Dividend for Shareholders on the Horizon

Today, MGX Minerals Inc. provided an update on the commercial deployment of its petrolithium systems in Alberta, Canada. Most interestingly, it was noted that a second commercial-scale contract for the deployment of a water treatment and lithium extraction system is already in the final stages. Final assembly, site preparation and deployment are underway for the initial site and installation at both sites is expected to be largely complete by June 2018.

MGX takes great care of negotiating agreements with major oil producers in Alberta that are for the full benefit of the company and its shareholders. Under the agreements, MGX remains in control of all lithium and other minerals extracted using the lithium extraction systems:

The contract for the first petrolithium system will generate (1) a limited annual fee for MGX, based on a per cubic meter environmental processing fee for the wastewater treatment, and (2) an undivided profit for MGX on all the lithium and other minerals extracted.

This creates a win-win situation for both MGX and the oil producer as the latter has limited, fixed costs (calculable) which is likely less than its current variable costs for conventional wastewater disposal and/or treatment, whereas MGX gets all the lithium and other extractable minerals.

Progress on Multiple Fronts

Since assembly and deployment of the first petrolithium system in Alberta commenced in late 2017, MGX and its engineering partner PurLucid made some significant progress in due course, such as the cost-cutting breakthrough in February, reducing the reagent use significantly, which on the other hand demonstrates that the system is working better than originally expected and that there are no delays caused by technical difficulties. Developing and deploying new technology is tapping into new, unknown frontiers and I rather have a visionary, optimistic pioneer during such company-making times than a pessimist. 

Industrial Lithium
Since January, MGX and Purlucid have been working to further prove the viability of lithium recovery from industrial wastewater sites in the United States while also improving the quality of effluent discharged to a river. Recent testing from an industrial site concentrated lithium to commercial grade as lithium chloride, excluding all magnesium and calcium (0.05% and 0.1% in product, respectively). Sodium and potassium, which comprised 76% of the cations in the feed water, were reduced by 90% in the final product. Additional optimization is ongoing in preparation for commercial deployment to this site.

H2S Advancement
Purlucid has also processed several bulk samples from sour gas fields and developed an effective, chemical free method for removing H2S and TVOC prior to water treatment and lithium recovery. H2S and TVOC concentrations were reduced from 60 ppm and 80 ppm, respectively, to 2 ppm and 40 ppm in a closed processing system. This system augments the ability to recover lithium from petroleum brines with dangerous levels of H2S and TVOCs, further extending access to brine resources.

The Partnership

Since announcing an acquisition and engineering partnership agreement in September 2016, MGX and PurLucid have invented new technology and filed patent applications related to brine treatment and selective lithium recovery. PurLucid’s exclusively licensed nanoflotation technology, which purifies wastewater brine, has since been integrated with a newly developed lithium recovery process. Combined, this Cleantech process reduces the capital cost of recovery compared to traditional solar evaporation as it does not require the investment in very large, multi-phase, lake sized, lined evaporation ponds, greatly reducing the physical footprint and enhancing the quality of extraction and recovery across a complex range of brines previously considered un-processable due to complexity or geographical location outside of solar evaporation appropriate zones. This includes oil and gas wastewater, natural brine, and other brine sources such as lithium-rich mine and industrial plant wastewater. MGX holds the global rights to the jointly developed lithium extraction technology.

Rewarding Shareholders

Yesterday, MGX Minerals Inc. announced its intention to reward existing shareholders with a dividend in form of shares from spinning off its 100% owned subsidiary ZincNyx Energy Solutions Inc. This transaction is aimed to monetize the full value of ZincNyx as a separate publicly listed company for the benefit of (1) MGX as a majority owner and (2) all MGX shareholders "of record" (i.e. everybody, no matter if from Canada, USA, Germany, or any other country, will receive shares of the new public company at no cost if being an existing MGX shareholder on the "date of record", which is a day in the "immediate" future). Further details, including the record date, will be announced "shortly". CEO Jared Lazerson explained: 

"The scale of the opportunity and the value of the intellectual property, now in excess of 20 issued patents developed by ZincNyx, has setup an ideal scenario for a spinoff transaction and return of value to shareholders through partial dividend of shares. This is an important standalone technology that needs to grow unbridled on the global stage, a public listing creates this platform."

After more than $15 million CAD of investments into the ZincNyx technology (Canadian Government Funds put in $2 million in the last 3 years, Teck spent another $13 million), MGX acquired the Vancouver-based private company from Teck Resources in December 2018 against $250,000 CAD in cash and 4.8 million MGX shares (most of which are "restricted shares" to be vested over 24 months as part of compensation and incentive plan for key employees). Fortunately for MGX, only a month after the acquisition, ZincNyx achieved a major technological breakthrough as a reliability challenge had been mastered successfully. Shortly thereafter, MGX announced its accelerated commercialization plans to make the ZincNyx technology a leader in the energy storage space. According to a GreenTechMedia article, ZincNyx is looking to produce 1,000 units annually by early 2019.

