Today, Rockstone initiates coverage on Maxtech Ventures Inc., an outstandingly well-connected and well-performing company entering the battery and steel manufacturing space with a highly sought-after critical metal only very few public companies have access to: Manganese.
As it‘s all about connections in the tightly controlled manganese market, today‘s announced joint venture in Brazil proves, once again, that Maxtech continues to assemble an impressive portfolio of manganese projects in the world‘s most productive manganese regions.
In little over a year since the company has focused on manganese, Maxtech has already positioned itself to become a leading force in the development of manganese deposits with high grades (i.e. Direct Shipping Ore; DSO) near infrastructure providing near-term production potential.
Of equal importance, and what most other juniors lack, are Maxtech‘s impressive connections to strategic partners not only for future offtake agreements but also to get its hands on some of the most prospective manganese projects globally.
Maxtech is on a fast-track mission to become a pure-play, low-cost supplier of manganese to the lucrative technology, industrial and agricultural markets.
While many companies and investors are chasing cobalt and lithium as battery critical metals, manganese should not be overlooked as not only Rockstone is convinced that this silvery-gray metallic element “is finding a solid place in the race to provide battery technology“ as the International Manganese Institute concluded last month.
Grade is King: In the Brazilian state of Mato Grosso, Maxtech‘s first property showed high-grade mineralization of 51.4% to 55.9% Mn in grab samples taken from surficial cobbles. Maxtech has already begun with a time-frame in which to ramp up a full mining plan. (Source: Maxtech Ventures Inc.)
Maxtech CEO Peter Wilson gave some valuable insights into the manganese market and how his company is offering a unique opportunity to gain direct exposure to manganese, whereas the first stop on his global path to growth is Brazil, where the company‘s projects are the most advanced.
“We’re a junior pure play manganese near-term producer. We have an ever-increasing portfolio of assets in Brazil in the state of Mato Grosso, and we have others coming“, Peter Wilson said. What makes Maxtech so unique and valuable is that it already has a strategic partnership with Maringa Ferro, the second largest producer of high-grade manganese in South America.
“They [Maringa] can buy everything in-country that we can produce. They like to review and support us. There are little or no peers. We see it as a rich market opportunity“, Peter Wilson said.
Maxtech‘s current projects are “relatively small but they do offer significant margin, because costs are low and grades are high. The small operations that Maxtech becomes involved with involve digging out high grade material at surface with a backhoe. A sifter is used and the soil is put back where it came from“, the article noted and Peter Wilson added:
“There are no chemicals involved in our projects. It offers great margin and we’re the aggregator down there. It’s not the big player‘s job to go round and talk to farmers – they’ll just come and be the offtake partners. Everyone’s trying to dig this up themselves, but no-one’s really brought it all together.“
So what is the scale of the opportunity we’re talking about?
“First off, it’s worth noting that high grade material of the kind Maxtech is looking to sell generally trades at around 30% above spot. Assuming that Maxtech is able to bring an initial 40,000 tonnes-plus of ore to the market, the overall revenue per year could come in at a tidy profit. And that’s just for starters.“
The ore in Zambia is equally high grade, and Wilson is getting ready to replicate his model in other countries too, including, potentially, Argentina and Spain. “The strategy of the company is always to have an off-take partner,” says Wilson. There’s an Indian buyer already lined up for the Zambian ore who won’t take product from other local producers because the grade is too low.“
It’s a model that Wilson refers to as being “reverse-engineered”. The customers are put in place before the production begins, and that’s only possible where grade is enough to turn the heads of some pretty big names. But it’s a model that could end up providing investors with some very healthy returns indeed.
High-grade manganese mineralization on Maxtech‘s property in Mato Grosso. (Source: Maxtech Ventures Inc.)
In October 2017, Maxtech partnered with Grupo Maringá, the second largest producer of high-grade manganese in South America. Grupo Maringá was founded in 1946 and has over 2,000 employees with over $200 million USD in 2016 revenues. They produce sugar cane, sugar, ethanol, energy and manganese alloy. Maringá Ferro-Liga S.A. is a subsidiary of Grupo Maringá and is located in Itapeva, State of São Paulo and is the second largest manganese ferroalloy producer in South America, producing high quality silico-manganese and high-carbon ferro-manganese. Maxtech CEO Peter Wilson commented:
“This has been an exciting year for Maxtech. As it comes to a close, we are developing strong partnerships globally with potential offtake partners. Their expertise and continuous support of our exploration activities is pivotal to our success as a relevant manganese mining concern.”
