Forget Lithium — Phosphate Is the Real LFP Battery Bottleneck

[00:00:00]Hi guys, I'm here with the CEO of First Phosphate, John Pasalacqua. But I do have a question for you, a serious question. Well, I shouldn't be joking, mate. What a decision that you've made investing so much into the company? I mean, it's worked out brilliantly. I'm I'm amazed. Anyway, most of the world's phosphate comes from sedimentary deposits. Your properties are rare.

[00:00:21]They're igneous rock that yields high purity phosphate without high concentrations of heavy metals. Guys, walk me through why that distinction matters for battery grade material.

[00:00:33]>> Yeah, it's really important because when you're making um LFP battery, phosphate is 61% more or less of the cathode of the battery. Lithium's only 4% even though people talk in lithium all day long. But the real bottleneck is the is the phosphate. It's over 60% of of the cathode. So, you need a lot of it. And it's not phosphate that goes onto agricultural fields. It's phosphate high purity that goes into the cathode of the battery. So, you need purified phosphoric acid. It's hard to make purified acid cuz if you're if you're using sedimentary phosphates, which are, you know, old sea beds and accumulated matter at the bottom of of these old old sort of ancient sea beds, it's got a lot of cadmium, uranium, thorium, and and a lot of impurities.

[00:01:15]So, most of that gets gets uh sent back into a fertilizer stream sometimes up to 70, 80%. And only the very, very um purest portion of that can be used for LFP battery. So, maybe 10, 20, 30% depending on on environmental constraints can go into making purified phosphoric acid. The rest stays back in a fertilizer stream. But when you have this igneous rock that we have, it's so pure, it's so clean, um it it processes clean as well. The gypsum that's created is is fully recyclable. So, what that allows us to do is get a conversion ratio of about 91.1% into purified phosphoric acid with a small little little waste stream um that can be dealt with easily. So, we basically fundamentally, this is important, we bypass the entire fertilizer market and we go directly into high purity phosphate for LFP battery. That's That's priceless because we're not a fertilizer operation. We are a high technology operation. You You can't serve two masters. You can't be doing fertilizer and high purity, um, you know, battery applications at the same time without, you know, being very cognizant having two separate internal streams. So, we don't have to have that commoditized fertilizer stream. That's the secret.

[00:02:24]>> A little bit like you see with any legacy legacy car manufacturers trying to make predominantly car, you know, gasoline-powered vehicles and then doing EVs on the side. So, one of one side is suffering.

[00:02:35]>> Right.

[00:02:36]>> You've got over 1,500 square kilometers of royalty-free district-scale claims.

[00:02:42]That's a lot.

[00:02:43]100% owned and they're free of net smelter royalties.

[00:02:48]Uh, what don't you know about What do you or don't you know about what's in the ground?

[00:02:53]>> Yeah, so look, we had that that many amount of claims. We've reduced it since. We've, you know, you you start with a wide net and then you kind of find the best spots. So, we're down to really two areas. So, it's the Baie Comeau La Malbaie area, which um, we're going to move towards feasibility. Um, and we have also the Lac La Malbaie area, which is a second deposit. Um, so the those are those are two very important deposits. There's a lot of phosphate there. Just with Baie Comeau La Malbaie, there's at least 23 years of phosphate according to our last analysis.

[00:03:23]>> Mhm.

[00:03:23]>> Enough for electrifying half the fleet of new vehicles in North America for the next 23 years. So, there's [snorts] a lot of phosphate. There's enough for 350 gigawatt hours per annum.

[00:03:33]Yeah, there's a lot of phosphate in the in that area of of Saguenay-Lac-Saint-Jean.

[00:03:37]And now it's a matter of, you know, bringing it to market.

[00:03:41]>> You just ran, correct me if I'm wrong, but I think you just ran a 30,000-m drill program.

[00:03:47]That was meant to wrap up around April 2026 to finalize the geological model and inform a feasibility decision.

[00:03:54]Where did that land and did the results change your confidence either way?

[00:03:59]>> Yes, exactly. So, there was a couple press releases after that that you might have seen as well.

