totaling 385m2 in Decelles and a further 259 claims totaling 149km2 at Mazerac, also located near the Quebec mining town of Val-dÓr. Winsome intends to begin the immediate exploration of Decelles, commencing with desktop mapping of granitic outcrops based on the extensive historical and public data available on the area, followed by a winter field visit to inspect visible outcrops and collect samples. Winsome is led by a highly qualified team with strong experience in lithium exploration and development as well as leading ASX listed companies.
Investment Rationale
Winsome further expanded its lithium exploration footprint in Quebec.
The Company recently signed an exclusive option agreement to explore and subsequently acquire the claims over 24 months. On 9 May 2022, the Company executed an exclusive option agreement to acquire 258 claims of ~149km2 in the prospective Mazérac region of Quebec, Canada, from Mr. Glenn Griesbach and one claim from Mr. de Keyser. Winsome has entered into an exclusive option agreement to acquire 259 claims from Mr. Griesbach under the following broad terms: (i) An upfront fee of AUD$75,000, paid in WR1 shares; (ii) AUD 250,000 paid in three tranches of WR1 shares, based on the five-day VWAP from last week's trading (AUS $0.47). This will equate to: (a) 177,000 WR1 shares issued now; (b) 177,000 WR1 shares to be issued on 3 May 2023; (c) 177,000 WR1 shares issued on 3 May 2024. The 2% Net Smelter Royalty (NSR) over the properties can be reduced to 1% for consideration of AUD 1,000,000. Once the final payment of 175,000 WR1 shares is made on 3 May 2024, the 259 claims will transfer to Winsome's Canadian subsidiary. This option agreement gives Winsome flexibility to have exclusive exploration rights over a large area in a highly prospective lithium region without having to commit the full purchase price until field exploration work can be carried out to confirm the presence of mineralized pegmatites. The Company also can accelerate the acquisition at any point within the next 24 months and have the claims transferred immediately by issuing all shares due to Mr. Griesbach. In a separate transaction, the Company paid Mr. de Keyser CAD 20,000 to acquire outright the 'Nippy Hill' claim, which is contiguous to the other Mazérac claims described above. The region has seen much recent staking and prospecting activity, including high-grade spodumene discoveries by Vision Lithium at their nearby Cadillac property. The enlarged property holding is highly complementary to Company's 100% owned, existing projects in the James Bay region – Cancet, Adina, and Sirmac-Clapier
Achieved exceptional results from metallurgical testing at Cancet and Adina lithium projects
The Company recently announced that it had received outstanding metallurgical results from test work on composite samples from the Company's Cancet and Adina projects in Quebec, Canada. Exceptional metallurgical results were achieved in the test work undertaken on two lithium-bearing composite samples from the flagship Cancet project and one composite sample from the Adina project. Heavy Liquid Separation (HLS), with batch flotation tests, was performed on three composite samples prepared from a split drill core. Samples were sourced from the split drill core from the Phase 1 drilling campaign, which was previously completed at Cancet. The hole selection was guided by the requirement to ensure the metallurgical testing would provide a representative view of the deposit at Cancet. HLS tests achieved global lithium recoveries ranging from 68% to 83% (interpolated to 6% Li2O grade). When combining results obtained from HLS and batch flotation testing, overall lithium recoveries ranged from 85% to 94%, with spodumene concentrate lithia grades ranging from 5.96% to 6.27% Li2O. Initial test work results demonstrated the potential for a dense media separation (DMS) processing route, which would lessen environmental impacts, enable quicker approvals, and subsequently accelerate time to market. The recoveries are exceptional with just HLS as a standalone and improved further with flotation test work. They show that Cancet ore can potentially benefit a 6% Li2O concentrate with just Dense Media Separation (DMS). This will result in a lower environmental impact with less comminution (crushing), power and chemicals needed, lower capital cost, and quicker approvals, which should mean acceleration to market. Future test work will further investigate iron rejection in the flowsheet, the impact of host rock dilution on metallurgical performance, and optimization of the flotation conditions. Metallurgical test work was undertaken at SGS Canada Inc. in Lakefield, Ontario.
o Outstanding metallurgical results were achieved from test work on composite samples from Company's 100% owned Cancet and Adina projects
o Exceptional high recoveries - potential for Cancet ore to be beneficiated to a 6% Li2O concentrate with Dense Media Separation (DMS)
o Results build on test work previously conducted by MetalsTech
o Test work to form part of scoping studies for both Cancet and Adina
Winsome confirmed the presence of high-grade lithium mineralization from the recently released 26 rock chip assays at Adina.
