Cygnus the front runner in the Malibu Cup

This thread is intended to have a focus on Cygnus Metals but in the context of the many other ASX listed stocks looking for lithium in Quebec.

To set the scene:
The current era of hardrock lithium exploration and mining in Quebec has a very distinct Aussie influence (after the previous wave of Chinese miners came to nothing). The only producer is the NAL project operated by and 75% owned by the Brisbane outfit, Sayona. That I know of there are only three mining projects under development in Quebec, including the James Bay project owned by another Brisbane outfit, Allkem, with one of the other two projects under development being half owned by Livent, which is in the process of merging with Allkem.

Of the exploration projects, Sayona has 60% of Moblan which at the moment has a 51mt resource. Patriot Battery, which has a toe in the ASX, has Corvette which is expected to announce a resource of at least 200mt later this year. Winsome should have little trouble declaring at least a 35mt resource at its Adina project up near Corvette. And a couple of research outfits reckon Cygnus might have a resource of between 7mt and 12mt at its Pontax site. From memory there are a few other projects that tout some resources in the southern part of Quebec but my impression is that they will be add-ons, probably to Sayona's NAL hub and not be stand-alone operations.

So by my reckoning there are four Aussie "majors" competing in the Quebec Champions League: Allkem, Sayona, Patriot Battery, and Winsome, all of which are known to have very large projects and all have market caps well in excess of A$100m.

The Penny Dreadfuls:
Just in the last year, mostly in the last few months, there has been a wave of ASX listed tiddlers, seemingly carpet baggers, who have sought to get in on the Quebec lithium mania, often through doing deals with local Canadian outfits that specialise in packaging up and vending blocks that might have only a suggestion of commercial amounts of lithium: in a gold rush, sell shovels. All of these ASX companies have share prices which the North Americans would dismiss as belonging to so-called penny stocks, all have market caps well under A$100m, and most are run by lawyers, accountants, and investment bankers who seem to me to have as much of a background in hardrock lithium and Quebec as I do. To the best of my knowledge none have existing MREs, though I think Cygnus, maybe in August, and possibly Burley are moving towards that milestone.

So how do you pick a winner from this field. Not on the personnel, for the most part; nor on results on the ground, again for the most part. Probably the most grounded filtration method seems to be to look at the geology. A few hc posters have gone this route but none more so than malibu_tan who has produced and shared some amazing maps and analysis looking at where the various projects sit with regards to greenstone and sub-provincial boundaries and other equally arcane geological differentiators. It must be close to a full-time job keeping up with all the developments among this field of hopefuls. So, a bit like picking a winner in the Melbourne Cup, it seemed to me. Hence the nonsense of the Malibu Cup was born.

The Malibu Cup
The Malibu Cup is a joke attempt to keep track on the various Aussie battlers trying to capitalise on the gold rush which is the Quebec lithium sector. This is mainly of interest to me because I have invested in Cygnus. To be included in the field the company must be ASX listed and have some claim to land in Quebec for the purposes of looking for commercial amounts of spodumene. And their market cap has to be less than A$100m. The winner of the Malibu Cup will be the first to get a market cap of more than A$100m (so, yes, a company could win by diluting the shite out of its shareholders with a series of cap raises).

Currently Cygnus is miles in front, with a market cap more than twice that of its nearest competition. My own view though is - did I mention that the Malibu Cup is a jumps race? - Cygnus has begun to struggle to get over a couple of the hurdles of late so it is not a shoe-in just yet. Just to be clear, full disclosure, I have placed bets on only Cygnus and Omnia.

The Table
From time to time I will update and share a table of the runners in the Cup. This is meant to be a bit of fun so I don't intend to be religious about keeping it up to date, and besides if any of these companies take off they will go off like a cracker, so a bit like an exercise in volcanology.

Just to explain the meaning of the "location" field. It is something I concocted and is both an over-generalisation and an over-simplification but it works for me. You should look at each company and each project to decide for yourself how prospective each project is on its own merits.

Southern Quebec: Just as most Aussies live within cooee of the sea, most Canucks live in the south of the country within spitting distance of the US border. Therefore southern Quebec has fantastic amenity and infrastructure. Historically, mineral exploration is also far greater in the south. My impression is that the city of Val-d'Or in southern Quebec is like the Kalgoorlie of Quebec. Sayona's NAL mining project is in the south, not far from Val-d'Or. But the thing is that much of the lithium elephants in Quebec are not in the south. So any lithium project in the south will likely have fantastic amenity without being an elephant (even Sayona says that its currently operating NAL project will be dwarfed by its Moblan project further north). So for me, the south offers relatively low risk but relatively low rewards.

Central Quebec: Currently central Quebec is the hub of the province's lithium industry, with Whabouchi, Rose and James Bay projects, all massive and in various stages of development and into production in the next two or three years. It does not have the amenity of the south - for instances, operations will be FIFO - but we know already that deposits like James Bay and Whabouchi are very large and extremely high quality so this part of Quebec will be a major lithium region for decades to come. Chances are that any new discoveries here will also be large, high quality and relatively easily monetised but with so much already happening in the region even smaller, lower quality projects might still be a chance.

And then there is northern Quebec. Corvette is very likely a monster, with it being described as a once-in-a-generation discovery and the Greenbushes of Quebec (if its not then there will be law suits all over the place). There is also Winsome's Adina which could also end up being a tier one discovery. The thing is anything up north is maybe five to eight years behind what is happening down south and in central Quebec, and the amenity is nothing compared to down south. In my view for a project in the far north to have legs it needs to be an elephant. Corvette is, Adina is probably, but I am not sure about anything else. So for me, the north is high risk but possibly huge rewards.

Why I favour Cygnus and Omnia is partly because both are located in central Quebec. That is just me, I already have an interest in the south, through Sayona, and in the north, through Winsome but remember different folks different strokes (and if I was any good at this I would not be spending so much time on hc, believe me).

Anyway here is today's table. The first and maybe the last. In future I will just share the updated table and how Cygnus and any stand-outs are faring. And do keep an eye on malibu-tan's posts and on the announcements from the various companies.