MGX
Minerals Inc. (XMG:CSE; MGXMF:OTCPK) is a diversified Canadian mining
company engaged in the development of large-scale industrial mineral
portfolios in western Canada. The Company operates magnesium, lithium and
silicon projects throughout British Columbia and Alberta. Although the
company has a Canadian Stock Exchange (CSE) listing at the moment, it is one
of the most liquid stocks over there, and management is currently looking
into the possibility of uplisting to the TSX Venture.
The strategy of MGX Minerals is well-thought out by management. It seeks
to build long-term shareholder value through development of industrial
mineral assets, in specific commodities and mining-friendly jurisdictions.
Benefits of this type of assets are relatively low initial capex needs, solid
demand and price decks, near term cash flow, very simple quarry-like open pit
operations with shovel and scoop mining with no tailings, fixed operating
inputs, long -term supply and energy contracts, streamlined permitting as
industrial minerals like magnesium and silicon just need quarry permitting.
On top of that the company also has partnerships in place or is seeking
those, providing financing, engineering expertise and low-cost energy
solutions.
The company is led by President and CEO Jared Lazerson, who is a
relatively unknown name in the field of junior mining. When talking to him, I
became impressed by his knowledge on almost every aspect of the company, the
projects and by his strategic thinking, work ethic and enthusiasm. Veteran
resource investor Robert Hirschberg and his team feel the same way about him,
and we all think Jared could make waves in the mining business soon. He
gathered an experienced team around him with many decades of experience, but
particularly impressive is his team of technical consultants, where Larry
Marks, Claudio Manissero and Cementation AG stand out. Larry Marks is a
former Shell Canada executive, Claudio Manissero a former FMC executive, and
Cementation AG is a renowned engineering firm working with the likes of Suncor,
Rio Tinto and Hudbay Minerals. Larry Marks and Cementation AG are very
important for the lithium project, based on oil brine recoveries. Larry Marks
is laying down the framework for MGX Minerals with large oil producers for
all sorts of collaborations through his vast network in O&G, and
Cementation AG is instrumental in developing the new lithium recovery method.
MGX Minerals has its main listing on the main board of the Canadian
Securities Exchange as mentioned, where it's trading with XMG.CSE as its ticker
symbol. The US ticker is MGXMF.US. With an average volume of in excess of
91,000 shares per day, the company's trading pattern is already quite liquid,
but it has to be noted that the daily volume is increasing rapidly, due to
possible catalysts and upscaled marketing efforts (I am just a small
component of this) to get the story out to a much wider audience.
MGX Minerals currently has 56.7M shares outstanding (fully diluted 71.9M)
which gives it a market capitalization of C$37.9M based on yesterday's share
price of C$0.67. At the end of the fourth quarter, the company had an
estimated working capital position of just over C$350k, and in excess of
C$500k in cash in the treasury, which will probably see MGX Minerals going to
the markets rather sooner than later.
Share price; 1 year time frame
As the lithium project seems to gain traction as the testing of the first,
small pilot plant was nearing completion at the end of December 2016, the
share price reacted accordingly, rendering a convenient, early low entry
something of the past. Fortunately the share price retracted a fair bit on
profit taking. Notwithstanding this volatility, I will try to explain why I
think this is just the beginning of much more possible upside. Needless to
say why Robert Hirschberg and his team are such excellent early stage
stockpickers, as they took down most of a C$500k private placement (5M shares
@ C$0.10) in April 18, 2016. So far they haven't sold a single share, as they
too are aware of the potential here.
Projects
MGX Minerals rather has several portfolios of projects instead of individual
projects, as it amassed lots of claims for each mineral/metal: magnesium,
lithium and silicon. Their flagship Driftwood Creek magnesium project,
surrounded by numerous adjacent claims, is probably closest to the definition
of a single project, and most advanced by having a recent resource estimate.
The lithium venture doesn't have a NI-43-101-compliant resource estimate yet
(as economic potential has to be established by then, for example by
verifiable testing), but pilot testing of lithium recoveries from oil brines
is well underway as a first step, which if successful will undoubtedly lead
to resource estimates and economic studies to define economic potential.
Silicon, the third commodity, is still at a very early stage on a project
level, as no claim set has a resource being done on them, but has only seen
sampling and limited drilling, also by previous owners. However this was
enough to establish the high grade nature of all claims, and therefore could
be interesting for further exploration and analysis of economic potential. As
the company is focusing all attention on the magnesium and lithium projects,
and the silicon projects are very early stage, I will focus solely on the first
two as well.
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Disclaimer:
The Critical Investor: The author is not a registered investment advisor,
and currently has no position in this stock, but might initiate one soon. MGX
Minerals is a sponsoring company. All facts are to be checked by the reader.
For more information go to www.mgxminerals.com and read the company�s profile
and official documents on www.sedar.com, also for important risk disclosures.
This article is provided for information purposes only, and is not intended
to be investment advice of any kind, and all readers are encouraged to do
their own due diligence, and talk to their own licensed investment advisors
prior to making any investment decisions.
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