The current age of innovation has produced technology that are on the cusp of revolutionizing industries and the world. Space travel, autonomous vehicles and robotics are some of the sexy technologies that the media likes to report upon regularly, but there are others, such as what MGX Minerals (XMG:CNX)(MGXMF) is aiming to do for the energy industry that warrants a closer look due to its game-changing potential in the near term.
MGX’s focus is squarely centered on taking a problem for gas and oil producers and turning it into a sheer gold for the lithium industry, potentially cementing the company a place in history for shaping the future of energy production if successful. A look at how 2017 has gotten underway indicates MGX is gaining momentum in its efforts.
Squaring the Circle
To understand what MGX is doing requires at least some understanding of conventional energy production and future energy demand. As energy producers sink their drill rigs into the ground to extract oil and gas, they pump billions of barrels of water deep into the earth along with it. The water that surfaces is usually full of contaminants—some of which are toxic, like radium, and others that are valuable, like lithium. With ever-increasing demand for lithium for electric vehicles and energy storage, a separation and purification process to single-out the lithium could set the industry on its head.
The problem is that there is no economically viable way to separate the “wheat from the chaff,” leaving producers with the costly problem of disposing of the tainted water, by and large wasting the lithium resource along with it. Moreover, virtually every method to dispose of the water byproduct, including storing it, re-injecting it, or even using the brine to treat roadways for ice and dust control, is met with sharp environmental criticism.
MGX Minerals recognized the problem as an opportunity dubbed “petro lithium,” an opportunity that has wide implications for the future of fossil fuels and renewable energy.
MGX partnered with and invested in Canada’s Purlucid Treatment Solutions to create and commercialize an oil well lithium brine separation process. Per its investment agreement with Purlucid, MGX has rights to acquire 100% ownership for $15 million in total investment. Purlucid is already established as an industry leader in oil well wastewater treatment, with a client list including the likes of Imperial Oil (IMO:CA)(IMO), SunCor Energy (SU)(SU:CA) and Royal Dutch Shell (RDS-A).
The strategy involves using the expertise and technology of Purlucid for a to begin the separation process by removing particulates and other dissolved materials, such as emulsified oil, colloids and heavy metals. The core technology was a finalist for The Katerva Award, which recognizes disruptive sustainable innovations from around the world. Phase 2 involves a proprietary process to remove the valuable materials, namely the lithium, from the relatively pure feed material.
MGX has a patent pending for its invention of producing lithium and other minerals from oil brine. This means that if it can complete the process successfully, it will have a major market cornered because lithium production in this manner is cheaper and exponentially faster than solar evaporation or hard rock mining methods. That goes without mentioning the other benefits of being more environmentally friendly, solving a problem for oil and gas producers and, importantly, essentially having an unlimited supply of feed stock.
As part of the bench testing and optimization process towards constructing pilot plant that is planned for later this year, MGX successfully extracted lithium from heavy oil wastewater early in January from its flagship Sturgeon Lake property in west-central Alberta. Starting with feed of 87 milligrams per liter (mg/L) lithium concentration, final recovery was 34.8 mg/L lithium, a milestone moment for sure, but one needing refinement to improve the yield.
Only two months later, MGX said optimization work on the pre-treatment process resulted in a clean lithium chloride brine containing 1,600 mg/L from feed of 67 mg/L lithium concentrate. Furthermore, the brine was effectively free of magnesium, boron and potassium, with the magnesium recovered for possible sale as well. In a demonstration of repeatability, a second test run delivered similar results.
While greatly reduced, calcium levels are the one mineral that need more work in the process. MGX says that will be addressed in the next step of optimization.
“The biggest challenge in lithium recovery is creating a clean brine,” said Purlucid chief executive Dr. Preston McEachern in a news release this month. “Once other ions are removed it is much easier to recover lithium as a pure carbonate or chloride.”
Seemingly Endless Supply
A possible upcoming supply/demand imbalance has miners scrambling to secure properties and prove lithium reserves to try and establish positions as industry leaders. Many have congregated in Nevada, home of Tesla’s (TSLA) massive gigafactory and the home of the only lithium-producing mine in North America, Albermarle’s (ALB) Silver Peak mine, to tout their property sizes.Generally speaking, most of these companies are years away from production because they’re planning solar evaporation projects. Considering this process takes 18 months for the evaporation process alone, not to mention mine development, horology is a restriction in and amongst itself.
