Valuation Commentary: Québec Innovative Materials Corp. (CSE: QIMC) (Frankfurt: 7FJ) (a.k.a. QI Materials), a Canadian-based mineral exploration and development company, has issued a 2024 strategy synopsis that rapidly advances it toward a near-term industrial mining production scenario on its portfolio of high-grade SiO2 properties in Ontario and Quebec. Additionally, QI Materials has entered into a Right of First Refusal ("ROFR") agreement with HPQ Silicon Inc. ("HPQ") which allows HPQ the Right of First Refusal to purchase the first 10,000 tons of high-grade silica material extracted from a QI Materials.
Over the coming months QIMC will continue to provide silica feed from its Charlevoix project in Québec to various industry participants, while it juxtaposes development efforts to ready the River Valley project in Ontario and the new Charlevoix discovery zones. QI Materials has announced the following plans and goals for 2024:
River Valley Silica Project: 1)
Perform mechanical stripping of the quartz vein formation. 2)
Perform a hybrid detailed exploration/geotechnical drill program in
order to delineate a resource and design the quarry. 3) Execute
quarry design and production plan. 4) Conduct advanced metallurgical
testing on silica material. 5) Commence production permitting
process. 6)Negotiate strategic offtake agreements.
The new discovery zones at Charlevoix are high-purity and are confirmed without permitting issues, 100% outside any hunting & fishing zec. Property zones will be stripped clean and various surveys conducted as needed with the intention of going operational; so far zones 4 and 5 have been mapped in detail, cleaned off, channel sampled, and over 120m of strike length is now exposed at surface. The true thickness and width of the quartzite formation is currently unknown as the contacts are buried beneath overburden, however we can observe 5-10 metres high quartzite walls in certain areas. This October-2023 QI Materials announced that it has received a permit to further expand work on its high grade on surface Charlevoix Silica Project. It was an 8 month process and further expands the capacity to deliver even more high-grade material. This permitting is in line with the Québec government’s green supply chain strategy, and expands the QIMC’s operations and ability to deliver even more high-grade silica to clients who have been eagerly waiting for this.
QI Materials has received expressions of interest from various manufacturers globally (e.g. a representative from a private Chinese-owned company in the solar panel manufacturing industry recently visited the Company's facility in Lachute, Québec and was provided with samples for analysis at their lab in Vancouver, BC.).
Demand for reliable high-purity quartz/silica feed is increasingly critical for companies such as nearby Montreal-based HPQ Silicon Inc. which is developing several new advanced silicon innovation processes that will drive the future (see related news release "QI Materials Delivers Additional Samples to HPQ Silicon Inc." and "QIMC Contributes to HPQ Silicon Battery Initiative", among others), such as GM and Ford which are building new EV battery plants nearby (next gen lithium silicon anode batteries offer improved performance and capacity), such as solar panel glass manufactures and a myriad of other applications (ceramics, building materials, foundry and metals, coatings and polymers, chemicals, filtration and absorbents, etc.). CSE:QIMC is set for upside share price revaluation to better reflect its strategic positioning, able to provide crucial feed. Of particular note is the October 11, 2023 joint press release from HPQ Silicon and Pyrogenesis entitled "Successful Silicon Pour and Validation of All Critical Milestones in HPQ PUREVAP™ GEN3 QRR Testing" confirming continuous pour at scale of 2N+ silicon and achieving one-step 3N+ battery-grade silicon -- this technology is the future of silicon production. Also important to note is that quartz-derived silicon has gained significant strategic importance, recently earning a place on the USA's strategic mineral list.
QI Materials has also prioritized its recently acquired 100%-owned River Valley Silica Property, 65 Km northeast of Sudbury Ontario, to be advanced toward fast-track production (see related October 11, 2023 news release "QI Materials Procures OptiSim Mining Solutions for Engineering and Production Services"). River Valley has no permitting issues, it hosts a substantial quarryable body of 98% - 99.9+% pure SiO2 proximal roads and rail infrastructure. An overview of two key silica projects belonging to QIMC (1-River Valley, 2-Charlevoix in Québec) may be viewed further below in this article.
Unlike traditional mining mineral resources (such as gold), which require copious amounts of drilling, silicon dioxide is industrial quartzite and a massive voluminous resource is able to be blocked out quickly with a few 100m drill holes (~1,000 m total should suffice), also these type of bodies are typically operated for multiple decades and the grades/quality get better with depth (where there is less weathering and impurities). The hard part (which QIMC has already accomplished) is to find the right combination of purity, consistency, access, permitting, and infrastructure -- the actual extraction of material is typically inexpensive (as its quarry-style mining), it is the transportation costs that can quickly add up. At River Valley its a short trip down highway and onto established rail network, and at Charlevoix it is only ~3.5 hours by road to Montreal (where HPQ, and other manufacturers are along the Saint Lawrence). In-short, economics are expected to be robust.
