In the wastelands of Salar de Atacama, about 700 miles north of Santiago, are huge lithium evaporation ponds, worth billions of dollars, operated by Sociedad Química y Minera de Chile (SQM), a Chilean chemical company, and the world’s third largest produced of lithium. Soon, a fundamental rethinking accompanied with a cataclysmic change of attitudes may occur in the lithium industry as we know it. (Picture source)
Today, MGX Minerals Inc. made an announcement which underscores the potential "global lithium dominance" to be realized faster than many may think (including myself). According to today‘s landmark news, lithium-bearing brines are being shipped from "four Chilean mining companies" to MGX´s pilot plant in Calgary, Alberta, where these will be processed with MGX‘s proprietary rapid lithium extraction technology. At the moment, there are just 2 active lithium producers in Chile: SQM and Albemarle, so it might be them, MGX is working with.
The joint brine testing involves lithium projects at various stages of developement at multiple salars located throughout Chile. Therefore, the chemical composition probably varies greatly. In case MGX‘s technology is capable of processing these different brines successfully, joint ventures may be formed to commission extraction systems on site in Chile. In a heartbeat, this would make MGX world-famous.
Nowadays it‘s commonly known that continental brines in Chile (and elsewhere on this planet) must be pumped into gigantic evaporation ponds to be concentrated to lithium chloride. This is being achieved alone by the power of the sun, despite this being a very time-consuming (>12 months) and cost-intensive (e.g. CAPEX for the ponds) process. The dependence on the weather is a big disadvantage everybody had to put up with. Now comes MGX with a technology that promises to produce highly concentrated lithium chloride in a matter of days, at competitive costs.
Chile is home to about half of the planet‘s lithium reserves and is responsible for a third of global lithium supply. The world‘s largest lithium producers are all active in Chile, because the country hosts some of the largest and highest grade salars worldwide. As Chile is a mining-friendly nation, exceptionally well-developed infrastructure (e.g. big plants to upgrade lithium chloride to battery-grade lithium hydroxide) with a skilled labor forces exist. The new incoming Mine Minister, Baldo Prokurica, who was elected recently and is taking office next month, has publicly stated his intent to reform the country’s mining industry through the rollout of a new mining development plan that will stimulate foreign investment into the country.
Naturally, as each brine production site has a different chemical composition, each one has its own economics such as recovery rates, production costs and effiency ratios. MGX is not allowed to talk about such numbers – although such numbers abundantly exist and the company could talk about them all day long. It‘s because one can only talk about such numbers if a NI43-101-compliant resource or PEA ("Preliminary Economic Assessment") exists. However, one may report certain "actuals", which are material, when being in production (one can go into production without a compliant resource or PEA, albeit with a somewhat higher risk of failure of course).
So it will be interesting to see if MGX will publish some tangible results from the testing of the 4 Chilean brines as one of them probably involves a project with a compliant resource, not to speak of being in production. In terms of the first petrolithium system in North America, MGX would be in a position to report financial and efficiency ratios as soon as commercial production starts (as announced earlier, MGX expects to deploy its first petrolithium system in March). As the testing of Chilean brines are performed with MGX‘s pilot plant in Calgary, results could be announced in the very near-term. This will provide "a basis for future potential joint venture locations that will utilize MGX’s lithium extraction technology", as the company puts it.
MGX Minerals Inc.
#303 - 1080 Howe Street
Vancouver, BC, Canada V6C 2T1
Phone: +1 604 681 7735
Shares Issued & Outstanding: 99,758,991
Canadian Symbol (CSE): XMG
Current Price: $1.52 CAD (02/13/2018)
Market Capitalization: $152 Million CAD
German Symbol / WKN (Tradegate): 1MG / A12E3P
Current Price: €0.97 EUR (02/13/2018)
Market Capitalization: €97 Million EUR
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Disclaimer: Please read the full disclaimer within the full research report as a PDF (here) as fundamental risks and conflicts of interest exist. The author hold a long position in MGX Minerals Inc. and is being paid a monthly retainer from Zimtu Capital Corp., which company also holds a long position in MGX Minerals Inc. The company may decide to advance its petrolithium projects into production without first establishing mineral resources supported by an independent technical report or completing a feasibility study. A production decision without the benefit of a technical report independently establishing mineral resources or reserves and any feasibility study demonstrating economic and technical viability creates increased uncertainty and heightens economic and technical risks of failure. Historically, such projects have a much higher risk of economic or technical failure.