Canadian developers add meat on the bone in next lithium hotspot

• Lithium prices are wobbling again, but Canada is shaping as a potential growth market
• Prairie Lithium plans to begin operations at its oilfield brine project in Saskatchewan in Q4 2026
• Mega spodumene deposits continue to emerge in James Bay region

Even as lithium prices suffer their third rough patch in under a decade and second downturn in as many years, developers are looking to bring on supply in new markets.

One that has been bubbling away for years is Canada. And years of promise look to finally be turning into construction-ready opportunities.

The first mover in Canadian lithium, Elevra Lithium (ASX:ELV), broke ground on the first stage of a multi-year expansion program for its North American Lithium operation in Quebec’s Abitibi region in June.

That will lift its capacity from around 199,000tpa of 5.4% Li2O spodumene concentrate by 15-20% by mid-2027 and then to 373,000tpa at all-in sustaining costs of US$680/t once its third stage is fully operational – around mid-2029.

Rio Tinto (ASX:RIO) has US$1.1bn in capex slated for its share of the Nemaska Lithium joint venture, a JV with the Quebec government expected to take ore from the Whabouchi mine in the James Bay region to a lithium hydroxide refinery in the port town of Becancour.

Construction activity was reduced in March following a review of project costs, with a strategic review expected to report back on the plan for the Whabouchi and Galaxy development in Q4.

Formally, first production from the 28,000tpa lithium hydroxide plant is still slated for 2028.

Beyond that, study work and exploration is progressing on a number of major spodumene deposits found in the last boom, including PMET Resources’ (ASX:PMT) Shaakichiuwaanaan and Q2 Metals’ Cisco.

And in Saskatchewan, small cap Prairie Lithium (ASX:PL9) has been quietly moving to development on a 150tpa lithium carbonate project using the oil field lithium extraction technique being pioneered also south of the border by energy majors like ExxonMobil and Chevron.

Political impetus

Despite a more than halving of lithium chemical and concentrate prices since May, Prairie executive chairman Paul Lloyd said Canada remained a great place to progress a new lithium project.

Prairie is expecting to commission its first 150tpa phase into production in Q4, re-entering an exploration well to extract lithium rich brines from reservoirs previously explored for hydrocarbons.

It’s installed North America’s largest commercial-scale direct lithium extraction system, a novel processing method which uses lithium-selective sorption to draw lithium from brines without the long lead times and water consumption of solar evaporation.

Prairie has received C$6.3m in interest-free finance from the Canadian government for the first phase, with all of its offtake already committed to Korean lithium processor Hydro Lithium.

The site, which has a total indicated resource of 4.6Mt lithium carbonate equivalent, could be upscaled over time in a walk before you run development model that would see Prairie provide proof of concept and add drill pads as it ramps up.

“We are a lithium brine company in an oil field and I think that makes a massive difference for permitting,” Lloyd said of the operating environment.

“And being in Saskatchewan makes a massive difference as well, because they’re very pro-business on this side of the continent.”

Saskatchewan is an outlier among the Canadian provinces given energy is its main extractive export, led by crude petroleum, while its Athabasca Basin region is one of the world’s top uranium domains.

“This is the first project I’ve had in Canada and I’ve been really impressed with the government officials,” Lloyd said.

“Saskatchewan’s fairly small – 1.2 million people – and you get to meet the ministers and the political figures.

“Zach Maurer, our executive director, knows the Premier of Saskatchewan and has his mobile number. We’ve done a lot of government engagement and they’re extremely positive on getting the royalties associated with lithium to replace their royalties from oil and gas.”

Price points

Lloyd says Prairie’s project of the same name, as a brine operation, is set to be in the lowest quartile of costs.

That compares to even large hard rock assets like PLS Group’s (ASX:PLS) Pilgangoora, which in spite of its scale will still sit at the top end of the second quartile after a $2bn expansion which will double capacity to 1.9Mtpa.

He believes Prairie will make ‘good money’ at prices of around US$15,000/t lithium carbonate, close to current levels.

However, prices closer to US$20,000-25,000/t could be important to provide capital providers with confidence to back new producers.

“When you’re applying direct lithium extraction, if you want to be critical, no one has applied it at a commercial scale as yet,” he said.

“But when it gets up and cranking, it must be in the lowest quartile of operating costs just by the nature of what you’re doing. And so you know at 15,000, we still make good money.“

At the same time, Lloyd says the war in the Middle East, which has shown the flimsiness of energy supply chains in an era of escalating geopolitical tensions, will incentivise consumer shifting to EVs.

