According to the International Energy Agency (IEA), mineral demand for energy storage and electric vehicles (EVs) will grow close to 30 times between 2020 and 2040, driven primarily by batteries, the metals they’re made of, and their fundamental roll in staving off climate change by minimizing the world’s reliance on fossil fuels.
This state of affairs places a premium on reliable battery metal supplies, as governments around the world incentivize and bring critical material production onshore to de-risk their economies and counteract China’s control of 80 per cent of global refining capacity, making it an opportune time to pick up quality, out-of-favour battery metals assets with most of their growth in front of them.
A junior miner with a strong case for a stock price re-rating is Coniagas Battery Metals (TSXV:COS), market capitalization C$3.10 million, a copper, nickel and cobalt explorer and battery metals production technology developer, whose stock has given back more than 50 per cent since going public in March 2024, despite:
- Its promising Graal project in Quebec, which has returned high-grade copper, nickel and cobalt, is progressing towards an initial mineral resource estimate, and is positioned to benefit from expected copper, nickel and cobalt demand growth of 28x, 41x and 21x, respectively, according to the IEA (slide 4), driven by insufficient global production.
- Its proprietary Re-2Ox technology, which uses hydrometallurgy to extract battery metals and by-products with no burning or smelting, offering a significantly lower-carbon footprint compared with legacy methods, setting Coniagas up to increase its share in a market propelled by an exponential tailwind.
- A management team filled with multi-decade track records in the mining industry focused on global precious and base metal drilling and refinement, as well as executive leadership, mining finance and hydrometallurgical engineering.
- A report by an outside research team which estimated a fair value for the shares at multiples higher than its current market price.
As inflation trends downward and interest rates begin to fall from generational highs, warming investors up to high-leverage opportunities such as junior mining stocks, now is the perfect time to analyze the constituent parts of Coniagas Battery Metals’ attractive value proposition.
Coniagas’ Graal project
Coniagas acquired the 6,113-hectare Graal project in Saguenay, Quebec, for only C$60,000, granting shareholders exposure to a potentially large high-grade copper, nickel, cobalt, platinum and palladium deposit near surface along a 6 kilometre mineralized strike length. This potential is substantiated by:
- More than C$6 million in drilling and geophysics, including Coniagas’ more than 16,000 metres of drilling at Graal in 2021 and 2022 targeting geophysical anomalies, hitting mineralized sulphides in almost every drill hole. Highlight results reached up to 10.31 per cent nickel, 0.6 per cent copper and 0.15 per cent cobalt, suggesting further expansion at depth.
- Historical drilling by Virginia Mines and SOQUEM between 1996-2004 yielding a target estimate of 30-60 million tons up to 0.80 per cent nickel, 0.50 per cent copper and 0.15 per cent cobalt, although Coniagas has already demonstrated through its own drilling that the estimate is only for a small area of the total deposit.
The project, aligned with Canada’s critical mineral strategy and Quebec’s critical and strategic minerals plan, also benefits from road access, mining and battery manufacturing infrastructure, nearby hydro power and access to an ocean port, revealing Graal to be a high-conviction, early-stage candidate for open-pit and underground mining in a province committed to being a major critical minerals supplier.
Coniagas is planning additional drilling, metallurgical testing and consultations with First Nations to usher Graal towards a maiden NI 43-101 resource estimate over the near term.
Coniagas’ Re-2Ox battery metals extraction process
Graal’s robust case for value through exploration is fortified by Coniagas’ proprietary Re-2Ox battery materials extraction technology, which is a key driver, along with access to Quebec’s hydroelectric power grid, to the project developing into a low-carbon supply of critical metals and minimizing Chinese dominance.
Re-2Ox’s zero-discharge hydrometallurgical process requires no burning or smelting, allowing for the production of low-carbon, low-cost, battery-grade materials from both sulphide and oxide feeds without losing any byproducts. This has been demonstrated by metallurgical tests at SGS (slide 13), a globally respected leader in metallurgical innovation playing an important role in Re-2Ox’s development.
Coniagas’ strategic arrangement with Swiss-based SGS, signed in May 2024, will see them validate and build out an Re-2Ox processing plant at the Port of Saguenay to monetize materials from Graal and offshore stockpiles, including from Europe and the Democratic Republic of the Congo, to fill the gap in Quebec-based facilities that convert raw materials into EV components like cobalt and nickel sulphates.
The arrangement is aimed at expanding Canada’s critical mineral supply chain through a feed-first strategy that prioritizes reliable, long-term feed contracts backed by ongoing metallurgical testing, with Coniagas intending to vertically integrate its own supply chain once it validates Re-2Ox at scale to meet growing global demand for EVs and battery metals.
