Snow Lake Expands Its Lithium Portfolio with Mineral Claims near Kenora, Ontario
- None.
- None.
Insights
The acquisition of mineral claims by Snow Lake Lithium signals a strategic move to expand its lithium exploration portfolio. Lithium, a critical component in electric vehicle (EV) batteries, is experiencing growing demand due to the global shift towards renewable energy and EV adoption. This expansion into the Muskrat Dam Project represents a potential increase in Snow Lake's resource base, which could enhance the company's valuation and attractiveness to investors who are keen on the EV and renewable energy sectors.
However, the success of this venture relies on the exploration results, which will determine the actual lithium content and the feasibility of extraction. The issuance of common shares and warrants as part of the acquisition cost reflects a common practice in the mining industry to finance exploration without immediate cash outflows, but it also dilutes existing shareholders' equity. The long-term impact on the stock price will depend on the balance between the potential resource addition and the dilutive effect of the new shares and warrants.
The financial terms of the option agreement with Manco, involving an upfront payment, share issuance and warrants, require a careful analysis of Snow Lake's capital structure and liquidity. The CAD$50,000 cash payment is nominal, but the half-million common shares and two million warrants represent future financial commitments that could affect the company's earnings per share (EPS) and cash flow, depending on the achievement of certain milestones.
Additionally, the 2% Net Smelter Return (NSR) royalty to Manco upon the exercise of the option is a common mechanism in the mining sector to provide ongoing benefits to the original claim holders. Investors should consider the potential impact on Snow Lake's profit margins if the project reaches the production stage. The NSR could reduce the net revenue from any future mineral extraction, thus affecting the overall profitability of the project.
The geological setting of the Muskrat Dam Project within the RFR Greenstone Belt is noteworthy. Greenstone belts are known for their economic mineral deposits, including gold and base metals. The presence of muscovite-bearing granites and pegmatites is indicative of lithium potential, which is a positive sign for Snow Lake Lithium's exploration prospects. However, the actual economic viability will depend on the concentration and distribution of lithium within the claims.
The comparison to the Musselwhite Gold Mine's mineralization suggests the possibility of finding not only lithium but also other valuable minerals like gold, copper and nickel. This multi-commodity potential could provide additional upside to the project but also introduces complexity to the exploration process. Detailed geophysical and geochemical surveys will be crucial in assessing the true potential of these claims.
Winnipeg, Manitoba--(Newsfile Corp. - February 8, 2024) - Snow Lake Resources Ltd., d/b/a Snow Lake Lithium™ (NASDAQ: LITM) ("Snow Lake" or the "Company"), is pleased to announce that it has entered into an option agreement (the "Option Agreement") with a private Manitoba company ("Manco") to acquire a
Highlights
- 302 single cell, unpatented mineral claims totaling over 6,000 hectares
- The RFR Greenstone Belt is recommended as an exploration target by the Regional Resident Geologist for the Red Lake district due to muscovite-bearing granites and pegmatites with potential to host lithium mineralization
- Option to acquire a
90% interest in the Muskrat Dam Project upon payment of CAD$50,000 in cash, issuing 500,000 common shares of Snow Lake, and issuing 2,000,000 warrants to purchase common shares of Snow Lake at a deemed price equal to US$1.50 per common share, with the warrants vesting upon a series of milestones being met by Snow Lake
- Manco receiving a
2% NSR upon exercise of the option by Snow Lake
CEO Remarks
"This option to acquire these prospective mineral claims in Western Ontario, near the Manitoba border, continues to expand our portfolio of prospective exploration stage lithium projects near our existing portfolio of properties," commented Frank Wheatley, CEO of Snow Lake.
Option Agreement to Acquire Near Kenora, Ontario
Snow Lake and Manco have entered into the Option Agreement with respect to 302 single-cell, unpatented mineral claims near Kenora, Ontario. Key terms of the Option Agreement are included in Appendix A.
Muskrat Dam Project
The mineral claims comprising the Muskrat Dam Project are set forth on the map below:
To view an enhanced version of this graphic, please visit:
https://images.newsfilecorp.com/files/9547/197209_458e56b0940c6acb_001full.jpg
Geological Setting of the Muskrat Dam Project
The Muskrat Dam Project contains an airborne geophysical anomaly hosted within rusty weathering metavolcanic rocks and meta-gabbro sills containing 1 to
About Snow Lake Resources Ltd.
Snow Lake is a Canadian lithium development company listed on Nasdaq:LTIM with 2 hard rock lithium projects, the Thompson Brothers project and the Grass River project (together the "Snow Lake Lithium™ Project"), in the Snow Lake region of Northern Manitoba. Snow Lake is focused on advancing the Snow Lake Lithium™ Project through subsequent phases of development and into production in order to supply the North American electric vehicle and energy storage markets.
