Quebec has seen an explosion of lithium spodumene discoveries in recent years, and developers are competing to bring the first product to Western markets.
Perth-based Winsome (ASX: WR1) said on Wednesday it plans to buy the Renard diamond mine in Quebec and transform the plant to process lithium.
The company has paid C$4 million for an option to buy the assets, which could help hasten development of its Adina lithium discovery in the Eeyou Istchee James Bay region.
Renard, developed and formerly operated by Stornoway Diamonds from 2016 until December last year, contains a permitted processing plant. Winsome says it may be possible to repurpose the plant to treat lithium ore.
“Winsome has the potential to acquire and repurpose the Renard assets at a fraction of their replacement value,” Winsome managing director Chris Evans said in a release.
The company can choose to exercise its option to acquire Renard any time after it’s approved by the Quebec Court and before Sept. 30 for C$52 million in cash or scrip. Extensions to the timeline are possible. Winsome would be bound to a specific payment schedule if it does exercise the option.
Evans says Winsome will use the option period to evaluate the feasibility of converting Renard for lithium, considering technical, economic, environmental, and social aspects. The company will also work out the best deal structure and finalize the necessary agreements for the acquisition.
Quebec has seen an explosion of lithium spodumene discoveries in recent years, and developers are competing to bring the first product to Western markets while simultaneously seeking to add value locally by processing spodumene to higher-value products for batteries such as lithium carbonates and hydroxides.
According to Evans, Renard represents a regionally strategic asset with the potential to provide Adina with a cost-efficient transport and logistics solution.
In December, Winsome released an initial 59 million tonne inferred lithium resource grading 1.12% lithium oxide for 1.6 million tonnes of lithium carbonate equivalent at Adina.
The Renard acquisition will open road and rail access year-round to the growing critical mineral and electric vehicle battery supply chain hub in nearby Bécancour and major ports on the St Lawrence seaway. This move leverages Renard’s existing permits and Quebec site, accelerating and potentially de-risking Winsome’s lithium aspirations.
Over C$900 million was invested in the asset, which has a capacity of 2.2 million tonnes per year. In October last year, Stornoway mothballed the operation, citing uncertainty about diamond prices over the short to medium term. A sudden drop in the price of the resource on world markets had a major impact on the company’s financial situation, the company said at the time.
Stornoway is owned by Osisko Gold Royalties (TSX: OR) and TF R&S Canada.
The company says recent site visits have allowed it to confirm the good state of Renard’s infrastructure, including an airport, power station, and connections to key transport networks.
Winsome plans to release an updated Adina resource statement during the second half of the year.
Winsome’s share price has softened in recent quarters, in step with flagging lithium prices. According to Trading Economics, lithium carbonate prices fell below $15,200 per tonne, failing to maintain the over-three-month-high of $16,000 per tonne seen throughout the second half of March as oversupply in the Chinese electric vehicle market maintained muted bidding for batteries.
Winsome shares in Sydney are down 46% over the past 12 months at A88¢ apiece, having touched A51.5¢ and A$2.24. It has a market capitalization of A$168 million ($110.3 million).