[00:04:03]>> I did.

[00:04:04]>> Basically, that that allowed us really to define the resource. We moved all of our resources from inferred up to indicated. In geology, there's inferred, there's indicated, and there's measured pretty much. And you need to be at the indicated and measured area, meaning that you're confident before you can go into a feasibility study. So, we were able to do that. We were able to move the resources up into indicated and measured.

[00:04:25]I think we we converted an extra 300% to indicated, which is staggering. And it was also 20% more resource, more or less.

[00:04:34]And the important thing is we showed continuity throughout all of that. So, it's continuous and it can be mined.

[00:04:40]Sometimes things can be spotty. There can be a lot of waste rock in between.

[00:04:44]>> Yep.

[00:04:44]>> But, it's very continuous.

[00:04:46]And we actually found more of it, and it's still open at depth. So, it's it gives us all the confidence that we need to move this this this resource forward, which is really important in mining.

[00:04:56]>> John, you mentioned before we've talked about this on the channel a few times in our discussions. LFP is clearly winning.

[00:05:03]About 80% market share worldwide for batteries, LFP lithium iron phosphate.

[00:05:09]They're partly winning on cost because of the Chinese scale.

[00:05:12]How does a Quebec mine-to-market chain compete on price rather than just on made in North America? Or will it compete on price?

[00:05:20]What would be the outlook there?

[00:05:23]>> I think when we look at it, the price is not too far off. Obviously, we're starting out. The [snorts] secret is obviously, you know, the rock, right?

[00:05:31]The the phosphate rock. 91% of it goes into purified phosphoric acid, so that gives us a tremendous advantage. We use about 35% less sulfur as well because of the purity of the rock. So, there's cost savings there, integrating the mine with the phosphoric acid plant and with the LFP cam plant will also cut down a lot of costs.

[00:05:52]Obviously, as LFP scales in North America, that will also cut down costs.

[00:05:57]There's also apart from tariffs, there's the just the normal discussion on distance, right?

[00:06:02]>> Yeah.

[00:06:02]>> Being able to export there's a cost to exporting from China to North America.

[00:06:07]There's a time lag. Also, these materials, believe it or not, they they do degrade a little bit depending on conditions, humidity, uh transportation, storage. So, there is a lot to be said about having a local sort of mine to market model. You can cut out a lot of cost and a lot of advantage of just being local. And then there still are the tariffs that uh that do put a a little bit of a of a cushion in there.

[00:06:29]We feel that we can get very close. When you factor all of that in, we feel we're very close on on the cost side, and it will only get better.

[00:06:38]>> Okay, well, that's good to know you're really close. Now, you described the vision as North America's LFP battery valley, which is kind of cool. I like that.

[00:06:46]What has to physically exist though beyond the mine for that to be more than a slogan?

[00:06:52]>> Well, the full entire supply chain, right? And that's what we've been trying to work on, starting with with upstream with the igneous rock, moving that into a concentrate, moving that into phosphoric acid, moving [snorts] that into iron phosphate, lithium iron phosphate, and eventually the the the LFP batteries.

[00:07:12]Now, we've already been able to do that in in the school with these batteries.

[00:07:15]This These batteries have phosphate from Beija La Marche and other critical minerals from North America, and they're the first ones that were made in 25 years using fully North American critical minerals. So, we've already been able to prove that the embryonically the supply chain does exist. It's all scalable. None of it is R&D. The critical minerals do exist. We we can make this happen. So, we need we need partnership, but above all, what we needed is demand. And as you know, the demand is is insatiable from these data centers and all the other applications.

[00:07:46]So, that's really starting to to pull.

[00:07:48]So, it's kind of push pull push pull.

[00:07:50]But, we see it coming together very fast here now. Very fast. Accelerating by the day.

[00:07:55]>> Thanks for the thanks for the chat, John. And I'll see you again for the next interview.

[00:08:00]>> Let's hope. Onwards and upwards.

[00:08:02]>> Yeah. Thanks, man.

[00:08:04]>> Thanks, Sam.