In light of the pressing need for a new US lithium supply under the new tariff regime under the Trump Administration, MGX Minerals Inc. today announced a startegic joint venture with Belmont Resources Inc., entering into a Property Option Agreement to acquire up to 50% interest in Belmont’s flagship Kibby Basin Lithium Brine Property, located some 50 km north of the Clayton Valley and thus closer to Tesla’s Gigafactory near Sparks, Nevada.
With the overappropriated Clayton Valley hosting the only lithium mine on US soil and a potential trade war escalating between China and the US at the very moment, the spotlight is, and will be, on domestic production of batteries and strategic commodities like lithium as such have officially been deemed critical to the economic and national security of the US.
According to the agreement, MGX is acquiring an initial 25% interest in Belmont´s Kibby Basin Project for funding up to $300,000 CAD in exploration expenditures to be used for drilling. Kibby Basin is drill-ready, with drill permits received recently in June and a drilling contractor already selected. With drilling to start now, we will very soon find out, probably with the first drill hole, if the Kibby Basin hosts lithium-enriched brine. Hence, MGX’s strategic move looking for US lithium brine sources for its award-winning rapid extraction technology comes with a perfect timing.
The agreement allows MGX to earn an additional 25% interest in the Kibby Basin Project by funding an additional $300,000 CAAD in exploration expenditures for drilling at which time the project will become a 50/50 Joint Venture with access to MGX’s rapid lithium extraction technology. Upon exercise of the full option agreement, MGX will become the project operator and the 50/50 Joint Venture will be formed with Belmont covering further exploration in the Kibby Basin, which may include additional exploration drilling, well testing operations, and extraction plant installation and operation.
The benefits for Belmont (current market capitalization: $5 million CAD) are clear: MGX (current market capitalization: $123 million CAD) will provide its lithium extraction technology, which is nearing commercial deployment on several sites in Alberta, and take over the Kibby Basin Project as a financially strong operator with strong ties into the US. Belmont CEO, James Place, commented today in a separate press-release from Belmont: “This agreement puts Belmont on secure footing with regard to funding the next stage of evaluation of the Kibby Property and, at the same time, enables us to get a significant “leg up” on lithium production by partnering with one of the leaders in extraction technology.”
The Kibby Basin is probably the most prospective basin in Nevada to host lithium-enriched brine and its sheer size is compelling: "The target area is a large well-defined anomaly discovered by a magnetotelluric survey carried out by Belmont in January 2018."
In March 2018, Belmont received a Geophysical Report which included the results from a Spartan Magnetotelluric (NYSE:MT) Survey over Belmont’s 100% owned Kibby Basin Property in Nevada. The survey was started in January by renowned Quantec Geoscience Ltd. and covered most of Belmont’s claims.
Now let’s take a look at the results:
“Kibby has significantly higher conductivity than the other published MT survey results for similar lithium explorers in the region. We are optimistic that our lithium values will reflect that difference. If the results for conductivity relates to lithium concentration for the Kibby in the same way that other companies in the area have found, then Kibby could be a significant lithium brine source containing a conductive anomaly that is measured in cubic kilometres.” James Place, CEO & President of Belmont Resources Inc., in the press-release “Belmont submits drilling plans for Kibby basin” (June 14, 2018)
One of the best identified aquifers is interpreted to be 6 km long and 3.5 km wide, including a thick (up to 1 km) zone of very low resistivity (between 1 and 0.14 Ohm-meters; see 3D maps above).
Reading through several company’s technical reports and press-releases regarding resistivities (see comparison with other lithium projects here) gives me the impression that Kibby Basin’s resistivity results are very good and superior to many projects worldwide, especially to the ones that I have seen in the region. What I see in other company’s public information is that Kibby Basin’s best resistivity results are many times better than the best results of other companies, whereas Kibby Basin’s potential pay zone appears relatively large.
The resistivity survey shows that the conductivity becomes greater as it goes deeper – so once the drillers hit brine, the concentrations should increase as they drill deeper until the center of the anomaly is hit.
With drilling to start now, we will soon find out if there is lithium in Kibby Basin. This could turn out big for both companies, so MGX also negotiated the right to acquire 4 million units of Belmont at a price of $0.05 CAD per unit, with each unit consisting of 1 common share of Belmont and 1 share purchase warrant exercisable at $0.08 in the first year and $0.10 in the second year after closing. If MGX exercises all warrants, the company would own 8 million shares of Belmont, representing a significant stake in Belmont as the company currently has around 71 million shares issued and outstanding.
Full size / Resistivity survey on the Kibby Basin Property in January 2018.
Canadian Symbol (CSE): XMGCurrent Price: $0.91 CAD (07/12/2018)Market Capitalization: $112 Million CAD
German Symbol / WKN (Tradegate): 1MG / A12E3PCurrent Price: €0.602 EUR (07/12/2018)Market Capitalization: €74 Million EUR
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Disclaimer: This report contains forward-looking information or forward-looking statements (collectively "forward-looking information") within the meaning of applicable securities laws. Forward-looking information is typically identified by words such as: "believe", "expect", "anticipate", "intend", "estimate", "potentially" and similar expressions, or are those, which, by their nature, refer to future events. Rockstone Research and MGX Minerals Inc. cautions investors that any forward-looking information provided herein is not a guarantee of future results or performance, and that actual results may differ materially from those in forward-looking information as a result of various factors. The reader is referred to the MGX´s public filings for a more complete discussion of such risk factors and their potential effects which may be accessed through the MGX´s profile on SEDAR at www.sedar.com. Please read the full disclaimers for both featured companies within the full research reports as a PDF (here andhere) as fundamental risks and conflicts of interest exist. The author, Stephan Bogner, holds a long position in MGX Minerals Inc. and Belmont Resources Inc. and is being paid a monthly retainer from Zimtu Capital Corp., which company also holds a long position in MGX Minerals Inc. and Belmont Resources Inc. Note that neither MGX Minerals Inc., Belmont Resources Inc. nor Zimtu Capital Corp. have reviewed all of the content prior to publication and may not agree with statememts made herein.
Disclosure: I am/we are long MGXMF, TSX.V:BEA.