The wholly owned Snow Lake Lithium™ Project now covers a 59,587-acre site that has only been
Forward-Looking Statement This press release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the "safe harbor" provisions under the Private Securities Litigation Reform Act of 1995. that are subject to substantial risks and uncertainties. All statements, other than statements of historical fact, contained in this press release are forward-looking statements, including without limitation statements with regard to Snow Lake Lithium™. We base these forward-looking statements on our expectations and projections about future events, which we derive from the information currently available to us. Forward-looking statements contained in this press release may be identified by the use of words such as "anticipate," "believe," "contemplate," "could," "estimate," "expect," "intend," "seek," "may," "might," "plan," "potential," "predict," "project," "target," "aim," "should," "will," "would," or the negative of these words or other similar expressions, although not all forward-looking statements contain these words. Forward- looking statements are based on Snow Lake Resources Ltd.'s current expectations and are subject to inherent uncertainties, risks and assumptions that are difficult to predict. Further, certain forward-looking statements are based on assumptions as to future events that may not prove to be accurate. Some of these risks and uncertainties are described more fully in the section titled "Risk Factors" in our registration statements and annual reports filed with the Securities and Exchange Commission. Forward-looking statements contained in this announcement are made as of this date, and Snow Lake Resources Ltd. undertakes no duty to update such information except as required under applicable law.
For more information, please contact:
Investors: ir@snowlakelithium.com
Media: media@snowlakelithium.com
Twitter: @SnowLakeLithium
www.SnowLakeLithium.com
Schedule A - Key Terms of the Option Agreement
Snow Lake and Manco have entered into an option agreement (the "Option Agreement") dated as of February 2, 2024 (the "Effective Date") on the following key terms and conditions. Capitalized terms not otherwise defined in this Schedule A have the meaning set forth in the press release to which this Schedule A is attached.
1. Project: The Muskrat Dam Project, located in Western Ontario, near Kenora and the Manitoba border, consists of 302 single-cell mineral claims
2. Option
Manco has granted Snow Lake the option (the "Option") to earn up to a
a) Payments on the Effective Date
paying to Manco on the Effective Date an aggregate of CAD
$50,000 cash;allotting and issuing to Manco on the Effective Date, as fully paid and non-assessable common shares, an aggregate of 500,000 common shares (the "Shares") of Snow Lake at a deemed price equal to the 30-Day volume-weighted average trading price of the Shares on Nasdaq (the "VWAP");
granting to Manco on the Effective Date, 2,000,000 common share purchase warrants (the "Warrants"), to purchase one Share at a price of US
$1.50 per Share for a period of 5 years, vesting as follows:500,000 Warrants vest on the Effective Date;
500,000 Warrants vest upon Milestone 1 having been met;
500,000 Warrants vest upon Milestone 2 having been met; and
500,000 Warrants vest upon Milestone 3 having been met;
b) Payments During the Option Period
Subject to Section d) below and the right of Snow Lake to terminate the Option during the option period for any reason or no reason, Snow Lake shall make the following payments (the “Payments”) to Manco during the option period as follows:
US
$1,000,000 in cash, or at Snow Lake’s option, allotting and issuing to Manco, as fully paid and non-assessable, such number of Shares calculated by dividing US$1,000,000 b y the 30-Day VWAP, on the earlier of the following:in the event a technical report determines there is a lithium resource on the Muskrat Dam Project of a minimum of 10 million tonnes with an average grading greater than
1% Li20; oron the 1st anniversary of the Effective Date (“Milestone 1”);
US
$1,000,000 in cash or at Snow Lake’s option, allotting and issuing to Manco, as fully paid and non-assessable, such number of Shares calculated by dividing US$1,000,000 b y the 30-day VWAP, on the earlier of the following:in the event the technical report determines there is a lithium resource on the Muskrat Dam Project of a minimum of 25 million tonnes with an average grading greater than
1% Li20; oron the 2nd anniversary of the Effective Date (“Milestone 2”); and
US
$1,000,000 in cash or at Snow Lake’s option, allotting and issuing to Manco, as fully paid and non-assessable, such number of Shares calculated by dividing US$1,000,000 b y the 30-day VWAP, on the earlier of the following:upon completing a preliminary feasibility study by Snow Lake on the Muskrat Dam Project; or
on the 3rd anniversary of the Effective Date (“Milestone 3”);
c) Work Commitment Obligations
Snow Lake shall incur or pay the following expenditures to improve the Muskrat Dam Project, during the option period (the “Work Commitment”):
US
$1,000,000 on or before the 1st anniversary of the Effective Date;US
$1,000,000 on or before the 2nd anniversary of the Effective Date; andUS
$1,000,000 on or before the 3rd anniversary of the Effective Date;
Qualified expenditures incurred during any period in excess of the required Work Commitment for that period will be credited and apply fully to the Work Commitment for the succeeding period.
d) Firm Commitments and Change of Control
The payments set out in §a)(iii), §b)(i)(A), and §c)(i)(A) above are firm commitments and must be made even in the event Snow Lake terminates the Option.
If during the option period there is a Change of Control (as defined in the Option Agreement) of Snow Lake, Manco has the option to terminate the Option Agreement or cause Snow Lake to the exercise the Option.
3. Royalty
Upon the exercise the Option, Snow Lake will grant Manco a
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/197209
FAQ
What is the latest announcement from Snow Lake Resources Ltd. (LITM)?
What is the potential of the Muskrat Dam Project?
What are the key terms of the Option Agreement between Snow Lake and Manco?
