Report #20

Image from the website of the Saskatchewan Research Council. MGX may decide to advance its petrolithium projects into production without first establishing mineral resources supported by an independent technical report or completing a feasibility study. A production decision without the benefit of a technical report independently establishing mineral resources or reserves and any feasibility study demonstrating economic and technical viability creates increased uncertainty and heightens economic and technical risks of failure. Historically, such projects have a much higher risk of economic or technical failure.

Today, MGX Minerals Inc. reported third party verification results of its patent-pending method of rapidly extracting lithium from oilfield brines. This announcement has been eagerly awaited not only by existing and potential new shareholders, but also by potential strategic partners such as major oil and gas producers as well as lithium end-users. This process eliminates the conventional 18 months solar evaporation phase, a landmark achievement in lithium extraction.

MGX continues to advance its oilfield lithium extraction technology with yet another milestone today, adding to the reported new development of passive nanofiltration technology last month. The independent verification of the active evaporation and crystallization process now provides for 2 core technologies, both active and passive for the extraction of lithium, with final plant design expected to be a combination of both. The successful concentration/upgrading of brine in the filtration and pre-treatment phase, as reported in March, using passive nanofiltration to produce a 1,600 mg/L lithium concentrate, now sets the stage for a final crystallization and evaporation system based on today‘s announcement that may produce one of the lowest cost alternatives on a per tonne of lithium carbonate basis for rapid lithium extraction. Having a pre-concentrated brine at 1,600 mg/L lithium means the evaporative system, confirmed by SRC, will be much smaller, and lower cost on a per tonne basis, than a system designed to process a 71 mg/L lithium concentrate (the original lithium content from MGX‘s flagship Sturgeon Lake oilfield).

The Saskatchewan Research Council (SRC) independently conducted multi-stage evaporation tests at its laboratories and reported that MGX‘s proprietary process design was successful in recovering up to 83.7% of lithium from brine sampled at the Sturgeon Lake oilfield near Fox Creek in Alberta, Canada.

The SRC is one of Canada’s leading providers of applied research, development and demonstration (RD&D) and technology commercialization. With more than 380 employees, $70 million in annual revenue and over 69 years of RD&D experience, SRC provides products and services to its 1,500 clients in 20 countries around the world.

Esteemed SRC also verified that the process effectively removed high contaminants, which are typical for oilfield brines and the reason why these “resources“ had been considered uneconomic for long time. Consequently, oil and gas producers face high disposal costs with such contaminative wastewaters. Here‘s where MGX also comes into play as the company aims to utilize 2 primary steps:

(1) A revenue generating water treatment step to reduce the cost of brine management within a producer’s facilities. During the tested multi-stage process, SRC estimated the overall water evaporation at 72% of the total feed brine mass. More than 99.99% of magnesium (historically a troublemaker in brine processing) were precipitated from the brine, as well as 99% of natrium, 45% of potassium and 25% of calcium.

(2) A mineral concentration and extraction step to recover metal salts such as lithium chloride. SRC reported that the overall recovery was 83.7% for lithium and 77.2% of strontium.

MGX‘s President and CEO, Jared Lazerson, commented today:

“The results of laboratory testing by SRC provide third-party validation of our proprietary design process and its ability to rapidly separate lithium and other valuable minerals from wastewater brine. We have made many advancements since this original process design, but this validation is important and we will continue to rely on SRC for independent testing and improvements of both active and newly developed passive filtration technologies.”

In March, when MGX announced the production of a clean lithium chloride brine free from magnesium, boron and potassium, Dr. Preston McEachern (CEO of PurLucid) noted:

“[A] small amount of calcium carried through to the brine, but this can be addressed in future optimization... The biggest challenge in lithium recovery is creating a clean brine. Once other ions are removed it is much easier to recover lithium as a pure carbonate or chloride.”

Dr. Preston is a respected leader in water management in the oil and gas industry with 23 years experience in solving water treatment challenges. He holds 3 faculty positions with Canadian Universities, and was the Vice President of Research and Development at one of the largest North American Oil & Gas Service companies (Tervita Corp.) prior to forming Purlucid Treatment Solutions.

