February has been a banner month for Vancouver, BC-based First Phosphate Corp. The company, engaged in extracting and purifying phosphate for use as cathode material for the LFP battery industry, celebrated its initial listing on the Canadian Securities Exchange and announced a production agreement with Europe’s largest purified phosphoric acid manufacturer Prayon.
First Phosphate Corp. (PHOS:CSE;KD0:FSE) maintains over 1,500 square kilometers of royalty-free claims in the Saguenay-Lac-St-Jean Region of Quebec. These holdings contain rare anorthosite igneous phosphate rock that yields high-purity phosphate material devoid of high concentrations of harmful elements.
The company's flagship property is located approximately 125 kilometers north of Saguenay. Firm assets include the Lac a l'Orignal, Mirepoix, Vanel Trilogy Flagship Property, the Bluesky Land Package, and the Lac Orignal and Supporting Land Package.
First Phosphate Corp. is focused on integrating its phosphate material directly into the supply chain of major battery and electric vehicle producers in North America, providing the only significant on-shore alternative to Chinese-extracted and -developed LFP batteries.
Phosphate is important in agriculture and battery manufacturing, and existing North American sources have roughly two decades of remaining production capacity.
The Catalyst: CSE listing and Prayon Memorandum
On February 22, the company announced that it had "received final approval to list its common shares on the Canadian Securities Exchange under the ticker symbol "PHOS" at market open on February 21, 2023."
According to company president Peter Kent, "the publicly traded shares of First Phosphate provide international investors with access to clean, high-purity phosphate development, focused on the lithium-iron-phosphate (LFP) battery in North America."
"LFP batteries last longer (more recharge cycles) and are safer (fewer fires!), but have a lower driving range than more powerful lithium-ion batteries using nickel and cobalt," Said Epstein Research.
"The First Phosphate deposits in Quebec are composed of phosphate anorthosite igneous rock and are among the rarest and most prized 1% of phosphate reserves in the world. This rock is ideal for the production of LFP cathode active material because it does not contain high concentrations of harmful elements."
Laurence W. Zeifman, Chairman of the Board of First Phosphate Corp., explained that executive team members "are pleased to have been able to deliver to the shareholders the stock market listing of the Company's shares on schedule and as promised. We are now in a position to pursue our strategy of building capital in the public markets."
Two days later, the company announced its memorandum of understanding (MOU) with Prayon. The MOU directs the parties to work together to assess the feasibility and opportunity for partnerships in four areas:
- Production and purchase (offtake) of phosphate concentrate
- The manufacture (tolling) of LFP-grade phosphoric acid
- Licensing for the development of an LFP-grade phosphoric acid production plant
- The development of an LFP cathode active material manufacturing plant
"The LFP battery already represents a type of battery that is establishing itself worldwide, but whose production is still limited in Europe and North America. Today's announcement paves the way for the establishment of this production capacity in North America," said Kent. "Let's not forget that LFP battery technology was originally developed several decades ago in partnership with researchers from Quebec, Canada, the United States, and Europe."
Marc Collin, Chief Technology Officer at Prayon, says the company is "pleased to cooperate with First Phosphate and to test with them our proven technologies for the production and processing of high-quality phosphoric acid to supply the LFP battery industry in North America."
"The opportunity to partner with First Phosphate is an important step in our global diversification initiatives."
Why This Sector? The Ascendance of LFP Technology
Traditional LFP batteries provide lower energy density than pricier lithium piles created with cobalt and nickel. This disparity meant they were commonly seen as less useful for transportation solutions.
According to a report from Epstein Research, "A few years ago analysts thought LFP batteries would be a niche market for low-end Chinese EVs, but then Tesla adopted LFP for its standard-range offerings globally and other OEMs are following. According to Adamas Intelligence — as of September 2022 — 31% of new Li-ion batteries were LFP. Penetration is forecast to be 40%-50% of an EV market growing at > 15%/yr."
"There are tradeoffs in using LFP chemistries, however rapidly growing market penetration clearly shows that OEMs are comfortable with the pros and cons," Peter Epstein explains in another article.
"LFP batteries last longer (more recharge cycles) and are safer (fewer fires!), but have a lower driving range than more powerful lithium-ion batteries using nickel and cobalt."
Why This Company? High Grade, On-Shore Phosphate
While there are innumerable investment options around traditional lithium-ion batteries in the mining market, First Phosphate Corp. is the only public concern specifically focused on the on-shore LFP supply chain.
"First Phosphate is not like peer phosphate or fertilizer companies who are [or hope to be] just phosphate or potash miners," Epstein continues. "Instead, they plan to vertically integrate in a substantial way, with the help of highly-skilled, cutting-edge technology partners."
"First Phosphate is not like peer phosphate or fertilizer companies who are [or hope to be] just phosphate or potash miners for the fertilizer business," Epstein continues. "Instead, they plan to vertically integrate in a substantial way, with the help of highly-skilled, cutting-edge technology partners."
"With an enterprise value of under US$60M, and only a few (if any) pure-play phosphate juniors with projects in Tier-1 jurisdictions like Quebec and focused entirely on LFP batteries to choose from, this is a company that could see a ton of interest from investors looking for new battery metal investments."
According to First Phosphate Corp. president Kent, the company’s igneous reserves can be converted into phosphoric acid with a yield of 88%, compared to much lower percentages for existing sedimentary deposits producing fertilizer phosphate for agriculture.
Why Now? Drilling Underway
Before announcing its CSE listing and MOU with Prayon, First Phosphate Corp. announced the commencement of a drilling program at its Begin-Lamarche property. The drilling program will consist of up to 4,000 meters of drill holes to test the continuity of high-grade phosphate-bearing nelsonites found on the surface.
"After obtaining results from field samples, geological reconnaissance, and a high-resolution magnetic survey completed during the second half of 2022, we are excited to initiate drilling at our Bégin-Lamarche property," said Kent. "High-grade phosphate assays in nelsonites coupled with a well-defined magnetic structure offer the potential for discovery of a large scale phosphate mineralization area."
Phosphate-bearing rock layers in anorthosite are easily identified through magnetic surveying as the phosphate is associated with magnetite. The heliborne magnetic survey completed in 2022 revealed a strong and continuous high magnetic structure that coincides with multiple grab samples that assayed over 10% P2O5. The characteristic high-magnetic signature of the type of deposit identified at the Bégin-Lamarche will be drill tested.
Ownership and Share Structure
Streetwise Ownership Overview*
First Phosphate Corp. (PHOS:CSE)
First Phosphate Corp. has a market cap of CA$24.64 million. The company has issued 48,316,722 shares, 6,781,959 warrants, and 6,225,000 options for a fully-diluted outstanding base of 61,325,681.
Management and insiders own 75% of outstanding shares, with VIP investors holding another 24% and the final 1% in the hands of pre-CTO investors.
The company has CA$1.7 million in the bank, with a base monthly burn rate of CA$30,000. Drilling costs this spring will run from CA$1 million, depending on scope.
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