There may not be a more diversified and innovative company in the lithium space than MGX Minerals Inc. (CSE: XMG)(FKT:1MG)(OTCQB:MGXMF), a Vancouver-based resource and tech company with interests in lithium, magnesium and silicon assets throughout North America. Lithium is particularly hot button, given the acceleration of the electric vehicle evolution and reports that China is pulling ahead of the rest of the world at securing supplies of the most important element in rechargeable Li-ion car batteries.
The EV explosion has triggered a cascading effect of companies looking to define the world’s future lithium mines and capitalize by filling what looks almost certain to be a supply gap. MGX Minerals is hitting lithium from all angles, with exposure to traditional hard rock mining, lithium brine and what has been coined “petrolithium,” a cutting-edge technology to extract lithium from the wastewater generated in oil extraction.
More importantly, with the company’s major acquisition announcement last week, MGX shows it’s now uniquely positioned to move beyond lithium to meet future energy demands. The company announced it acquired ZincNyx Energy Solutions, Inc., a Canadian battery company that has developed a patented regenerative zinc-air fuel cell battery technology that efficiently stores energy in the form of zinc particles. The regenerative zinc-air flow battery can be scaled from kilowatt to megawatt range to provide low cost energy storage, and can be much more cost-effective than other traditional battery commodities.
“By acquiring ZincNyx, MGX advances its mission of accelerating emerging energy and energy commodity technologies that disrupt the status quo,” said MGX Minerals President and CEO Jared Lazerson in the announcement. “MGX is proud to be a part of a fundamental shift from traditional high cost and difficult to acquire commodities such as lithium, vanadium and cobalt to low cost zinc in residential, remote and mass storage applications.”
Clearly, it’s been a very busy few months for MGX, which has made big strides on all fronts, setting the company up for a strong end to 2017 and start of 2018.
Petrolithium: The World’s Smartest Lithium Production?
Everything is getting “smart” today: phones, televisions, roads, thermostats, etc., etc. But, pulling lithium out of oil wastewater is plain genius. It solves a major problem with pollution by cleaning the water, while efficiently producing lithium and other minerals, like magnesium, in a manner faster than anything else the world has to offer. The process, being developed by MGX and its engineering partner PurLucid Treatment Solutions, eliminates the evaporation process through high temperature filtration and other means, generating an end product that can be turned into different types of lithium (i.e. carbonate, hydroxide) for various applications, including EV batteries. The process is up to 100-times faster than conventional production methods.
MGX owns a 34% stake in PurLucid with rights to acquire 100% through future investments.
Not only can lithium and other elements be extracted from oilfield brines, PurLucid last month expanded the process, inventing a way to purify geothermal brines to extract their valuable minerals as well. Thanks to a non-repayable contribution from Sustainable Development Technology Canada (“SDTC”) and Emissions Reduction Alberta (“ERA”), PurLucid received $8.2 million last month to support the commercialization of a low energy water treatment system for the oil and gas industry.
That’s $8.2 million in non-dilutive funding to advance the revolutionary technology that couples PurLucid’s patented brine treatment and selective lithium recovery with MGX’s Petrolithium Recovery Process that can cut lithium production time down to as little as one day. That compares to at least 18 months for evaporation techniques and years for hard rock production.
MGX is working with a series of potential partners, including major oil and gas producers on the potential of its petrolithium technology.
Also in the space, MGX last month initiated a geophysical survey at its Blueberry Unit in its Paradox Basin Petrolithium project in Utah. The massive project, for which MGX holds a 75% interest, envelops more than 110,000 acres of oil and gas leases and about 118,000 acres of mineral claims. The Paradox Basin has been identified by the U.S. Geological Survey as hosting one of the country’s largest undeveloped oil and gas fields. The Lisbon Valley oilfield contiguous with the Blueberry Unit has cumulative lifetime production of 51.4 million barrels of oil through April 2017.
The geophysical survey is meant to identify geological formations within the 80,380 acres of the Blueberry Unit favorable to the accumulation of oil, gas and mineral brine deposits. Historic exploration by Superior Oil previously showed the Lisbon Valley oilfield to contain up to 730 ppm lithium, the type of geology that falls right into the wheelhouse of MGX to extract the full gamut of resources.
Case Lake – Hard Rock Lithium
Many may not realize that North America dominated the lithium industry with hard rock mining of the white metal from spodumene until the 1980s. Spodumene is a mineral consisting of lithium aluminium inosilicate, a source of lithium often found in large size. As lithium prices dropped, though, the better economics of lithium brine evaporation ponds, namely in the “lithium triangle” of Chile, Argentina and Bolivia, became the preferred method. However, with lithium prices back on the rise, hard rock projects, often with robust high-grade reserves, that were once mothballed are again economically viable.
In 2016, Australia, where lithium is extracted from hard-rock spodumene mines, was the world’s top producing country at 14,300 metric tonnes of lithium.
Across November, MGX Minerals’ joint venture partner Power Metals Corp. (TSX-V: PWM) provided updates on drilling at its Case Lake property outside Cochrane, Ontario, Canada. The 50-hole, 5,400-meter diamond drill program at Case Lake was completed last month, with initial results supporting historic results, while discovering two new spodumene pegmatite dykes between the known Main and South Dykes. The first new dyke discovered was made up of up to 30% spodumene and only about 40 meters beneath the surface.
The initial focus of exploration at the project is lithium mineralization in the form of spodumene. Lithium grades in the first batch of assay results were highlighted by 3.29% lithium oxide (Li2O) over 1.0 meter as part of a larger cut of 1.94% Li2O over 26.0 meters in hole PWM-17-08. Other significant intersects from the report included 1.23 % Li2O and 148.0 ppm tantalum (Ta) over 16.0 meters in PWM-17-09 and a cut in PWM-17-10 averaging 1.74 % Li2O and 245.96 ppm Ta over 15.06 meters.
Investors will surely be watching for a steady flow of drill results from the completed program in the coming weeks, as well as the initiation of a 2,000-meter diamond drill program to better define the new discoveries next month.
Completing the November Round-Up: New Office and Fresh Capital
MGX has an impressive list of properties in the U.S. and Canada, but management has certainly not overlooked the famous lithium triangle either. Late last month, the company opened a field office in Santiago, Chile to evaluate business opportunities and potential acquisitions through collaboration with mineral consulting firm Kura Geosciences SPA. The northern part of Chile is home to the Salar de Atacama, a huge salt flat that produces some of the highest-grade lithium brine in the world and accounted for all of Chile’s lithium production in 2016.
According to the USGS, Chile contains the most lithium reserves in the world by a long shot, tallying 7.5 million metric tonnes (China #2 at 3.2 million MT).
MGX has tasked Kura on a number of fronts, ranging from new projects to employing the its rapid lithium brine processing technology.
In order to keep advancing at a brisk pace, MGX initiated a funding aiming to raise C$7.5 million, broken down into C$5.0 million through a non-brokered private placement and a concurrent C$2.5 million non-brokered flow through private placement. Due to demand, expectations are for the private placement to be completed within a week or so of being launched.
In aggregate, the MGX is not neglecting any component of its business development model, filling its coffers, proving out resources and taking steps to establish itself as a valuable player not just in the lithium business, but also in the oil and gas industry as well as the remote and mass energy storage market, claims that few other companies of any size can make.
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