Why Foremost Lithium (NASDAQ: FMST) (CSE: FAT) Could Emerge A Frontrunner In Today's Global Electrification Transformation

The mining sector market has historically been dominated by iron ore and coal. But as countries ramped up their urge to curb carbon emissions, the global energy transition gained unprecedented scale and speed. Global energy transition investment hit a record of $755 billion in 2021, spurred by global climate goals requiring net-zero emissions by 2050, and the same year, lithium prices surged 10-fold. S&P Global Market Intelligence forecasts that lithium-ion battery capacity will reach 6.5 TWh by 2030, almost tripling current capacity. As energy transitions away from fossil fuels, there is presently a lack of suitable alternatives for lithium, a crucial component in the production of batteries and a key element of the advancement of clean energy technology. 

As the demand for lithium-powered energy sources is expected to continue to increase in the upcoming decade, current governments are attempting to add measures to meet clean energy goals. The Canadian Natural Resource Minister announced in February 2024 plans are underway to make massive investments to meet the growing demand of the clean tech revolution as well as reduce regulatory approval and review processes in half. Foremost Lithium Resource and Technology FMST ( CSE : FAT ) is a Canadian hard rock exploration company committed to being a premier supplier of future domestic North American lithium feedstock. 

A Perfect Storm

Energy-transition metals were expected to breathe new life into the mining sector, however, since 2022, lithium prices have crashed back to earth with the unexpected slowdown of the electric vehicle market. Today’s lithium market price volatility in part can be attributed to China which dominates the lithium-ion battery industry, controlling 80% of the battery cells worldwide. It solidified its lead in battery capacity a full decade ahead of other nations with Iarge-scale manufacturing capabilities, enabling the country to minimize costs as well as subsidize production in times of low demand. The North American markets are at a distinct disadvantage to the Chinese market and will require massive investments in natural resources, infrastructure and grid storage to be in a more competitive and stable landscape. 

The Biden Inflation Reduction Act

The IRA Act of 2022 served as a catalyst for investments in the domestic electric vehicle battery arena. In fact, since this act was put into law, over $100 billion has been injected into the clean area market. However, in the United States, when you pull back the curtains in the mining space, the mine permitting process is a rigorous one. There is currently one lithium mine in the U.S., The Silver Peak Mine, in Clayton Valley Nevada. Mines are large-scale projects that demand extensive research and policies. As a result, mining projects can take 16 years or more to start production. In addition, environmental activists have adopted a “Not in my backyard” stance towards domestic mining. As a result, companies have often had to resort to litigation to make any progress in the permitting process.

Canada – A Mining-Friendly Jurisdiction

Canada announced The Critical Minerals Infrastructure Fund (CMIF), which will provide up to $1.5 billion in federal funding for clean energy and transportation infrastructure projects necessary to enable the sustainable development and expansion of critical minerals in the country. Companies like Foremost Lithium will be able to apply for up to $20 million under Phase 1 of this program, which could provide the necessary funding to build the infrastructure needed at their lithium projects to facilitate the future extraction and transportation of its ore.

Foremost Lithium has over 43,000 acres located in the Snow Lake region of Manitoba Canada.  This area has a rich mining history of over 100 years and hosts exploration and mining giants such as HudBay Minerals HBM with a current market cap of around $2 billion, and Kinross Gold Corp KGC with a current market cap of over $6.5 billion. Foremost announced that drilling will commence in Q1 of 2024 on the heels of a multi-year permit awarded from the Manitoba Mines Branch. This permit will enable the company to streamline administrative processes involved with future exploration and understand the potential long-term impacts of the property while minimizing any potential work disruptions in a safer, more cost-effective approach. Additional government support for the company came by way of the Manitoba Mineral Development Fund which has thus far totaled $675,000 towards Foremost’s project to support mineral exploration and development.

The Future  

The lithium market is still relatively small, at around only one-and-a-half-million tons annually, and is very young in comparison to iron ore at 3 billion tons or copper at 25 million tons. It is not traded actively in any great quantity on the commodity exchanges, which makes it challenging to assess inventories and thus prices accurately. Most sales of the commodity rely on term contracts which may not reflect current market demand/supply dynamics. Once the lithium market matures, it should stabilize, and then better pricing mechanisms can be placed.  Foremost Lithium Resource & Technology Ltd is strategically located in the heart of North America with many upcoming catalysts, including a current drill program.  

Today’s climate in the lithium market may seem uncertain, but the energy transition is gaining global momentum, and what is certain is that tomorrow we will require more lithium. Foremost Lithium is striving to meet tomorrow’s demand for the electrification revolution and be the source supplier of domestic lithium feedstock for future lithium-powered energy needs.

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