Leadership with high-quality track records
Coniagas’ path to shareholder value, focused on high-quality raw materials and the demonstrated ability to extract battery grade products, is being put into motion by a management team bespoke to the task. Let’s meet them now:
Management
- Frank Basa, P.Eng. Ontario, Coniagas’ president, director and chief executive officer, is a metallurgical engineer and mill expert with more than 40 years of experience. His extensive battery metals expertise includes work with Agnico Eagle and developing the Re-2Ox process described above. Basa has a more than 29-year background in gold mining and development as a hydrometallurgical engineer specializing in milling, gravity concentration, flotation, leaching and refining. Basa has served as chairman, president and CEO of Granada Gold Mine (TSXV:GGM) since June 2004.
- Matt Halliday, P.Geo., consulting geologist, is a senior geologist with more than two decades in the field, including multiple minerals and projects around the world with Kirkland Lake Gold, Electra and SGS Canada. Halliday is currently the president and chief operating officer of Nord Precious Metals Mining.
- Remantra Sheopaul, chief financial officer (CFO), serves Coniagas as part of Toronto-based Marrelli Support Services Inc., which provides CFO, accounting, regulatory, compliance and management advisory services to issuers on Canadian and U.S. stock exchanges. Sheopaul specializes in initial public offerings, IFRS disclosure and compliance, and is currently CFO of Granada Gold Mine, Canada Carbon (TSXV:CCB), Angel Wing Metals (TSXV:AWM) and Metalite Resources (CSE:METL).
Board
- Aurelian Basa, director, brings nearly 10 years of accomplishments in the natural resources industry. These are most recently highlighted by securing feed sources for the Re-2Ox process, including high-grade tailings projects, recycled batteries and battery metal deposits abroad. Basa is advancing Metals-as-a-Service, a platform connecting commodity traders to responsible sources of critical metals leveraging existing relationships with European metal traders and Asian battery manufacturers. He also manages Resource Active Media, a digital content agency tailored to publicly traded mining companies.
- Ronald Goguen, Sr., independent director, took on the roles of chairman and CEO of Colibri Resource (TSXV:CBI) in July 2017. Goguen is also the founder of Major Drilling Group International (TSX:MDI), one of the largest mineral drilling service companies in the world, where he served as president and CEO until 2000. In 2006, Goguen became chairman of the Beaver Brook antimony mine, the largest antimony mine outside of China, until the operation began production in 2008.
- Heidi Gutte, business consultant, has nearly 15 years of experience working with publicly traded mineral exploration and mining companies. She specializes in providing corporate finance, IFRS financial reporting, audit preparation and response, tax optimization, and corporate compliance for the mineral exploration and junior mining sectors. Gutte earned her bachelor’s degree of computer engineering from the University of Applied Sciences in Brandenburg, Germany. She holds the professional designation of Chartered Professional Accountant (CPA, CGA), and is a member of Chartered Professional Accountants of British Columbia and Canada.
Guided by established mining industry professionals with tailor-made experience, Coniagas finds itself on a path to expedite global battery materials production, de-risked by SGS’s involvement, with a stock price that has done anything but recognize this vast potential.
The gift of exponential upside with no market recognition
Having given back more than 50 per cent since March, shares of Coniagas Battery Metals are at odds with the highly prospective Graal project and potentially revolutionary Re-2Ox process, which would be attractive to mines across the world limited by higher-cost, energy intensive production methods, as well as governments keen on bolstering national supplies of critical materials.
We can explain the market’s reluctance to embrace the battery metals stock by a series of factors that are simultaneously the retail investor’s nightmare and the seasoned allocator’s green flags for an outsized opportunity. Here are four to consider:
- Junior mining stocks, being pre-revenue, are highly volatile, rewarding a seasoned investor’s ability to hold on to their reasons for conviction, no matter how rough the ride.
- The need to decipher technical language to perform informed due diligence on a junior miner favours investors with a taste for the tedious and meticulous.
- Canada’s currently restrictive economic environment, marked by high consumer prices, is still encouraging saving and risk-off investment strategies away from micro-cap stocks and towards bonds and cash.
- The more than decade-long mining life-cycle will try even the most market-tested investors given the diversity of delays and economic climates that can transpire between exploration and production.
Together, these factors have pummelled Coniagas shares beyond reason, heavily discounting its untapped assets despite results supporting their upside, creating an attractive entry point for investors willing to wait for a ramp-up to commercial production to cash in on greater market awareness.
When it comes to high-quality, early-stage exposure to a junior miner on a path to global relevance, you needn’t look any further.
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(Top photo of mineralization from the Graal project: Coniagas Battery Metals)