Patriot’s Canadian stock traded between 20¢ and 50¢ from 2020 until late 2022, before beginning to rise sharply, spiking as high as $C17 in March this year. It’s been a bit volatile since, but is still trading today at elevated prices around $C13.
“It’s a function of the property we’re delivering,” Way says of the company’s rapid rise.
Workers assembling lithium batteries at a factory in China’s Zhejiang province.CREDIT:AP
It wasn’t always so. Initially, the company struggled to prove the resource’s size and value. “It was tough to raise the initial financing to get the funds to do the drilling,” Way says.
“We were able to finance our exploration in Canada through our Australian investors. Australians understand lithium better than Canadians. They just get hard rock mining,” he says.
Patriot’s rapid ascent has also attracted the attention of short sellers. The company was hit by a Night Market Research short report in July that prompted the ASX to issue a trading halt on its stock and ask the company for an explanation.
The short sellers claimed Patriot’s management “over-touted” the Corvette lithium deposit and delayed revealing details about the size of the resource multiple times.
Australia has the world’s greatest known reserves of lithium.CREDIT:BLOOMBERG
“Resource speculation has flourished under Patriot’s opaque disclosures,” the report said, arguing its stock rally can in part be attributed to promotions by an opaque marketing outlet which other tier-1 explorers would avoid.
It also accused the company of generating “implausible” buyout rumours, including by Chris Ellison’s Mineral Resources and Pilbara Minerals.
“With the highly anticipated resource estimate approaching, we think Patriot is near a speculative peak,” the report said. “We think the stock is at risk of a painful correction.”
At the time, Patriot hit back saying it was taking legal advice and dismissing Night’s report as misleading, although it acknowledged it had used agencies to help it with “market awareness” – as the short sellers claimed – a practice Patriot said was “not uncommon” among microcap stocks.
“We knew the shorters were putting positions on us,” Way says. “They take a punt and don’t always look at the underlying value. It sometimes works. In this case, it’s not working so well.”
Short sellers are not the only ones interested in the company. This week, the world’s largest lithium producer Albemarle Corporation paid $C109 million ($124 million) for a 5 per cent share of Patriot, a tie-up that Way describes as a “neat fit.”
“We’ve had many interested parties and are receptive to discussions,” Way says. “We’ve always had a desire to work the property ourselves, and we have the capital to do that.” The desire to retain control won’t be disrupted by Albemarle’s presence on the register, he maintains.
“We had approaches that wanted to make significantly more investment, up to 20 per cent, but that’s just short of a takeover.”
Albemarle’s interest is a symptom of lithium’s growing stature as Biden’s Inflation Reduction Act supercharges America’s clean energy economy, ramping up incentives for US companies to provide the critical minerals and production needed to secure America’s supply chain.
The Charlotte-headquartered Albemarle is strategically buying stakes in early-stage projects as it manoeuvres to lock in future supply for its lucrative lithium production business. The tie-up will lead both companies to explore the viability of a downstream lithium hydroxide plant in Canada or the United States, to process the mine’s output.
Alexander Thompson, Albemarle’s vice president of lithium resources, says the company wants a hands-on understanding of Corvette’s potential and the opportunities it presents for North America’s battery materials supply chain.
The same early mover advantage saw Albemarle recently sink $US20 million ($30 million) into a subsidiary of Lithium Power International which has exploration tenements near one of the world’s best hard rock lithium mines, Greenbushes in Western Australia. The company already owns a half share of Greenbushes, which it uses to supply its Kemerton lithium hydroxide plant.
While lithium is a relatively plentiful substance, it is difficult to find deposits with the correct metallurgical and chemical composition that can be extracted efficiently.
“We have something that is very large. It’s getting to be on par with some of the big deposits you see in WA,” Way says.
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