Frontier secures $3.35 million lithium facility loan, shares rise
Frontier Lithium Inc. [FL-TSXV, LITOF-OTCQX, HL2-FRA] said it has secured a $3.35 million convertible loan. The company said net proceeds from the financing will be used to purchase an industrial site on Mission Island in Thunder Bay, Ont., where it plans to build a lithium conversion facility.
Frontier said the Mission Island lands are composed of 183 acres, including a 50-acre water lot. Frontier has held an option to purchase the Mission Island lands since June 1, 2023. The option is expected to be exercised, and the definitive purchase and sale agreement to purchase the Mission Island lands is expected to be entered into on February 28, 2025. The convertible loan transaction is expected to close on the same date.
Fontier shares advanced on the news, rising 6.5% or $0.04 to 65 cents. The shares trade in a 52-week range of $1.21 and 38.5 cents.
Frontier Lithium is a preproduction business. Its aim is to become a strategic domestic supplier of spodumene concentrates, as well as battery-grade lithium salts to the growing electric vehicle and energy storage markets in North America.
The company has said its PAK Lithium development project in northwestern Ontario is one of the highest quality known lithium mineral resources in North America due to its high-grade and low impurity properties in the pegmatite ore material and the spodumene mineral.
Recently, Frontier Lithium confirmed the presence of spodumene with the Bolt pegmatite, between the PAK and Spark deposits and the Pennock pegmatite occurrence, a further 30 kilometres along the project.
PAK hosts a probable reserve of 4.0 million tonnes averaging 1.79% Li20 with a 0.65% Li20 cut-off grade.
The company aims to complete final permitting, metallurgical test work and definitive feasibility study in 2025 to make construct decision for a mine, mill and downstream chemical plant to produce lithium chemicals.
Thunder Bay is the closest major city to the PAK deposit, which maintains the largest land position and resource in a premium lithium mineral district located in Ontario’s Great Lakes region.
The company said the convertible loan is considered a related party of the company under Multilateral Instrument 61-101 (Protection of Minority Security Holders in Special Transactions) and the policies of the TSX Venture Exchange as the lender is an affiliate or associated entity of Reginald (Rick) F. Walker (Chairman of the Board of Directors).
The loan is convertible into, or exercisable for, fully paid common shares of the company. The principal amount of the loan, together with any accrued unpaid interest, will mature and become due and payable in cash on a date that is 18 months from the date that the convertible loan was issued, subject to earlier conversion. The principal amount owing under the convertible loan will accrue interest from the issue date at the Canadian overnight repo rate average plus 3.0% annually, and the interest will be calculated and compounded annually and payable and be due on the maturity date.