Phosphate Co. Intersects Multiple High Grade Phosphate Layers

Earlier this month, First Phosphate Corp. (PHOS:CSE;KD0:FSE) reported the signing of a collaboration agreement between First Phosphate and the Regional Economic Benefits Maximization Committee (CMAX). This gives First Phosphate Corp. major project status with the Quebec regional government and is a major milestone and validation for the company.

First Phosphate is a Canadian-based mineral development company that specializes fully in the development of phosphate for the production of Lithium Iron Phosphate (LFP) batteries.

The company's business strategy is "to vertically integrate from mine source directly into the supply chains of major North American LFP battery producers that require battery grade LFP cathode active material emanating from a consistent and secure supply source."

Technical analyst Clive Maund noted, "The company’s phosphate is of the highest quality and, in recent tests, had a very high recovery rate."

Through this agreement, First Phosphate will be allowed to connect directly to the region's workforce to better aid in the company's operations with a broader context and without supplier challenges. 

Regarding this news, CEO  John Passalacqua said, "First Phosphate strongly appreciates the warm welcome shown by the population of the Saguenay-Lac-Saint-Jean Region toward the company’s phosphate mine project and its value-added mineral processing plants. First Phosphate firmly believes that its projects must be well-integrated into the local host community fabric and that it must do its utmost to ensure that the community benefits from the economic spin-offs. First Phosphate looks forward to integrating the region into the North American EV battery manufacturing industry." 

Licensing Agreement with Integrals Power

First Phosphate seems to have had an inundation of news. Last month, the company announced it had signed an LFP Production Technology licensing agreement with Integrals Power Ltd. 

The press release stated First Phosphate had finalized a joint lithium iron phosphate (LFP) homologation agreement and LFP production technology licensing agreement with Integrals Power Ltd. of Milton Keynes, United Kingdom. This agreement went into effect on March 24, 2023, and consisted of the following:

• IPL will validate First Phosphate LFP-grade purified phosphoric acid and iron sulfate for use in LFP battery cells.
• IPLs LFP cathode active material homologation process will use First Phosphate LFP-grade purified phosphoric acid and iron sulfate.
• IPL provides LFP production technology license to First Phosphate in the production of LFP cathode active material at any First Phosphate LFP cathode active material production facilities to be built in Quebec, Canada, or elsewhere in North America. A royalty fee of 1.5% will apply to all LFP cathode active material sales.
• First Phosphate has acquired 7,386 common shares of IPL for a cost of CA$83,060.35 and has the right to make follow-on investments in future funding rounds.
• First Phosphate and IPL plan to leverage First Phosphate's access to green hydroelectric energy in the Saguenay-Lac-St-Jean region of Quebec for optionality in the build-out of IPL's future production facilities.

In light of the news, IPL's Chief Executive Officer Behnam Hormozi stated, "We are pleased to partner with First Phosphate in gaining strategic access to properly curated LFP-grade purified phosphoric acid and iron sulfate, which will be in short supply in the near future as LFP production comes online in the Western World."

Drill Results

First Phosphate also reported a few interesting finds from its March 24 drilling in the Bègin-Lamarche site, located in the Saguenay-Lac-St-Jean area of Quebec. The primary minerals found in the drilling project are Phosphorus Pentoxide (P2O5) and Titanium Dioxide (TiO2).

The drill holes intersected two layers of mineralization: layer one reportedly started in bedrock and may be thicker, and layer two had a thickness of 83m over 500m in length. Additionally, First Phosphate reported a strong apatite presence in drill holes along the layer 2 strike.

The company established two holes at the site: BL-23-01 and BL-23-02.

• BL-23-01 found 10.6% P2O5 and 5.2% TiO2 between 5.9m to 29.6m and 7.8% P2O5 to 4.2% TiO2 between 131.9m to 215.4m.
• BL-23-02 found 9.9% P2O5 and 6.5% TiO2 between 16.6m and 29.6m and 8.4% P2O5 and 3.4% TiO2 between 143.8m and 201.0m.

First Phosphate has indicated that it will pursue further opportunities based on these drill findings. Hole BL-23-02 ended while still in a mineralized zone, and the company reports that when drilling logistics allow, it will continue drilling in this hole.

According to Peter Kent, the president of First Phosphate, "These initial drill results confirm our earlier high-grade surface findings and are some of the highest-grade drill results ever established in the Saguenay-Lac-St-Jean region of Quebec."

