Is this Zinc Mining Firm Sitting on a Significant Lithium Cache?

Both the U.S. and Canada designated zinc as a critical material, which is one reason why some investors have already been quite bullish about Vancouver, BC-based Slave Lake Zinc Corp. (SLZ:CSE). The company is primarily engaged in acquiring and exploring mineral property assets in the Northwest Territories of Canada.

Slave Lake Zinc is currently focused on the exploration of its O'Connor Lake zinc, lead, and copper property in the under-explored South Slave Region of the NWT. With the collaboration of the Northwest Territory Métis Nation and the assistance of the other Indigenous groups representing the stakeholders of the South Slave, the historic O'Connor Lake Zinc-Lead (critical metals) deposit is well situated for an advanced stage of exploration. 

The site is located in the South Slave Region of the Northwest Territories, which is approximately 185 kilometers southeast of Yellowknife, where the company’s recently-expanded land package covers approximately 18,841 acres.

In-ground zinc-lead has become a prized commodity among investors seeking to escape the tumultuous equities market. “Lead-zinc is among the most important of base metals, constituting an essential requirement of a country’s industrial development,” said analyst Rick Mills on November 22 last year. “The two metals keep us powered and sheltered, yet the lead-zinc sector has not seen a major discovery in over two decades, leading to concerns over resource depletion.”

The Catalyst: Potential Lithium Strike

In a press release issued today, the company announced that it “has identified pegmatitic material at the company’s O’Connor Lake critical metals project. These pegmatites occur as dykes and masses in complex multiple-phased intrusive granitic geologic environments and have significant untested potential to host lithium mineralization.”

Although the company had previously recognized these pegmatites' prospective lithium, it maintained confidentiality until ownership staked the land position.

The release explains that the company has “recently obtained a significant database of historic information for the O’Connor Lake property and is continuing to merge  these results with the modern exploration generated to date by the company’s own fieldwork.”

Richard Mills at Ahead of the Heard stated, "Zinc is among the most important of base metals, constituting an essential requirement of a country's industrial development."

Following a partial review of the data compiled to date, the firm has identified several areas with significant potential to host new lithium mineralization. Thus, a new exploration program for this season will include field mapping, sampling, and drilling if warranted.

This new potential is indicated by the presence of mapped pegmatitic bodies in government data, location in a favorable tectonic region, and similarity to known lithium pegmatites located approximately 120 kilometers due north of the Slave Lake property. 

The potential lithium host rocks at O’Connor Lake are very similar geologically to the granitic intrusives complex region in the Hearne Channel-Beaulieu River area on the north shore of Great Slave Lake, where multiple known deposits of lithium pegmatites occur.

For a deemed value of CA$154,620,000, Li-FT Power Ltd. (LIFT:CSE;WSO:FRA) recently purchased the Hearne Channel known lithium pegmatites, and plans aggressive exploration there. 

Ritch Wigham, CEO of Slave Lake Zinc, commented that “Canada’s need for critical minerals is designated a priority that will continue to grow. Demand for critical minerals like zinc, lithium, and copper, for which Slave Lake is exploring, will only continue to expand.”

He explains that “The potential for lithium on our property is significant, and the lithium host minerals have never before been explored for at O’Connor Lake or in our South Slave region,” going on to commit to continuing “to review the company’s expanded database to develop other new exploration opportunities.”

Why This Sector? Growing Need, Limited In-Ground Resources

A January 10 report from Richard Mills at Ahead of the Heard stated, "Zinc is among the most important of base metals, constituting an essential requirement of a country's industrial development."

However, he pointed out that as a result of this wide demand, “much of the ‘low-hanging fruit’ [is] already picked, [and] there is a need to go further afield and dig deeper to find metals at the grades needed to mine them economically. This usually means riskier jurisdictions that are often ruled by shaky governments with an itchy trigger finger on the resource nationalism button. Recent examples include Chile, Peru, Indonesia, the DRC, and even the United States.”

“Zinc demand may be outrunning supply,” he concluded, “but getting new mines to fill the gap is a big ask.”

Why This Company? Stable Government, Growing Holdings

Unlike many riskier (and deeper) zinc claims scattered around the globe, experts consider Slave Lake Zinc Corp well positioned in a jurisdiction offering considerable political stability.

