Shareholderscould be forgiven for thinking the sky’s the limit for Petro HorizonEnergy (TSX:V.PHE, StockForum). After all, its stock has popped 306% so far in 2010 to its current 
of 34.5 cents a share. The question is, will the sun keep rising or seton this penny explorer?
Petro Horizon’s sole concern is its Brazil Lake Lithium RareMetals Project, a 3,160 acre property located about 30 kilometres northof Yarmouth, Nova Scotia, and 12 kilometres west of the AvalonRare Metals (TSX:T.AVL, StockForum) East Kemptville Project. Although the property has yet to bediligently explored by the company, drilling to date has revealed twolithium-bearing pegmatite dikes. In addition to lithium, the dikes hostseveral other rare metals such as tantalum, niobium, beryllium, tungstentin and rubidium. Metallurgical bench testing to date has also revealedother potential economic targets, including cosmetic grade mica, silicachloride, aluminum chloride and rubidium enriched potassium feldspar.
“(Our deposit) is classic hard-rock pegmatite.What’s attractive about this project is that it’s accessibly is reallygood compared with a lot of other projects in the world. We’re withinwalking distance of power, (it is in) southern Nova Scotia,which is within 15 miles of a saltwater port and it has year-roundaccess, including road access,” says Petro HorizonPresident Ron Bourgeois.
Bourgeois was quick to point out that it’s not a grass rootsproperty – it has been drilled up by the private that has held the claims for a number of years and has 29 holes in it.“The real challenge is to prove up the size of the resource,” he added.
Bourgeois went on to explain that lithium-hosted pegmatitedikes tend to occur in clusters. Petro Horizon has two (dikes) that havebeen drilled and a third on the property that the company is going todo some excavation this summer. Its goal this summer, then, is to expandthe drilling on both of these dikes – “they have not yet hit bottom.”The company has about 500,000 tonnes measured up (non-43-101 compliant).Bourgeois said he hopes to get the two dikes up to twomillion tonnes, which he believes will get the company to thecommerciality stage. In addition, he plans to do some work on the thirddike, which would encourage the company to do further drilling on it.
The company currently has $150,000 in cash and 10.6 millionshares (basic) outstanding, not including 4.6 million convertiblewarrants and about 1.8 million share options. This figure also doesn’tinclude its announcement on March 31, 2010,that it is proceeding with a non-brokered private placement of up to2,977,000 units in the capital stock for total gross proceeds of up to$1,000,200.
Bourgeois says at this stage there are no plans to bring inpartners. “Our joint with a private company called Champlain Mineral Ventures is that wewill earn 75% through a phase work program.” He added that once they getto that level they may consider partners because to build a mill therewould probably cost between $40 million and $50 million.
“Unlike the salares (salt lakes containing lithium brine), wehave some very good by-products potential here, with 8% cosmetic mica.”He said it has been sent to a number of cosmetics producers in the UnitedStates and they like it because it doesn’t have any ironin it. “Cosmetic mica is non-allergenic so it’s used as a base in a lotof cosmetics,” Bourgeois claims.
Petro Horizon boasts that it has one of the purist lithiumdiscoveries in North America at 7.7%. To put that inperspective, Bourgeois asserts that the salares tend toaverage 1% to 2%. He explained that the mineral that hosts the lithiumelement is called spodumene. The granite intrusion thatcomes the surface is called a pegmatite and within the pegmatite thereis spodumene. Bourgeois told Stockhouse that the companyhas been running 14% to 20% spodumene in the pegmatite andthe spodumene itself has been running 7% to 7.7% lithium.What you end up doing if successful, he said, is having an open pit minewhere you follow the spodumene – you mine the pegmatite where you’veidentified the spodumene.
Petro Horizon Energy shareholders carry the risk of investingin a junior with just one project, but could benefit from its, so far,relatively low number of shares outstanding. The company could also bean attractive takeover or joint venture candidate, possibly involvingits neighbour Avalon. Regardless, Petro Horizon must continue to drillto justify a higher share price.
“We’re looking at other projects. Right now we’ve got anapplication from the TSX on this project. Until such time we get thisproject approved by the TSX we really can’t commit to anything else butwe are looking at other projects and we do have our eye on a few otherscomplementary to this one,” according to Bourgeois.He added that once Petro Horizon gets confirmation from itsdrilling program that it has proved up the resource to a higher level,at that stage it plans to go into a bulk sampling and a pilot project,hopefully within the year.