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Pilbara Mineralsweighs tilt at Patriot Battery Metals, RBC hired

Pilbara Minerals is understoodto have hired RBC Capital Markets’ resources bankers to weigh a tilt atdual-listed explorer Patriot Battery Metals, whose Corvette lithium project inQuebec is due to put out an initial mineral resource in July

Sources said Patriot BatteryMetals had its long-time adviser Macquarie Capital taking Pilbara through adata room. It’s understood discussions have centred on potential offtakeagreements, joint ventures and equity investment.

There was no certainty that talks between the two parties wouldlead to a deal, whatever form it may take, sources said. Also, Pilbara wasn’tthe only party in the data room, with other tyrekickers also consideringPatriot’s claims to owning one the world’s highest-grade and largest hard-rocklithium projects under exploration.

It would be interesting to see what Pilbara Minerals makes ofPatriot Battery Metals reaction to claims made in a short seller reportpublished past week.

Patriot’s share price climb – still up 121 per cent on the ASXyear-to-date even after Friday’s selloff – has been astonishing to fundies whenit’s yet to go into production and make any revenue. But last week, Night Market Research claimed lithium reserves were 40 per cent lower than stated, a comprehensive resource update had been delayed seven times, and the stock was subject to periodic buyout rumours.

Patriot had $56.7 million cashat March end and made a $10.1 million loss for the year.

Global search

Macquarie Capital’s sell-side analystshave a $2.30 price target for the stock, according to a research note publishedon July 5 after drilling results at CV13 target. Shares closed at $1.64 apieceon Friday, after tumbling 7.4 per cent in the day’s trading.

It expects Patriot to begin producingin mid-2028, and has pegged a 690,000 tonnes a year spodumene concentrateproduction rate from the mining inventory from Corvette’s CV5 Pegmatite. Theanalysts said potential joint processing approach using ores from both CV5 andCV13 presented upside to their base case forecasts.

Pilbara’s interest in Patriot comes asthe lithium producer, which is capitalised at $14.6 billion on the ASX, rampsup efforts to diversify from just mining to producing battery-ready lithiumhydroxide.

It recently hired Macquarie Capital tobegin a global search for a new partner to build a processing plant which wouldconvert spodumene to battery-ready lithium hydroxide. It is already building a43,000-tonne plant in South Korea’s Gwangyang with Korean metals giant POSCO ata $US800 million ($1.2 billion) cost.

Its Pilgangoora asset in WesternAustralia is a globally significant hard-rock deposit, and has grown productionby 250 per cent since 2019 to build the company a $2.7 billion cash balance.