Slave Lake Zinc Corp. is one of only two companies that have successfully negotiated the multi-year, international process required to allow tribal lands in Canada to revert to Crown ownership and be claimed by commercial producers.

On February 9, analyst Chris Andrew of Clarmond Securities explained that the stock is "very cheap, like a lot of these Canadians, and I really liked the management because, to me, management is everything. 

“We can confirm that Slave Lake Zinc and the NWTMN have a positive working relationship, as provided for in the Collaboration Agreement between the NWTMN and Slave Lake Zinc,” explained Dr. Ronald Yaworsky of KHL Consulting, speaking on behalf of the nation itself.

“Slave Lake Zinc has been respectful and proactive in [its] engagement with the NWTMN and our Indigenous communities, and we fully expect this will continue in the future.”

In addition to the considerable goodwill and rich in-ground reserves he has ferreted out, CEO Wigham says the claim’s close proximity (about 37 miles) to the Taltson hydroelectric plant will allow for a green-focused, hydrocarbon-free operation once the mine is up and running.

Why Now? Low Price and Potential Lithium Production

The possibility of lithium at the O'Connor Lake site furthers the company's existing value proposition. On February 9, analyst Chris Andrew of Clarmond Securities explained that the stock is "very cheap, like a lot of these Canadians, and I really liked the management because, to me, management is everything. What I really liked about it was that they've taken a lot of time to get to this position and this place, and they haven't rushed it."

Regarding the firm's close relationship with the NWTMN, he explained, "That's a really powerful thing to have because, once you're on the inside there, everything becomes a lot easier."

He is also quite optimistic about the variety of metals at the site. Before the company announced the potential for lithium deposits, he proclaimed, "It's not just zinc; It's copper; it's lead; it's silver; it's gold. By the sound of it, you scratch the surface up there, and you can find another mineral. So that's also amazing. So it just looked geologically like a very interesting area, on top of a really good team . . . what's not to like?"

Analyst Clive Maund concurred in an analysis published on January 9. "The fundamentals of the company certainly appear to be promising with the recent dearth of news providing the cover to quietly accumulate the stock, and it is worth noting that Canada recently rated zinc 'a strategic metal'."

Maund explained that "The 5-year chart shows the entire life of the stock from when it started trading late in 2018, and on this chart, we can see immediately that the price is hard down on a zone of strong long-term support where it is forming a large Double Bottom with its lows of late 2021."

"With the price and its moving averages now bunching together and the 200-day flattening out, the probability that the price will advance out of this base to commence a new bull market is steadily growing."

"The 1-year chart shows recent action in much more detail, and on it, we can see that the second low of the Double Bottom that we saw on the 5-year chart is itself comprised of a much smaller Double Bottom that has formed since the low of mid-October that the price now appears to be just starting to advance out of. This looks like a good zone to buy it in this area of support above 6 cents."

Ownership and Share Structure

According to Reuters, 38.11% of Slave Lake's stock is owned by management and insiders. Director and CEO Ritch Wingham has 9.32%, with 4.80 million shares. Director Glen MacDonald has 9.28%, with 4.78 million. President Jaskarn Singh Rai has 9.16%, with 4.72 million. Director Brandon Maxwell has 8.75%, with 4.51 million shares, and CFO Peter Cummings has 1.61%, with 0.83 million.

There are no institutional investors on record, and all of the outstanding stock is retail except for the CA$150,000.00 balance of the debenture outstanding. The company has roughly CA$300,000 in the bank and is burning CA$25,000/month at current operating levels.

Slave Lake Zinc Corp. has a market cap of CA$5.15 million, with 51,509,500 shares outstanding as of November 17, 2022. The company also has 6,652,000 options in the CA$0.10 to CA$0.105 price range expiring between February 22, 2023, and November 7, 2024, as well as 16,095,000 warrants ranging from CA$0.15 to CA$0.18 expiring between March 25, 2023, and February 18, 2025. An additional CA$150,000 in CA$0.08 convertible debenture financing adds another 1,875,000 potential claims. The total outstanding fully diluted share count is 76,131,500.

Disclosures:
1) Owen Ferguson wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. He or members of his household own securities of the following companies mentioned in the article: None. He or members of his household are paid by the following companies mentioned in this article: None.

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