Lithium-X: Burgeoning Bet on Batteries

07/27/2017 2:50 am EST

Focus: COMMODITIES

Tom Bishop

Founder, BI Research

Lithium-X Energy (LIXXF) is a lithium exploration and development company with a goal of becoming a low-cost supplier for the burgeoning lithium battery industry, observes small cap expert Tom Bishop, editor of BI Research.

Lithium-X owned 50% and had the option to acquire up to 80% of the Sal de los Angeles lithium brine project in the prolific “Lithium Triangle” in the mining friendly Salta province of Argentina, a well-known salar with positive historical economics, grade and size.

Howeverthe company has just acquired the remaining 50% of the Sal de los Angeles project and therefore now owns 100% — a good sign that the upcoming feasibility study due out in Q4 will show good economics (more below). This project has 2 million tonnesof indicated and inferred resources here.

Lithium-X also now owns 19.9% of Pure Energy with 26,300 acres in Nevada’s Clayton Valley, contiguous to the only producing lithium operation in North America, Silver Peak, which is owned and operated by Albemarle, the world’s largest lithium producer. Pure Energy has a 43-101 inferred mineral resource of 816,000 metric tons of lithium carbonate equivalent.

In addition, the company is also exploring its recently acquired district-scale (83,600 acre) Arizaro project located in one of the world’s largest and least explored salars thought to contain elevated lithium brine values.

The company believes there is the potential to increase and enhance brine processing at Sal de Los Angeles, Lithium X’s flagship project, by combining with brine products from Arizaro.

Lithium-X is currently planning an exploration program to assess the quantity and quality of the contained brine at Arizaro, as well as beginning to assess the brine for use in mixing with Sal de Los Angeles brine.

So as noted briefly above, Lithium-X has, just recently acquired 100% ownership of Sal de Los Angeles by acquiring the remaining 50% interest in the project held by PLASA. It had an option to buy another 30% but went full bore and acquired the entire remaining 50% for $5 million in cash and 6 million shares.

This brings the share count to 85 million shares. I believe this also brings Lithium-X’s share of the 2,500 tonnes per year pilot project (construction now underway) to 50%. The cost of this is estimated at C$9 million of which Lithium-X needs to put up $3 million.

SESA will put up the other $6 million and be the builder and operator of the pilot facility consisting of wells, pipelines, pumps and the evaporation pond. Note that 2,500 tonnes of lithium carbonate would sell for over $30 million. So there could now be some serious cash inflow coming back in late 2018 into 2019.

Meanwhile, the company’s lithium product generated by an even smaller test facility is already being tested by potential customers. And I would guess the results have been good given Lithium-X has gone ahead and purchased the remaining 50% of Sal de Los Angeles.

Recall that the brine is high grade at an average of 501 mg/l Li with a low average magnesium to lithium ratio of 3.8 as well, both desirable characteristics for producing lithium carbonate. So things are moving along nicely. I continue to rate the stock a buy.

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