seaemay, oh, for sure, what I described is just one possible scenario and there is a reasonable chance various things play out differently. But I outlined that scenario of Winsome pulling the Renard trigger at the end of September because I think it is supported by a number of factors:
Length of time: Chris Evans said that his team began zeroing in on the idea of repurposing Renard late last year and that by the time they acquired the option on Renard they had carried a fair amount of preliminary due diligence on the facilities and the idea. They began the scoping study / preliminary economic assessment work in early April so by then they had already been in de facto due diligence mode for at least four months. All up, by the time they release the scoping study conclusions in say early September they would have been kicking the tyres on repurposing Renard for at least nine months. I could be wrong but that to me seems to be a reasonable amount of time to conduct a scoping study.
Scope of the analysis: Much of the work they would need to do would be on-point for both studies, the work on the Adina mine itself, the development of the road between Adina and Renard, the logistics of moving product to Becancour. And in some areas the inclusion of Renard narrows what needs to be worked through, workers accommodation, workers FIFO arrangements, power supply to plant, tailing dam location and development. My guess is that having to run parallel scoping studies would not require twice the time and effort of looking only at one option.
Level of study: The investigations Winsome are running on Adina and Renard are at scoping study level. My understanding is that scoping studies are aimed at having an accuracy of between 30 and 35 percent. In other words in a scoping study costings can be as much as 35% understated or overstated from true pricing. Scoping studies are not intended to give THE answer but are more about whether a project is worth spending more time and money on through more exacting investigations (they are only supposed to work out what suburb you live in, not which street you live in and certainly not at which house number).
Chased by crocodiles: There's the old joke that says if you and your mate are being chased by a crocodile you don't need to run faster than the crocodile, you only need to run faster than your mate. With the two scoping studies Winsome is running there will be two conclusions. One is the basic question of whether Adina looks to have the potential to be viable but the second is whether including Renard makes better sense than excluding Renard. Actually stress testing all of their calculations and assumptions may be a job more for the feasibility studies. All Winsome needs to get from the scoping study is that yes, Adina has potential and yes Renard is better in than out.
Wink, wink, nudge, nudge: I think both Ecopro and POSCO would be dead keen to support a source of lithium for hydroxide production in Quebec. Both have construction sites for cathode production facilities in Becancour. POSCO has clear form of working with an spodumene miner to produce hydroxide (Pilbara is a minority holder with POSCO in a hydroxide facility in Korea). I just think they will want for the Americans to know that they can deliver the midstream products necessary for the EV industry to prosper in north America and they can do that by signing up with the likes of Adina sooner rather than later.
As I commented in my previous post I am assuming time to be Adina's greatest enemy. Currently north America has very little domestic lithium supplies and now is a great time for Winsome to establish Adina as a proven source of the stuff. There currently seems to be lots of doubt that the US will embrace the EV revolution but as Winston Churchill probably never said, the Americans will always do the right thing but only after trying everything else.
A couple of asides: I recently listened to a talk by the boss of Ford who pointed out that they are already number three for evs in the US and number two for hybrids. His vision is quite different to what is commonly touted: he sees EVs typically being pickup trucks that can power your work and your house (with smaller vehicles more likely to be hybrids). I also see that Exxon Mobil was one of two cornerstone sponsors at the recent Fastmarkets convention and is a major landholder in the Smackover formation in southern Arkansas (they intend to extract lithium from brine wells using a direct lithium extraction process). They have already started drilling there and the processes they intend to use for lithium are similar to what they use with oil. I don't think Exxon does anything by half measures and so if Quebec spodumene miners don't occupy the space then big boppers like Exxon will.
WR1 Price at posting:
61.0¢ Sentiment: Buy Disclosure: Held
(20min delay)