Market Equities Research Group has a near-term (12 month) share price target several times the current for CSE:QIMC: QIMC currently has a nominal market cap of ~C$2.3M (~73.91 million shares trading near ~C$0.03). The company has sufficient capital on hand to accomplish all exploration and development goals for 2023 and into next year. The share price of QIMC is poised for upside revaluation as the significance of what Québec Innovative Materials Corp. possesses is better appreciated by the market. A good comparable for investors in QIMC to look forward gravitating towards is that of Homerun Resources Inc. (HMR), a silica pure-play out of Brazil -- HMR trades with a marketcap near C$35M; Comparably QIMC is on par for silica and is out of North America, which affords certain advantages. QIMC has simply been under-the-radar, however now with the moves its making to advance key assets combined with continued expressions of intent from client HPQ and others, it appears only a matter of time before QIMC gravitates significantly higher in share price (several multiples current).
Figure 1. (above) -- QIMC has various grades and types of feed stock, mined from its Charlevoix project, prepped and ready for delivery to clients requiring silica according to spec. Visible in the image above in the bags up front and in the insets are large crystalline-like chunks that are milled to specification; in HPQ Silicon Inc.'s case they are very specific: X size, at X grade, X-sort of dimension, roundness angularity, etc. -- reports are HPQ is very pleased with the product being delivered and explains why HPQ entered a ROFR agreement with QI Materials. In the image above, any weathered look is attributed to surface exposure -- simply crack below the surface and the silica is much more translucent white. The rows of bags further to the back are finer material, a by-product of processing the main batch -- this material would go to a different client such as an asphalt company; no waste.
Figure 2. (above) -- QIMC's mobile refining processing plant for custom batches, with inset of current world market pricing* (*annotated by Mining MarketWatch Journal). For reference, the product processed in the bags seen up front in Figure 1 would likely command somewhere between US$225 - $500/tonne, depending on specs -- certainly offering quality margins for QIMC once operational at scale. HPQ is able to take the feed from QIMC and upgrade it using proprietary technology to US$500 - $5000/tonne range product, HPQ can produce the value-added product significantly cheaper and more environmentally friendly than any current process being employed now in the world.
QIMC has a MOU with HPQ Silicon Inc. whereby QIMC provides feed stock for HPQ’s various processes, currently in various stages of development. HPQ is a technology firm that is on the cusp of literally revolutionizing several multi-billion dollar industries. Market Equities Research Group believes the market cap of HPQ is poised to propel ~10X (to well over C$1B) as its various verticals advance over the next couple years. The fact HPQ approached QIMC to secure its high-purity silica feed speaks volumes. Prior to using QIMC, HPQ was sourcing feed from private operators that charged horrendously for the uniquely rigorous specs HPQ needed.
QIMC is only a few years old, it was originally created specifically twofold; 1) to position as a primary source of silica (which it has concentrated on first), and 2) to work in the technology related side. With its access to quality silica assets, the basic building-block needed to capitalize on technological opportunity, QIMC can leverage its assets and relationships to innovate and expand into its own value-added technology related ventures down the road.
Recent news headlines from Québec Innovative Materials Corp.:
● November 15, 2023 -- "QI Materials Announces Newly Discovered Zone at the Charlevoix Silica Project"
● October 24, 2023 -- "Qi Materials Starts Preliminary Modelling of High-grade Silica Projects"
● October 11, 2023 -- "QI Materials Procures OptiSim Mining Solutions for Engineering and Production Services"
● October 4, 2023 -- "QI Materials Receives Permit to Expand Work at Charlevoix"
● September 20, 2023 -- "QI Materials Delivers Additional Samples to HPQ Silicon Inc."
● September 14, 2023 -- "QI Materials to Mobilize Crew to River Valley and List on the Frankfurt Exchange"
● September 7, 2023 -- "Qi Materials Acquires River Valley Silica Property And Announces New Chairman"
● June 29, 2023 -- "QI Materials Provides Pilot Plant Update"
● May 31, 2023 -- "QIMC Mobilizes Pilot Plant and Begins 2023 Exploration"
● April 26, 2023 -- "QI Materials Reports High-Grade Results from Channel Sampling"
● March 14, 2023 -- "QIMC Contributes to HPQ Silicon Battery Initiative"
Below is an summary of QIMC's key silica assets:
Valley Silica Project - 100%-owned
Located in the Sudbury mining division, near River Valley, Ontario, Canada
This project was recently acquired September-2023 (click here for related news release). This is a remarkably good project, news flow should be steady from QIMC as it is quickly advances toward large-scale operational quartz/silica quarry status.