Winsome Resources recently confirmed the presence of high-grade lithium mineralization from laboratory assays following the recent field exploration program at the Company’s Adina project in Quebec. Winsome has received 26 rock chip assays from the SGS laboratory in Quebec, confirming strong mineralization at the recently discovered pegmatite outcrop at Adina following a three-week field exploration program. The results confirmed high-grade lithium rock chips, with the highest grade of 4.89% lithium oxide (Li2O), with other significant high-grade results recorded, including 10 of the 26 samples over 2% Li2O. The recently discovered pegmatite outcrops, labeled as the Jamar Discovery, appear to be hosted in a basalt unit and are located approximately 1.2km to the NE of the previously drilled mineralized pegmatites at Adina. The assay results from these rock chip samples give the company confidence ahead of the upcoming autumn drilling campaign. These exceptional results of up to 4.89% Li2O demonstrate that the extent of lithium mineralization at Adina is much larger than it was previously thought. This offers an excellent opportunity to develop a maiden resource at Adina while advancing Cancet and other existing regional projects.
o Rock chip Assay results through surface mapping from the recent Jamar Discovery at Adina confirmed that lithium mineralization is much larger than it was previously thought
o Achieved multiple exceptional results of up to 4.89% Li2O
o Upcoming drill program to determine potential connectivity with previously discovered ore body at Adina
o Discovery is a significant step towards co-development alongside the flagship project, Cancet
Winsome has submitted and received permits for drilling, which is anticipated to commence early in the next month. The drilling program is designed to infill drill the previously drilled mineralized pegmatite ore body at Adina and the new Jamar Discovery and investigate the ground in between to determine if the ore bodies are connected. The drill program is expected to take about six weeks to complete with a Diamond drill rig which is heli-portable. Continued exploration success at Adina would increase the prospect of co-development with Winsome’s nearby flagship Cancet lithium project, which lies approximately 90 km to the west. This offers a rapid path to define more resources for production, with existing road infrastructure in the region connecting Cancet to mining and transport centers to the south. The Company closed JuneQ with a Cash and cash equivalents of $13.47 million, providing a funding runway of up to 7.5 quarters.
ACE’s Recommendation
Winsome is well positioned to leverage the growing appetite for critical battery metal lithium, an integral component of batteries for electric vehicles. The Company has an established portfolio of leading exploration lithium projects in the James Bay Region of Quebec Province, Canada, an area renowned for its world-class infrastructure and support for mining developments, as well as exclusive rights to explore and subsequently acquire its most recent project, Decelles. The Company recently signed an exclusive option agreement to explore and subsequently acquire the claims over 24 months. On 9 May 2022, the Company executed an exclusive option agreement to acquire 258 claims of ~149km2 in the prospective Mazérac region of Quebec, Canada from Mr. Glenn Griesbach and one claim from Mr. de Keyser. This option agreement gives ‘Winsome flexibility to have exclusive exploration rights over a large area in a highly prospective lithium region without having to commit the full purchase price until field exploration work can be carried out to confirm the presence of mineralized pegmatites, thereby significantly reducing the risks associated with the acquisition. Winsome also recently confirmed the presence of high-grade lithium mineralization at Adina, confirming strong mineralization at the recently discovered pegmatite outcrop at Adina following a three-week field exploration program. The results confirmed high-grade lithium rock chips, with the highest grade of 4.89% lithium oxide (Li2O), with other significant high-grade results recorded, including 10 of the 26 samples over 2% Li2O. The assay results from these rock chip samples provide the Company with great confidence ahead of the upcoming autumn drilling campaign. These exceptional results of up to 4.89% Li2O demonstrate that the extent of lithium mineralization at Adina is much larger than it was previously thought. This offers a great opportunity to develop a maiden resource at Adina, while simultaneously advancing Cancet and other existing projects in the region. We believe that the recently executed option agreement to acquire 258 claims of ~149km2 in the prospective Mazérac region of Quebec in Canada and the presence of high-grade lithium mineralization at Adina will provide a solid foundation for growth. The stock has declined 39% from its 52-week high to A$0.350/share and offers an attractive opportunity. So, we would like to recommend a SPECULATIVE BUY rating on the stock.
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