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Pioneer Resources lays ESG groundwork amid geopolitical concerns over cesium

SNL Image

Cesium crushed ore being trucked from Pioneer Resources' Sinclair mine in Western Australia.
Source: Pioneer Resources

Being among the world's few cesium producers and sending product to China has focused global attention on Pioneer Resources Ltd., which is doubling down on its environmental, social and governance focus to aid financing and future off-takes for its West Australian Pioneer Dome lithium-cesium-tantalum project.

Pioneer entered into a binding off-take agreement with Cabot Corp. subsidiary Cabot Specialty Fluids Ltd. in June 2018 for all the cesium ore extracted from the Sinclair mine within Pioneer Dome, including a US$4.8 million loan facility to fund mining operations of what is Australia's first commercial cesium ore producer.

Though Cabot Specialty Fluids said at the time that the product would augment its pollucite supply and complement the supply projects at its Tanco facility in Manitoba, Cabot divested the unit in June 2019 to Chinese group Sinomine Resource Group Co. Ltd. subsidiary Sinomine (Hong Kong) Rare Metals Resources Co. Ltd. for US$135 million.

Winnipeg Free Press reported Sinomine as saying after the transaction that it had "become the world's largest pollucite mining enterprise and the world's largest producer and ­supplier of cesium products."

Mining analyst Mickey Fulp of mercenarygeologist.com said acquiring Tanco gives China virtually total control of 21 of 35 minerals the U.S. designated as critical ­commodities in 2018.

Avalon Advanced Materials Inc., whose Lilypad project in Ontario also hosts significant cesium-bearing pollucite mineralization, said about 75% of the cesium market is used to make a high-density, low-viscosity fluid called cesium formate used in drilling deep oil wells. Cesium is also critical for healthcare and defense and more recently has been revealed as key to 5G technology.

In February, Canada's Power Metals Corp. cited Sinclair, Tanco and the Bikita mine in Zimbabwe as the only pegmatite mines globally that produce cesium when announcing its focus on its own cesium mineralization in the spodumene pegmatites at Case Lake, one of the five cesium occurrences in Ontario.

On June 8, Pioneer announced an exploration target of between 1,000 and 2,000 tonnes grading between 8% and 14% cesium oxide from the remaining resource outside the Sinclair stage-one pit, which stands at 581 tonnes at 7.6% cesium oxide, and from the 2019 diamond core drill intersections that targeted the specific pollucite zones.

It is now considering open pit or underground mining while scouting potential off-take partners for a smaller-scale stage-two mining operation of less than three months and assessing value-add opportunities; cesium in a semifinished or finished form can command significant premiums to already valuable crushed ore.

SNL Image
Pioneer Resources Managing
Director Tim Spencer.
Source: Pioneer Resources

Pioneer Managing Director Tim Spencer told S&P Global Market Intelligence that the new Chinese partner has been "exemplary" in honoring the contract terms and negotiating in good faith but said Pioneer will not be beholden to that agreement when negotiating a new off-take for Sinclair's stage two, which could be from Asian, North American or European players.

Spencer said Pioneer's shareholder base is predominantly in Australia and the company has no substantial shareholders with more than 5%, meaning there is no influence on how it operates.

Lepidico Ltd. offered a price indicator in May when saying it employed a price forecast for cesium formate brine of US$42,900 per tonne for its vertically integrated Phase 1 project definitive feasibility study for Karibib in Namibia. The company is targeting long-term off-takes with Asian and North American cesium and rubidium chemical companies.

ESG focus

As Pioneer progresses its critical minerals and battery materials projects, a European manufacturer's battery buyer recently told Spencer that while most of the carbon in vehicles comes from running the cars, not from the production, carmakers are "tackling carbon from all angles," echoing concerns outlined in a recent report from Perth, Australia-based Future Battery Industries CRC.

On June 10, Pioneer announced four resolutions for a July 7 shareholder general meeting: changing its name to Essential Metals Ltd., consolidating every 10 shares to 1, issuing 10 million options to nonexecutive chairman Craig McGown, and issuing 6 million options to nonexecutive director Paul Payne, who founded Dacian Gold Ltd.

The share consolidation is to make Pioneer "more attractive to fundamental investors and less impacted by day traders who have little regard" for the company's fundamental business, while the name change will help ensure Pioneer can "walk the ESG talk" when engaging potential customers and suppliers, existing and new shareholders, regulators and other stakeholders, the company said.

While Spencer's research suggests certain underground operations could use electric vehicles to offset their higher cost against the savings through not needing the same amount of ventilation from diesel gear, EVs do not appear to have advanced to become economically competitive with diesel vehicles for open pit operations, though gas could be a possibility as a less carbon-intensive option.