Progress / Development Update on River Valley:
See related October 24, 2023 news release "Qi
Materials Starts Preliminary Modelling of High-grade Silica Projects";
The QI Materials field team has completed the first pass of field
exploration and development work on the Company’s wholly owned River
Valley Silica project, located in the Sudbury mining division of
Ontario, Canada. The Company is now processing the data and
commencing preliminary modelling and quarry designs.
Figure 3 a. (above) - Visual high purity quartz samples from River Valley Project quartz vein (source: October 24, 2023 corporate update news release).
Figure 3 b. (above) - Quartz
outcrops with technicians performing detailed
topographic survey (source: October 24, 2023 corporate
update news release).
The Company also performed a site visit with the engineering team from OptiSim Mining Solutions, of Sudbury, Ontario (See news release Oct-11-2023) for the purpose of preliminary quarry design, engineering, and permitting.
The River Valley Silica Project is host to a high purity quartz vein. Publically available historical* purity results and mapping indicate that the quartz vein is up 99.9% pure SiO2. Historical* mapping indicates that the quartz vein is over 300m long and over 40m wide.
Figure 5. (above) Historical Results;
enlarged image of SiO2 section from lab assay table results from the
2019 report. Site visit by professional geologist Raymond Wladichuk,
CEO of Qi Materials, confirms that these historical reports appear
to be accurate.
Figure 6. (above) Location Map of River Valley Silica Property with inset claims map (different scale) -- 65 kilometres north east (as the crow flies) from the world-class mining camp of Sudbury, Ontario. It is easily accessed by existing road infrastructure, and a short trip to the River Valley network of rail transfer stations. The Property covers an area of approximately 47 hectares.
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Charlevoix Silica Project - 100%-owned
Located near Clermont, Québec, Canada
Figure 7. (above) Location Map.
Figure 8. (above) Map of Charlevoix Silica Project showing zones -- The new Zones 3, 4, 5, & 6 are 100% located outside the hunting and fishing zec, thus large-scale permitting is no different than neighbour Sitec Mine, just across the highway, which is the largest employer in this mining-friendly region. Sitec quarries high-end quartz countertop material and has operated for over 50 years.
Figure 9 a & b. (above) Aerial photograph of the Charlevoix Silica Project Main Zone 1.
In the summer and fall of 2022, the Company stripped the overburden off the Main Zone silica outcrop (Figure 1). A series of 16 channels were cut across the stratigraphy and sampled at one (1) metre long intervals as seen in Figure 2. Approximately 50% of the channel samples were sent to ALS Global for purity analysis, the remaining samples were delivered to the Institute National Research Scientifique (INRS) in Québec City for further analysis. The results of the purity analysis suggest that the majority of the Main Zone outcrop is comprised of high-grade silica, returning an average grade of 98%, with purity ranging as high a 99.88% SiO2; see related April 26, 2023 news release entitled "QI Materials Reports High-Grade Results from Channel Sampling".
New Zones (3, 4, 5, & 6) on Charlevoix Silica Project
See related August 29, 2023 news release "QI Materials Announces Assays over 99% SiO2 from Newly Discovered Zones at the Charlevoix Silica Project"; The QI Materials field team's mapping and prospecting efforts have led to the discovery of newly found quartzite outcroppings with remarkably high purity grade. The new zones currently named zones 3, 4, and 5 occur approximately one kilometre northeast of zones 1 and 2. According to SIGEOM, the ministry of Quebec's public natural resources database, the new zones are located outside of the Zec des MartresSeven (7) samples were delivered to ALS Global's lab in Val d'Or, Québec where they underwent purity analysis. These samples were selected from various locations on the outcrops and averaged over 98% SiO2 ranging from 97% to over 99%:
Table 1. (above) Assay results from new zones.
Figure 10a&b. (above) Photos of Quartzite Samples from New Zone -- The majority of the samples collected from the new zones are of beautiful, clear, near-crystalline quartzite.
Figure 11 a & b. (above) Photos of quartzite from zone 4 & 5
Progress / Update on Charlevoix:
See related October 24, 2023 news release "Qi Materials Starts Preliminary Modelling of High-grade Silica Projects"; The QI Materials team is currently at the Charlevoix Silica Project completing the final field work of the season. The team is following up on the newly discovered high grade zones announced in August 2023 (See news release). The scope of this program includes: