Phosphate Company on the Rise as EV Batteries More Wanted Than Ever Before

First Phosphate Corp. (PHOS:CSE; KD0:FSE) has announced the results of its preliminary economic assessment (PEA) on the Lac a l'Orignal property in Quebec, which are overwhelmingly positive.

First Phosphate negotiated a 100% royalty free interest in the property in 2022. The PEA provides a case for developing the property by open-pit mining for the primary production of a phosphate concentrate and secondary recovery of magnetite and ilmenite concentrates. First Phosphate is focused on extracting and purifying phosphate for use in the production of cathode active material for lithium-iron-phosphate batteries.

"Just 5% of phosphate deposits are held in igneous rocks, and just 1% in the type of geology First Phosphate has. This is very important because igneous rock has much lower concentrations of deleterious elements, enabling a large portion of it to be upgradable [purified] to the very highest grade of phosphoric acid."

The highlights of the PEA are as follows:

• The project would produce an annual average of 425,000 tons of beneficiated phosphate concentrate at over 40% P2O5 (phosphorus pentoxide) content, 280,000 tons of magnetite and 97,000 tons of ilmenite over a 14.2 year mine life.
• The project generates a pretax internal rate or return (IRR) of 21.7% and a pretax net present value (NPV) of CA$795 million at a 5% discount rate at June 30, 2023, approximate 18-month trailing average phosphate price and long-term consensus magnetite and ilmenite prices.
• The project generates an after-tax IRR of 17.2% and an after-tax net NPV of CA$511 million at a 5% discount rate at June 30, 2023, approximate 18 month trailing average phosphate price and long-term consensus magnetite and ilmenite prices.
• The project would generate an after-tax cash flow of CA$567 million in years 1 to 5, resulting in a 4.9 year payback period from the start of production.
• The company has a memorandum of understanding in place with Prayon Technologies of Belgium for up to 400,000 tons of annual phosphate concentrate offtake as well as a long-term purified phosphoric acid toll processing agreement. The project benefits from nearby road access and electrical power line, year-round-accessible deep sea Port of Saguenay at 107 kilometers by four-season road.
• The PEA used indicated and inferred mineral resources in its calculations.
• The project has no outstanding royalties or financing streams registered against it.

According to Peter Kent, the president of First Phosphate, "Our strategy to keep capex low and mine size controlled echoes these PEA results nicely. We're now in a position to prudently evaluate next steps for the company as we continue with our mission to apply a partnership-based approach to integrate vertically from mine to value-added production of purified phosphoric acid and LFP cathode active material for the North America LFP battery industry."

Demand on the Rise for Batteries

The US is aiming to incorporate 30 million to 42 million electric vehicles (EVs) by 2030, which will require large scale production of chargeable batteries and the installation of charging infrastructure in homes and public places. Utility Dive estimates that this will require a national investment of about US$53 billion to US$127 billion.

A Rare Resource

Peter Epstein of Epstein Research has noted that First Phosphate is not just notable for its successes, but also for the rare type of phosphate it possesses: "just 5% of phosphate deposits are held in igneous rocks, and just 1% in the type of geology First Phosphate has. This is very important because igneous rock has much lower concentrations of deleterious elements, enabling a large portion of it to be upgradable [purified] to the very highest grade of phosphoric acid."

Another article from Epstein Research on the company noted that its phosphate reserves can be converted into usable material with a yield of 88%, a much more efficient rate than other sedimentary deposits.

Ownership and Share Structure

John Passalacqua owns 19.79% of the company with 9.56 million shares, Garry Siskos owns 0.85% with 0.41 million shares, Laurence Wayne Zeifman owns 0.78% with 0.38 million shares, and Gilles Laverdiere owns 0.64% with 0.31 million shares.

Glen Eagle Resources Inc. owns 5.59% with 9.56 million shares, Z Six Financial Corporation owns 3.82% with 1.85 million shares, POF Capital Corp owns 3.81% with 1.84 million shares, 582284 Ontario Limited owns 2.28% with 1.10 million shares, Capwest Investment Corp owns 1.33% with 0.64 million shares, and ExpoWorld Ltd. owns 0.49% with 0.24 million shares.

The company reports no strategic investors.

First Phosphate has CA$1.5 million in the bank with a base burn rate of CA$30k per month. The monthly drilling cost is variable, but roughly CA$1 to CA$3 million.

The company reports no potential sellers, and small warrants overhang.

It does not work with any IR firms or influencers. Erik Wetterling, Hedgeless Horseman, Deep Drive, and Supercharged Stockd all provide analysis and news coverage of the company.

There are 48.32 million shares outstanding with 29.21 million free float traded shares. The company has a market cap of CA$13.85 million. It trades in the 52-week period between CA$0.32 and CA$1.20.

Important Disclosures:

1. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of First Phosphate Corp.
2. Amanda Duvall wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee. 
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