In October 2018, Maxtech signed a Strategic Cooperation Agreement with S.K. Sarawagi & Co. Pvt. Ltd. located in India to form the foundation for business development opportunities enabling the joint exploration, evaluation, development and potential acquisition of manganese mineral deposits. The agreement provides a framework for the opportunity for Sarawagi to be able to access projects currently controlled by Maxtech, or under negotiation, that it may normally not be able to because of this strategic cooperation agreement. Sarawagi is one the oldest and largest mining companies in India specializing in manganese mining and exports. It is also one of the largest exporters of steel input minerals from India to China and has also been exporting manganese ore to East-Asian countries such as Japan, South Korea and Taiwan. Sarawagi started as a fledgling manganese ore mining company in 1961 in India. Its ability to innovate, adapt, respond and deliver its products to market needs enabled the company to emerge as the largest producer/exporter of manganese ores from India. Maxtech CEO Peter Wilson commented:
“Maxtech welcomes the Sarawagi family to the Company. This alliance provides a unique opportunity for Maxtech to expand its established high grade manganese claims beyond Brazil with an established Manganese mining conglomerate. The Company has begun research and preliminary due diligence on potential permits and mines for acquisition in Africa. The Company feels this jurisdiction will be an excellent near term benefit for all stakeholders.”
Green Energy Resources SARL is based in the capital of Rabat, Morocco, ideally located to evaluate African mining concessions. Green Energy Resources is a junior exploration company aiming to become a force in the green energy revolution through the development of manganese/copper deposits and become a low-cost supplier for the industry booming LiMn2 batteries. Green Energy‘s long-term strategy is to build a multinational manganese and copper company to produce and sell in Europe and Asia.
GeoQuest is a fully independent Geological (Geotechnical), Environmental, GIS and Hydrogeological Consultancy and Contract Services Group based in Southern / Central Africa. The company has offices in Zambia, The Democratic Republic of Congo and Zimbabwe but has also worked in Botswana, Gabon, Malawi, Mozambique, Namibia, Republic of Congo, Rwanda, Uganda and Tanzania.
In December 2017, Maxtech signed an agreement with Cairn ERA, a battery industry consulting and advisory firm specializing in energy storage. All Cairn ERA partners have multiple years of experience working in the energy sector and have a strong and diverse network of contacts throughout the industry. The Cairn ERA approach to research and modelling has been honed over decades of experience in providing first-rate deliverables to some of the world’s most successful and demanding companies. The firm is based in Boulder/Colorado and works with clients in Asia, Europe, the Middle East and North America. Sam Jaffe is the founder and Managing Director of Cairn ERA. He has more than 12 years experience as an analyst, consultant and executive in the energy storage industry. He is an authority on battery usage on the grid, transportation and consumer electronics. He is an accomplished public speaker and a frequent keynote speaker at conferences and events throughout the world, including Battery Power, Interbattery Korea, Stockage D’Energie and the Energy Storage Association annual meeting. He is frequently quoted in multiple press outlets, including the New York Times, The Wall Street Journal and CNBC. Maxtech CEO Peter Wilson commented:
“As we expand our global manganese exploration assets and partnerships, the Company is advancing to the forefront of the clean energy industry. Having a strong industry research group advising of current pricing, delivery and market trends is essential to this mandate. I am pleased to welcome Sam Jafee and his firm to the advisory side of the company.”
In December 2017, Maxtech signed a Membership Agreement with the International Manganese Institute (IMnI) of Paris/France, a not-for-profit industry association that represents manganese ore and alloy producers, manufacturers of metallurgical products or chemical compounds, trading houses, industry service providers, companies involved in Mn business development, universities and research organizations around the world. Maxtech CEO Peter Wilson commented:
“Joining the IMnI and aligning Maxtech with global leaders in discussions about the usages of manganese and its effects on the Green Revolution is integral to the company’s future successes. After our participation in the latest conference in Miami, we determined membership in the IMnI was necessary. As one of the few Canadian members, we look forward to contributing to the organization and supporting their manganese coalition and initiatives.”
Along with key strategic partners, Maxtech Ventures Inc. has also assembled a group of veterans in mining and exploration, acquisitions and field management to guide the development of the company‘s projects. Maxtech CEO Peter Wilson commented:
”We continue to be excited about the manganese industry and its future potential. The price and demand for high-grade manganese is again on an upward trend. There are only a handful of junior pure play manganese explorers, this is an advantage Maxtech is looking to capitalize on as it expands its exploration claims and strategic relationships.”
Peter Wilson (CEO)
Mr. Wilson has been the lead financier for public and private companies raising over $300 million worth of equity and debt financings in the mining and energy fields internationally during the last 20 years. As an experienced corporate executive, he has extensive relationships in project acquisition, corporate structure and finance, specializing in, but not limited to, the global resource sector. As President of Hana Mining Ltd. based in Vancouver, Canada, he orchestrated the creation and discovery of a major copper/silver district in Botswana/Africa, positioning Hana into a market capitalization of over $580 million. Prior to these involvements, Mr. Wilson served as Vice President of Samoth Capital Corp., a $150 million TSX listed merchant bank involved in participating real estate lending and development throughout the south-western USA and Canada.
John Harper (Consulting Geologist)
Mr. Harper is an international mineral exploration geoscientist and consultant with over 30 years industry experience in base and precious metals, manganese, uranium and diamond exploration. He is a member in good standing of the Association of Professional Engineers and Geoscientists of Alberta (APEGA) and Ontario (APGO). His international experience has taken him to projects throughout North America, Brazil and Africa. For the past several years, his expertise has taken him to Brazil, where he has managed comprehensive exploration programs for Cancana’s manganese claims.