Company Details

MGX Minerals Inc.
#303 - 1080 Howe Street
Vancouver, BC, Canada V6C 2T1
Phone: +1 604 681 7735 

Shares Issued & Outstanding: 101,573,656


Canadian Symbol (CSE): XMG
Current Price: $0.98 CAD (04/03/2018)
Market Capitalization: $100 Million CAD


German Symbol / WKN (Frankfurt): 1MG / A12E3P
Current Price: €0.63 EUR (04/03/2018)
Market Capitalization: €64 Million EUR 

Previous Coverage

Report #53 “MGX-Highbury Accomplish Almost Complete Gasification of Petcoke, Produce High-Grade Vanadium Concentrate“

Report #52 “MGX Set to Alter Lithium Landscape, Partners with Investment Bank Heavyweight Capstone Headwaters“

Report #51 “Congratulations! MGX Nominated in 2 Categories as a Finalist for the S&P Global Platts Metals Awards“

Report #50 “MGX Gets Serious About Magnesium, Engages Hatch for Magnesium Metal Scoping Study“

Report #49 “MGX to Acquire and Commercialize Clean Technology for Extraction of Lithium and Aluminum from Spodumene“

Report #48 “MGX Minerals Issues PEA for a World-Class Magnesium Project in British Columbia“

Report #47 “High-Grade Battery Metals From Dirty Petcoke“

Report #46 “Big Times Ahead For Several Joint Ventures from MGX Minerals“

Report #45 “MGX Partner Broadcasting on US Television“

Report #44 “The Big Rethinking Begins: Multiple Lithium Projects in Chile Test the Rapid Lithium Extraction Technology from MGX“

Report #43 “Global Lithium Dominance? MGX Doubles Performance of Lithium Extraction Filters“

Report #42 “Scores of Tail Winds for MGX becoming a Leader in the New Energy Economy“

Report #41 “MGX Goes Big, Develops Utility-Scale Battery Storage System“

Report #40 “Positioned to Profit from Transition to New Energy Economy“

Report #39 “MGX Assembles Dream Team For California Lithium Strategy“

Report #38 “MGX: The Next GreenTech Energy Giant“

Report #37 “MGX Partners with Highbury Energy to make Petroleum Coke more Clean“

Report #36 “Technological Breakthrough in the Mass Energy Storage Industry“

Report #35 “Eureka! MGX Starts Developing Silica Projects after Acquisition of Mass Storage Battery Technology“

Report #34 “MGX Going Big on Petrolithium: The first large-scale integrated petroleum and lithium project ever developed“

Report #33 “Driving into the Realms of Tesla & Co: MGX Acquires Mass Storage Battery Technology from Teck Resources“

Report #32 “Backed by Private and Institutional Heavyweights: MGX cashes up for Lithium Extraction and Exploration“

Report #31 “MGX Revolutionizes the Lithium World - Commissions First Rapid Lithium Extraction System“

Report #30 “Full Steam Ahead: MGX Engages Senator Polanco (Ret.) to Head California Lithium Brine Strategy“

Report #29 “MGX to Target Geothermal Market for Extraction of Lithium and Gold“

Report #28 “MGX Minerals Commences Development of the World‘s First Petrolithium Field“

Report #27 “Canadian Government Backs MGX Minerals‘ Petrolithium Cleantech“

Report #26 “MGX Minerals Solves the Magnesium Problem of the Lithium Industry“

Report #25 “Hard-Rock Lithium Exposure for MGX“

Report #24 “One of the Largest Initial Oil Estimates in US History“

Report #23 “MGX starts Petrolithium pilot plant to deliver hard facts for strategic partners“

Report #22 “Time to bet: Sprott takes a position in MGX“

Report #21 “Petrolithium: First Come First Served“

Report #20 “Successful Independent Verification of the MGX Lithium Extraction Technology“

Report #19 “MGX to Drill the World‘s First PetroLithium Well in Utah“

Report #18 “MGX Reports Upgrading of Lithium Brine from 67 to 1600 ppm Lithium“ 

Report #17 “MGX technology nominated for prestigious Katerva Award, the Nobel Prize of Sustainability“ 

Report #16 “Unconventional oil play legend Marc Bruner to take MGX and PetroLithium to the next level“ 

Report #15 “Total Conviction: MGX forms PetroLithium Corp. to expand into the US oilfield brine markets“ 

Report #14: “MGX Extracts Lithium from Oil Wastewater - Begins Monumental Integration with Big Oil“

Report #13 "MGX Partners with Oil Major on Lithium Brine, New Energy Industry Facing Fundamental Shift“

Report #12 "Game Changing Potential: MGX Minerals‘ Pilot Plant for Rapid Production of Lithium Nears Completion“

Report #11 "MGX assays 34 g/t gold from surface sampling in British Columbia“

Report #10 “Official: MGX owns magnesium worth multi-billions of dollars and starts pilot plant shortly“

Report #9 “One of the world‘s largest lithium resources on the horizon?“

Report #8 “Ready for significant lithium brine work in Alberta“

Report #7 “At the forefront of Alberta‘s lithium brine riches“

Report #6 “Pioneering Lithium in Alberta: MGX Minerals Teams Up“

Report #5 “Time to Put a Lithium Production Process in Place“

Report #4 “MGX Minerals Taps Into Canada‘s Potentially Largest High-Grade Lithium Resources“

Report #3 “MGX Minerals Receives Mining Lease for 20 years (in British Columbia!)“

Report #2 “MGX Minerals Accelerates Towards Production“

Report #1 “MGX Minerals Plans To Enter The Magnesium Market“

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.comPlease read the full disclaimer within the full research report as a PDF (here) as fundamental risks and conflicts of interest exist. The author, Stephan Bogner, holds 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.

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Name: MGX Minerals Inc.
Canada Symbol: XMG
Germany Symbol / WKN: 1MG / A12E3P
Shares Issued & Outstanding: 101,573,656
Phone: +1 604 681 7735

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