“The demand is only growing so there really is a disconnect between the lithium industry’s expectation of where the commodity price will be and the capital markets,” he said.

“We would be a lot more comfortable with a spot price of US$20,000 a tonne. Hopefully this is a seasonal thing and it recovers to a price like that.

“If we can finance our project, we’ll make good money at US$15,000/t, but you’d take $20,000 or $25,000 all day of the week.”

Lloyd said Hydro’s backing gives the project additional credibility, with the Korean firm providing $10m of proprietary processing equipment for the Phase 1 operation.

Similar DLE tech developments from ExxonMobil in the Smackover Formation of Arkansas, as well as Rio Tinto and Eramet’s work with the technology in Argentine brines, are also providing confidence the processing method will find commercial success.

And if Prairie proves successful, Lloyd says there are other players in Saskatchewan and nearby Alberta who could develop a new industry producing lithium from oil field brines.

“If you look at the brine projects that are similar to us, E3 is in Alberta, we’re in Saskatchewan, EMP is another company that’s Canadian listed,” he said.

“Those companies could combine to produce 100,000 tonnes per annum of LCE.

“That’s not insignificant to the current supply of LCE. So Canada does have the ability to be quite a substantial provider of lithium carbonate in those two provinces and then you’ve got the other suppliers in on the east coast and there’s plenty of spodumene over there as we know.”

Spodumene hotspot

Canada’s James Bay region continues to be the next hard rock lithium hotspot on the horizon after world leader WA, Africa and Brazil.

In PMET’s Shaakichiuwaanaan and Q2’s Cisco it has two of the largest high-grade lithium deposits globally.

The next could be WhiteRock Lithium Corp (ASX:WLC), which defied weak capital markets this year to secure a $25 million IPO on the ASX.

Led by former Galaxy Resources and Leo Lithium boss Simon Hay, the firm recently wrapped up drilling at its Banana project for the year, where it announced thick intercepts of 84m at 1.84% Li2O from 8m, 40m at 1.9% Li2O from 141.6m, 40.9m at 2.16% Li2O from 171.2m, 38.6m at 2.29% Li2O from 156.5m, 37.9m at 2.47% Li2O from 197.3m and 51m at 2.24% Li2O from 52.5m at its Spodumene Mountain prospect.

A resource estimate there is due in the first half of 2027.

Based on its exploration target it could be the third undeveloped monster pegmatite resource in the James Bay region after Shaaki and Cisco.

That suggests the massive, banana shaped whaleback could host 190-275Mt at 1.2-1.6% Li2O.

The aptly named Spodumene Mountain holds an exploration target of 70-100Mt at 1.2-1.6% Li2O.

“Our initial drilling more than doubled the known pegmatite footprint, and these assays now provide valuable insight into the distribution of lithium mineralisation across the larger system,” Hay told the market after the initial post-listing drilling campaign.

“With drilling complete, our focus is on processing the remaining core and integrating validated assays into our geological model.

“We look forward to reporting further assay results as they become available, and subject to these results, we are targeting a maiden mineral resource estimate for Spodumene Mountain in H1 2027. This estimate for Spodumene Mountain will be a subset of the larger mineralisation potential across the entire project.”

Infrastructure advantages could help other players unlock smaller deposits, with Green Technology Metals (ASX:GT1) completing an environmental assessment on its Seymour project in Ontario last quarter and now chasing a final investment decision on the develpment in mid-2027.

Li-FT Power, which acquired ASX listed Winsome Resources, is expected to deliver an updated mineral resource and preliminary economic assessment for its Adina-Galinée project in Quebec in early 2027, with a DFS and the exercise of an option on a repurposed diamond process plant called Renard due in late 2027.

Whether lithium markets have turned by then is a big question: A note this week from Citigroup saw the investment bank slash its short term forecasts from US$20,000/t and US$17,000/t for carbonate and hydroxide and from US$2000/t to US$1200/t for spodumene.

Rising supply and demand uncertainty, along with the sentiment driven nature of lithium pricing, could keep the market subdued, they suggest, with Citi also trimming its expectations for prices through 2028.

But there is optimism still around longer term demand, with Benchmark Mineral Intelligence suggesting a base case US$100bn needs to be spent on new supply by 2050 to service a rise in demand from 2.11Mt LCE to 7Mt LCE.

At Stockhead, we tell it like it is. While Prairie Lithium and WhiteRock Lithium are Stockhead advertisers, they did not sponsor this article.

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