SOI has entered into an option agreement with Sumitomo Metal Mining (JSE: 5713) for advancing the Aquilon high-grade gold project in Quebec. Sumitomo can acquire an 80% interest, by spending $14.8M on exploration.
Sirios has also completed an updated resource estimate for its flagship Cheechoo gold project, located 15 km from Newmont’s (TSX: NEM) Eleonore gold mine in Quebec. NEM is Sirios’ largest shareholder, holding 12% of SOI’s equity.
72% of inferred resources were upgraded to indicated resources. In addition, the weighted average grade increased by 36% (0.65 to 0.89 gpt), implying potential for lower OPEX. We note that these are high grades for an open- pittable deposit. We believe there is potential for resource expansion.
Upon completing a preliminary analysis, management believes three of its projects are prospective for lithium (Cheechoo, Maskwa, and Li-52). SOI is planning a maiden lithium exploration program on these projects.
Quebec is a relatively untapped, but highly prospective region for lithium. Piedmont Lithium (ASX:PLL) and Sayona Mining Ltd (ASX:SYA) recently commenced lithium production at their North American Lithium project in Quebec. Earlier this year, the Canadian government approved Allkem Ltd.’s (ASX: AKE) application to construct a lithium mine in the province.
We are expecting the upcoming lithium exploration program to be the next major catalyst for SOI. In addition, we have a positive outlook on gold prices, as there is potential for the Fed slowing/pausing rate hikes, amid turmoil in the financial industry, slower GDP growth, and as inflation has started to taper.