Having the exclusive rights to the patented and patent-pending technologies for the extraction of lithium and other minerals from oilfield brines, MGX would be in a favourable position in case commercial deployment can achieve economic results. MGX aims to start commercial test deployment as early as mid-2017.

In total conviction that its technologies will work as expected, MGX continues to aggressively acquire mineral rights in Canada and the US. On March 23, MGX announced to drill the world‘s first petrolithium well in Utah, near Tesla‘s Gigafactory. Together with the landmark announcement of the appointment of unconventional oil industry legend Marc Bruner in January, MGX is now positioned as North America‘s oilfield lithium industry leader.

In total, MGX now holds permits throughout Alberta totaling over 600,000 hectares. The company also has exploration level agreements in place with major oil and gas companies throughout Alberta to conduct well sampling.

While joint ventures with large oil and gas producers should be the natural course of action going forward (especially with the assistance of Marc Bruner and Dr. Larry Marks), additional partnerships or certain agreements with lithium end-users wouldn‘t surprise, especially when considering that the lithium extraction method has now been verified independently. Not only Tesla Motors but other battery manufacturers, especially from Asia, have shown in the past to prefer signing offtake agreements with potential future lithium producers at relatively early project levels.

Having a potential low energy, low CAPEX and low OPEX solution in hand to clean oilfield brines, petroleum production wastewaters and to extract metal salts from the cleaned and concentrated brines, MGX envisions to interloop the old and the new energy industries with the help of its cutting-edge invention.

Excerpts from the SRC Summary Report - Metallurgical Tests and Executive Summary - are outlined verbatim below. Note that certain portions of the report have been redacted to protect proprietary information and data. SRC independently carried multi-stage evaporation tests following the patent-pending design process as provided by MGX. As reported by SRC in the executive summary:

1. It was not feasible to remove 90% of the water in the primary evaporation of the Formation brine because the formation of the jel-like material made the filtration impossible. The maximum water evaporation was 66% of the feed brine mass before the jel formation. Approximately 97% of Na, 26% of K, 35% of Ca and 29% of Mg were precipitated. The recovery of Li and Sr was 75.6% and 68.8%, respectively.

2. The modified processes including magnesium precipitation by lime followed by the primary evaporation to precipitate NaCl and the secondary evaporation to precipitate CaCl2 and concentrate lithium.

3. The Mg removal was very effective and more than 99.99% of Mg was removed. The residue Mg in the brine was less than 0.1 ppm. The lithium recovery was 84.1% and the Sr recovery was 80.1%.

4. In the primary evaporation process, 67% of the feed brine mass was evaporated as water and more than 96% of Na was removed as NaCl. There were almost no Li or Sr loss in this process. Li was concentrated from 60 ppm to 321 ppm.

5. In the secondary evaporation process, 26% of the feed brine mass was evaporated as water and 12% of Ca was removed as CaCl2. The lithium recovery was 94.1% and the Sr recovery was 94.6%. The sample turned to a jel-like material after further evaporation to remove 40% of the brine mass as water.

6. In the whole process, the estimated water evaporated was 72% of the total feed brine mass. More than 99.99% of Mg, 99% of Na, 45% of K and 25% of Ca were precipitated from the brine. The overall recovery was 83.7% for Li and 77.2% for Sr. Lithium was concentrated to 461 ppm from 71 ppm. However, the impurity level, especially Ca, was still very high and further removal of Ca through evaporation is not feasible.

SRC has provided the Company with several recommendations to remove Ca impurity levels. The full report will be filed on SEDAR within 45 days.






Company Details

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

Shares Issued & Outstanding: 62,130,378

Canadian Symbol (CSE): XMG
Current Price: $1.06 CAD (04/19/2017)
Market Capitalization: $66 Million CAD

German Symbol / WKN (Tradegate): 1MG / A12E3P
Current Price: €0.74 EUR (04/19/2017)
Market Capitalization: €46 Million EUR



Previous Coverage

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: Please read the full disclaimer within the full research report as a PDF (here) as fundamental risks and conflicts of interest exist. The author hold 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: 62,130,378
Phone: +1 604 681 7735

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