Meris Kott (President Commercial)
Ms. Kott is a global consultant and business development specialist. She attends trade shows and global seminars forging strategic relationships for Maxtech worldwide. She is key to the mining operations of Maxtech and works closely with the company‘s teams. She has an Economics degree from McGill University and a Design Engineering degree.
Ryan Cheung (CFO)
Mr. Cheung is the founder and managing partner of MCPA Services Inc., chartered professional accountants, in Vancouver, Canada. Leveraging his experience as a former auditor of junior venture and resource companies, Mr. Cheung serves as a director and/or officer or consultant for public and private companies providing financial reporting, taxation and strategic guidance. He has been an active member of the Chartered Professional Accountants of British Columbia (formerly Institute of Chartered Accountants of British Columbia) since January 2008. Mr. Cheung holds a Diploma in Accounting from the University of British Columbia and a Bachelor of Commerce in International Business from the University of Victoria.
Eugene Hodgson (Independent Director)
Mr. Hodgson is a graduate of the University of Calgary and holds a Bachelor of Arts degree in Political Science. He has held senior positions in both the public sector for the Governments of Northwest Territories and British Columbia. He has served on the Board of Directors of various companies such as Timmins Gold Corp., a TSX and NYSE listed company.
Alex Tsakumis (Director)
Mr. Tsakumis has over 25 years investment experience within the North American capital markets with private and public companies. Beginning his career in 1989, he has experience in capital formation, management and growth of publicly listed companies including mergers and acquisitions, finance, corporate governance, marketing and corporate communications. Born and raised in Vancouver, Mr. Tsakumis is a graduate of University of British Columbia with a Bachelor degree in Economics.
Santokh Sahota (Director)
Mr. Sahota has been involved for over 40 years in the acquisition, development, management and disposal of both commercial and residential real estate. He has also been involved with a range of other businesses over the years, with investments in both private and public entities and in fields as varied as hospitality and mining.
“Manganese occurs in specific regions around the world with heaviest concentrations in Brazil, South America, China, Australia and India.“ (Source: Maxtech Ventures Inc.)
According to the International Manganese Institute, Tesla could switch to manganese-based lithium-ion batteries in the near future for its Model S electric vehicle (“EV“).
Tesla recently signed a 5 year exclusive partnership with Dr. Jeff Dahn, a prominent NCM researcher, to reduce the cost of its batteries. This new Tesla partnership comes after 3M has developed its own patented NCM cathodes based on work by Dr. Dahn and LG Chem using 3M‘s formulation of NCM, already supplying its NCM-based lithium-ion cells to Chevrolet Volt and Nissan Leaf. BMW i3 also uses NCM batteries.
The market research company Roskill forecasts NCM523 (Nickel-Cobalt-Manganese) chemistry will become the dominant cathodes in the coming years as battery producers try to reduce the content of expensive materials in their cathodes, such as cobalt and nickel. This means that NCM cathodes would continue to be favoured by battery makers to LMO (Lithium-Manganese-Oxide) cathodes.
“According to several market participants, prices for EMD and HP MnSO4 have increased over the last few months more than what is shown on the chart above, due to rising demand.“ (Source: International Manganese Institute www.manganese.org)
Although the total volume of manganese consumed by the battery will remain relatively small when compared to the demand from the steel industry, getting hands on manganese supplies could prove difficult in the future: In order to produce NCM cathodes for electric vehicles, high-purity manganese sulphate (“HP MnSO4“) is used. According to the International Manganese Institute:
“HP MnSO4 can be produced from different manganese products, but high grade Mn ore and EMM [Electrolytic Manganese Metal] are preferred as starting raw materials.“
Manganese Ore Production: In January 2018, Africa mined 787,000 t of Mn units, followed by Asia & Oceania (767,000 t), Americas (102,000 t), CIS (84,000 t) and Europe (1,000 t).
Manganese Metal / EMM Production is dominated by China historically and anticipated well into the future (January 2018: 137,400 t in China vs. 3,600 t ROW).
Maxtech Ventures Inc.
#702 - 595 Howe Street
Vancouver, BC, V6C 2T5 Canada
Phone: +1 604 484 8989
Shares Issued & Outstanding: 49,186,448
Canadian Symbol (CSE): MVT
Current Price: $0.45 CAD (03/26/2018)
Market Capitalization: $22 Million CAD
German Symbol / WKN (Frankfurt): M1NA / A1W3JE
Current Price: €0.25 EUR (03/26/2018)
Market Capitalization: €12 Million EUR
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 Maxtech Ventures 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 Maxtech´s public filings for a more complete discussion of such risk factors and their potential effects which may be accessed through the Maxtech´s profile on SEDAR at www.sedar.com. Please 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 does not hold shares or any other interest in Maxtech Ventures Inc., but may initiate a long position shortly, and is being paid a monthly retainer from Zimtu Capital Corp., which company also holds a long position in Maxtech Ventures Inc.