Community opposition in Quebec cottage country may sink Lomiko Metals’ (TSXV: LMR; US-OTC: LMRMF) prefeasibility-stage La Loutre project, the seventh-largest undeveloped graphite deposit, after the province denied it funding.
The proposed open-pit mine about 100 km north of Ottawa landed research and development grants of US$8.35 million ($11.2 million) from the U.S. Department of Defense and $4.9 million from Natural Resources Canada in May. However, two provincial ministers said in September they wouldn’t approve the key Quebec infrastructure funding needed to build the $236-million capex project because it lacks local support.
La Loutre is at a make-or-break point as Western countries promote domestic battery metal projects to supply the transition away from fossil fuels and from depending on China for minerals and processing. But it also lies at the juncture of support or not from a province considered to have some of the most pro-mining legislation and that is aggressively building local battery minerals capacity.
The Petite-Nation Lakes Protection Group, which represents five municipalities in the Laurentian Mountains region around La Loutre, says it’s concerned the proposed open-pit on the dividing line between two watersheds will pollute waters.
Lake district
“There are very big lakes around this project and there are thousands of people living around it, and more and more those are permanent residents, not only cottagers,” Petite-Nation organizer Louis Saint Hilaire said by phone on Monday. “That’s the reason why there’s such a mobilization against this project.”
Provincial Natural Resources Minister Blanchette Vézina said funding agency Investissement Quebec wouldn’t finance the project. Vézina echoed comments by Mathieu Lacombe, Quebec minister responsible for the Outaouais region. He cited Premier François Legault saying in 2022 that mining projects require public support to be approved.
“This is a project that needed government support to come together, and today I’m telling you it does not have it,” Lacombe told an event in Gatineau on Sept. 16. “This can reassure citizens who don’t want this project, which might be a good project, but isn’t in a good place.”
The company criticized the ministers the next day for going against the province’s leadership role in promoting battery metal projects and its mining-friendly reputation without waiting for important studies.
‘Contradictory’ stance
“We are surprised and disappointed at the negative comments directed toward Lomiko by members of the Quebec government,” the company said in a statement. “It appears the comments, where Quebec is seen as a global leader with a Plan for the Development of Critical and Strategic Minerals, is contradicting its own four strategic initiatives with comments made publicly about Lomiko and our efforts.”
Lomiko said government officials weren’t giving the company a chance for consultation and permitting through economic and proposed feasibility studies that so far show it has a “compelling” business case. The company is conducting environmental research as it seeks a partner to help develop the project.
“It appears the government has made pre-emptive conclusions about our project,” the company said. “We are committed to executing our business plan in the most environmentally friendly manner possible and will engage with any party concerned about our business to allay fears and foster informed discussions of graphite in community settings.”
Financing criteria
On Monday, Minister Vézina said the company didn’t meet the criteria to receive financial help form Investissement Québec.
“The government does not arbitrarily decide whether or not to support a project,” she told The Northern Miner by email. “We put in place a legislative and regulatory framework so that economic projects, including mining projects, can see the light of day. We can decide to become a financial partner in projects when they are in line with our priorities.”
La Loutre has an after-tax net present value of $185.6 million at an 8% discount rate, according to a 2021 preliminary economic assessment.
The study shows an after-tax internal rate of return of 21.5%, payback period of 4.2 years and all-in sustaining cost of US$406 per tonne of graphite concentrate over a 15-year mine life. Graphite flake concentrate was selling for about US$830 a tonne in China on Monday, according to Fastmarkets.
Shares in Lomiko Metals fell 6% by early afternoon Monday in Toronto to 16¢ apiece, valuing the company at $7.2 million. They’ve traded in a 52-week range of 10¢ to 70¢.
Resource update
La Loutre holds 68.3 million indicated tonnes grading 4.08% carbon graphite for 3.1 million tonnes graphite in situ, the company said in updated resource in May. There are 12.7 million inferred tonnes grading 4.11% carbon graphite containing 800,000 tonnes of in situ graphite.
The proposed mine’s average annual graphite concentrate production would be 108,000 tonnes for the first eight years with a life-of-mine average annual output of 97,400 tones.
Saint Hilaire said his group is optimistic the project won’t advance because final approval lies with the province, and his group has told federal regulators as well. The group held three information sessions this year on the project and plans a community referendum in November next year.
“There were more than 100 business people from the region that said publicly they were against this project,” he said. “This is not standard.”