Interviewing MGX Minerals (CNX:XMG) CEO Jared Lazerson is like kayaking a level 5 rapid: you try to stay upright as the wash of information rushes over you. Lazerson has a lot to say because MGX has been exceptionally busy.
In its update news release August 28, 2017, MGX gave its investors and followers a lot to digest. As Lazerson put it in our interview, “We’re working on the battery metals. The advanced materials like lithium, silica, magnesium and rare earth elements which the solar industry and the electric car industry need.”
The news release lists four separate exploration projects, one in Ontario, the rest in British Columbia, where MGX is looking for hardrock lithium, silica, magnesium or Niobium-Tantalum-Titanium. Each of these projects is proceeding and hitting the targets MGX has for them.
What really excites Lazerson is, however, the tremendous progress the company is making on its petrolithium technology. “We changed our strategy a bit,” said Lazerson. “Originally we had planned to take our pilot plant out to the various potential projects we have been looking at. But now we are keeping the pilot plant at the warehouse and bringing barrels of the well wastewater there for processing. This allows us to evaluate each of those projects.”
“We are looking at deploying 7500 barrel a day plants. We’ve completed testing on over twenty-five prospective locations,” said Lazerson.
What is intriguing about the MGX filtration process is that it can function as petrolithium extraction operation or as a wastewater treatment operation or both.
“There are a number of areas where there are high lithium concentrations in the wastewater and the wastewater handling costs are very high.” said Lazerson. “We have patented technology and a working pilot plant so we can run wastewater from a particular site and get real numbers from a real plant.”
But there are more variables to consider. For example, as Lazerson pointed out, “Production water in California is different from production water in Utah.” Part of the difference is in relative levels of lithium and other minerals in the water, but a huge part of the difference is in the environmental rules in different jurisdictions. In some states wastewater can be pumped right back underground, in others wastewater wells are effectively illegal.
“There are more than two columns on our spreadsheet.” said Lazerson.
But with twenty-five potential projects to run through that spreadsheet MGX is pushing ahead to build and deploy its first 7500 barrel a day plant in Q1 2018.
“We’ve started to fabricate the first of the 7500 barrel a day plants.” said Lazerson. “There are people out there dying to get into lithium. We’ve had a few situations where the oil company has realized that it has been pumping millions of dollars in potential lithium revenue back into the ground.”
The MGX technology is, essentially, modular. Rather than building larger and smaller plants, where there is sufficient volume, MGX will simply deploy a second or even third plant.
An unforeseen application of the MGX filtration technology is in filtering lithium brines directly. “The current technology is evaporation which takes a long time. Years in some cases,” said Lazerson. “We can go right to lithium producers and offer our filtering technology to speed up their cycle.”
Overall, MGX is looking at a volume model. The company wants to build and deploy its technology in as many locations as it can. “We want to put out lots of systems.”
To that end, MGX is looking at creative ways to finance the systems it deploys. “We could do it as a joint venture, or the client could pay outright for the unit, or we could supply the unit for a combination of the rights to the minerals extracted or we could contract to do the water handling for a particular project.” said Lazerson.
There are lots of moving pieces and the market seems to have taken a bit of a wait and see attitude to the stock. “We did a financing at $0.90 We were very happy that Sprott came in as an investor. I am happy with where we are trading now. It is a nice consolidation at around $1.00.”
Lazerson tends to be a bit evasive when asked if MGX is close to closing and then announcing deals for the deployment of its technology. All he’ll say at the moment is that, in future, MGX will “issue fewer news releases but with more serious content.”
Looking at the bigger picture, the entire energy industry is undergoing a transformation as the shift from fossil fuels to renewables. With its petrolithium technology, MGX is sitting with the oil producers and showing them how they can benefit from that transition. This is not the sort of thing which makes it into press releases but, as Lazerson puts it, “No group has a greater ability to advance the new energy industry than the energy industry ie. big oil.” MGX is in the sweet spot to facilitate the fossil fuel to renewable transition.
At time of writing MGX Minerals was trading at $.92 with 76,195,199 shares outstanding for a market cap of $70,099,583.
You can see the MGX Company page here.