In a March 23 newsletter, technical analyst Clive Maund noted, "The company’s phosphate is of the highest quality and, in recent tests, had a very high recovery rate." He then rate the company a Buy.

Why Phosphate?

Phosphate is a crucial ingredient in LFP batteries, which have seen a huge surge in demand since the advent of electric vehicles (EVs). Goldman Sachs Research estimated that EV sales will rise to 73 million by 2040.

According to Kota Yuzawa with Goldman Sachs, "We expect the automobile industry to undergo a major transformation between 2020 and 2030, driven by the increasing adoption of vehicle electrification and autonomous driving."

Richard Mills, an analyst with Ahead of the Herd, reported that "global carmakers and established battery manufacturers have announced plans to invest at least US$50 billion into a minimum of ten states to build EV assembly and battery plants since the start of 2021, and states have made commitments totaling at least US$10.8 billion to lure those investments."

Goldman Sachs has indicated that while the market for EV batteries has been monopolized by the top five manufacturers, the U.S. is seeking to introduce more diversity to the field in an effort to fight inflation.

Peter Epstein of Epstein Research also highlighted First Phosphate's singularity in a February piece, saying, "Instead of selling its phosphate rock at an early stage of the multistage process of refining run-of-mine ore to premium purified phosphoric acid [PPA], the company hopes to work with specialty chemical companies to advance mined material to much higher-value end products."

Innovations in the market are also expected to be substantial as manufacturers seek out new ways to reduce the weight and power consumption of EVs and acquire new materials more efficiently.

Jessica Cummins of Stockhead reports that Australian Prime Minister Anthony Albanese has made statements indicating that he intends to ramp up the country's battery production. The production of LFPs is also a critical part of the United State's plan to reduce greenhouse gas emissions by half by the year 2030.

According to First Phosphate, there are only a few sources of clean igneous rock-based phosphate, and the few sources of sedimentary-based phosphate on the North American continent are quickly running out, with potentially less than twenty years of mining left.

Peter Epstein of Epstein Research also highlighted First Phosphate's singularity in a February piece, saying, "First Phosphate is unique in other key ways as well. Instead of selling its phosphate rock at an early stage of the multistage process of refining run-of-mine ore to premium purified phosphoric acid [PPA], the company hopes to work with specialty chemical companies to advance mined material to much higher-value end products."

Multiple Catalysts, Including Completion of PEA

The Queen's University Pufahl Research Group completed their research report, "Characterization of First Phosphate's Lac à l'Orignal Phosphate Deposit, Lac-Saint-Jean Anorthosite (LSJA) Complex, Quebec, Canada: Implications for Supplying Lithium Ferro (Iron) Phosphate (LFP) Batteries."

The report concluded that the deposit in question "has a high probability of being ESG-compliant."

There were several points that the report highlighted:

1. The first was the presence of fluorapatite, ilmenite, and magnetite, which have uses in the development of titanium oxide and iron.
2. The P2O5 concentration was slightly higher than estimated by SGS Canada Inc.
3. The ratio of minerals present in the deposit was optimal for the production of phosphorous for LFP batteries.
4. The risk of acid mine drainage from tailings appears to be reduced.
5. There may be value in future research focused on other First Phosphate claims.

According to President Peter Kent, "advanced mineralogical data is essential for making decisions regarding site feasibility and how to cost-effectively extract clean phosphate under strict Environmental, Social and Governance guidelines, with the lowest possible carbon footprint."

The company has recently acquired 13 more mineral claims within the Bégin-Lamarche site.

According to First Phosphate, these claims were acquired "for the consideration of US$25,000 to be satisfied through the issuance of 27,173 common shares of the company at a deemed price of US$0.92 per share." These new acquisitions have expanded the company's holdings, which now cover 1,531 sq. km in Quebec.

First Phosphate expects to complete a preliminary economic assessment, which launched in January, on the original Lac site by the end of 2023.

"Ultimately, we want to leverage our high-purity phosphate mineral resources to help Quebec and Canada become a leader in the electric vehicle industry and advance our national climate change goals," said Peter Kent.

Ownership and Share Structure

According to First Phosphate, 75% of the company is owned by the board, management, advisors, and business associates. 

According to the company, much of the earned coverage of the company is mostly in French-language media. 

First Phosphate has a market cap of CA$40 million. There are 48.3 million shares, 6.8 million warrants, and 6.2 million options. According to Market Watch, the company trades in the 52-week range between CA$0.45 and CA$1.20.

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