Image via Steve Jurvetson/Flickr CC
Further, the fact is that MGX arguably has the largest lithium-based portfolio of properties in North America and it keeps adding to it.
Late in January, the company formed PetroLithium Corporation of America as a wholly-owned a U.S. subsidiary for the purpose of acquiring oil field assets, including lithium brine, oil wells and existing oil and gas infrastructure. PetroLithium’s activities are initially focused on the Paradox Basin in Utah and Colorado and the Smackover Formation in Texas and Arkansas, a formation that has produced over two billion barrels of oil already.
The first portfolio addition was the Lisbon Valley petro lithium project south of Moab, Utah in February, bringing under MGX’s umbrella almost 900 placer mineral claims, inclusive of lithium brine mineral rights covering most of the Lisbon Valley oil and gas field. Data from Superior Oil – part of ExxonMobil (XOM) – shows historic lithium brine content as high as 730 parts per million lithium at the property.
Later that month, MGX entered into an arm’s length earn-in agreement with Scientific Metals Corp. (STM:CA), under which MGX can acquire a 50% interest in the Paradox Basin Lithium Brine Property, also in Utah. The property would add another 111 mineral claims spanning 2,220 acres northwest of Intrepid Potash’s Cane Creek operation. Like other targets, the property has wells drilled on it and historic data supports strong lithium levels.
To kick off March, the company said staking activities further bolstered its petro lithium land position in Alberta and Utah. By adding metallic and industrial mineral permits covering 350,000 acres in the two regions, the company’s lithium portfolio now exceeds 1.5 million acres; that’s nearly 2,400 square miles.
Reserves need to be proven in compliance with NI 43-101 standards. Current non-compliant resources are estimated at over two million tonnes of lithium, which at current prices would be about $18.0 billion in the ground.
A Veritable Who’s Who in Energy Steering the Ship
When it comes to thinking outside the box to reshape an industry, the name in the non-conventional oil and gas production business is undoubtedly Marc Bruner. Among many other assets, in the past 20 years Mr. Bruner built Ultra, Falcon, and Pennaco, an unrivaled achievement in the unconventional energy industry."
Bruner has a dossier filled with unparalleled successes in non-conventional energy production. In addition to founding and leading Falcon Oil & Gas, Ultra Petroleum and Pennaco, he has served as a director to several leading companies and is widely recognized as an industry expert.
Among his successes, Bruner grew Pennaco from a market cap of $1.0 million to a sale to Marathon Oil (MAR) only a few years later for $550 million. He also built Falcon to a market capitalization in excess of $3.7 billion and Ultra to a valuation over $7.0 billion by employing his unique skillset to recognize opportunities and negotiate contracts with majors like Halliburton (HAL), Exxon Mobil, Questar Gas and Hess Corporation (HES) to grow value.
In January, Bruner agreed to bring this skillset to MGX by assuming the position of Chairman of the Board of Directors.
"Mr. Bruner is one of the original developers of the unconventional oil and gas business and is a rare breed of visionary businessmen able to recognize and advance fundamental paradigm shifts in the energy industry," MGX President and CEO Jared Lazerson said in the announcement."
Bruner joins other seasoned vets Dr. Larry Marks (Geophysics), formerly of Royal Dutch Shell and Shell Oil Canada, as well as Mr. Claudio Manissero, formerly of FMC Lithium (FMC) and Dr. Preston McEachern, Chief Scientist, on the PetroLithium corporate team. Bruner has skin in the game, agreeing not to a salary for his leadership, but for the opportunity to earn 17% ownership in the company based on meeting milestones and maintenance of responsibilities over the next two years.
If the first 10 weeks are any indication as to what type of year 2017 is going to be, the future looks bright for MGX Minerals. The company is aligning to bring game-changing technology to an industry in desperate need of innovation. Just how successful MGX will be over the remainder of the year hinges on optimizing the purification process to rapidly and repetitively produce yields of high quality lithium and building the pilot plant to work towards scalability. Given the course that is being charted and the results so far, investors and the energy community will likely remain closely tuned in for more accomplishments.
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