Market Equities Research - Market Bulletin February 16, 2018 11:46 AM ET

 

MGX Minerals targeting mid-2019 for manufacturing of fuel cell battery with potential to rival Tesla's Powerwall/Powerpack, and at the beginning of Petrolithium growth curve

 

MGX Minerals Inc. (CSE: XMG) (FKT:1MG) (OTCQB: MGXMF) is targeting mid-2019 for large scale manufacturing of its ZincNyx Fuel Cell Battery and already has manufacturing partners in place -- if this develops as I think it will, MGX's is due for significant upside revaluation. Market Equities Research Group has a near-term $5/share initial price target for CSE:XMG as the MGX's fuel cell battery has potential to rival Tesla Powerwall and Powerpack. Additionally, the MGX's proprietary Petrolithium technology appears at the beginning of a growth-run as one contract leads to another; the Company has first-mover advantage in the industry, with its first commercial Petrolithium system to begin cash-flowing imminently, and a series of progressively larger, additional systems, are currently in construction/development.

 

Simon Levinson, f.william@marketequitiesresearch.com


 

MGX Minerals Inc.

Technology, Industrial, Mining, Energy

CSE: XMG,  OTC: MGXMF,  Frankfurt: 1MG     www.mgxminerals.com

Prices

Share: C$1.61

MCap: ~C$152M

On: February 15, 2018

History

52-Week: C$1.96–C$0.73

   

Prices

Shares O/S: ~95M

   

 

MGX Minerals Inc. is a diversified Canadian resource company with interests in advanced material and energy assets. MGX is also a clean technology company focused on accelerating emerging energy and energy commodity technologies that disrupt the status quo. The Company is at the initial phase of commercialization with their Petrolithium technology targeting the extraction of lithium from oilfield brine and wastewater, and is advancing innovative regenerative zinc-air flow battery technology that is immune to the growth of zinc dendrites which have traditionally plagued zinc-air flow batteries.

   

Listed below are some of the key business lines of MGX Minerals, each unique and ripe with potential catalysts:

 

1) Petrolithium/Lithium Brine Technology - The Oil and Gas sector discards more lithium than anyone in the world produces, MGX Minerals has Petrolithium solution.

 

MGX Minerals proprietary/patented brine processing technology gives the Company a significant advantage in the marketplace having solved the problem of magnesium (Mg) in lithium (Li) laden brine, able to deal with very complex/dirty brines. Up until now rich complex Li brine projects with high Mg:Li ratios have been passed over as technology did not exist to economically separate the two. MGX's technology now positions scores of complex lithium brine projects (previously untouchable) across the globe ripe for production, with better economics than solar evaporation. MGX Minerals Inc. is also positioned technology-wise to commercially exploit the mineral rich brine that is a residual by product of geothermal power generation. MGX is looking to bring the first 750bpd wastewater brine plant in Alberta in production this Q1-2018. The Company's first major contract will be for a contract with a major oil sands company, for a 1,200m3 (7500bpd) per day, $45/m3 revenue agreement. Initially the commercial operation is expected to represent a modest, roughly $500,000/year revenue stream, or about $3/b -- costs, however, are less than $1/b (information source: recent CEO interview). MGX Minerals has recently announced improved refinement of its nanofiltration lithium technology, and has commenced initial design of a 2400 cubic meter per day (~13,000 barrels) plant.

 

Petrolithium processing involves capturing oil, natural gas, and minerals from oil & gas industry brine, leaving cleaner water behind. MGX Minerals is deploying the only technology that can deal with ultra-high total dissolved solids plaguing the oil & gas industry. The process involves complex floatation and nano-filtration technologies which use reagent coated filters each designed to pull a specific element (NOTE: MGX is not limited to Lithium, it can target a wide range of elements, including gold and silver if present). The following excerpt is from the Company's February 12, 2018 news release entitled 'MGX Minerals Announces Advancement in Nanofiltration Lithium Technology; Commences Initial Design of 2400 Cubic Meter Per Day Plant'; "The System utilizes a highly charged Replaceable Skin Layer (RSL™) membrane related to the nanofiltration and High Intensity Froth Flotation (HiFF) system, known as nanoflotation, which collectively have demonstrated performance superiority over other processes typically used to remove contaminants. The technology allows ultra-high temperature water treatment (up to 700°C) at 10-30 times the efficiency of existing ultrafiltration systems and offers numerous environmental water purification and mineral extraction benefits, including contaminant removal, mineral recovery, reduced energy demand, and small footprint."

 

This February-2018 the CEO of MGX Minerals provided an interview update in which he stated "Regarding the demonstration contracts, 90% is completed, 2 or 3 from 12 are being followed up at the moment. MGX is looking for projects with scale. One of the follow up contracts the company is closing in on, is a 5,000bpd agreement with Chesapeake Oil, which has wastewater containing 200ppm Li which is very high in wastewater terms. MGX foresees about $3.4M in LCE revenues, and about $7M in water treatment revenues, together generating $6.7M in profits. MGX is still within the demonstration contract on this one, bulk samples are ongoing, more testing has to be done, could take another 6 months for a decision."

 

Additionally, this week The company has commenced lithium brine testing in Chile on multiple projects, with MGX's brine processing technology standard economic grade brines of say 500-600mg/L Li are NOT necessary; half of this would provide interesting/potentially very lucrative outcomes.

   

Video: MGX's Mass Energy Storage Zinc-Air Battery Solutions (2 min.15 sec.)

2) Mass Energy Storage Zinc-Air Battery

 

MGX Minerals has positioned itself as a leader in mass energy storage solutions with tech that is cost-effective, easily scalable, and eliminates all short-term energy downtime. MGX is advancing innovative modular energy storage batteries through proprietary (100%-owned) patented zinc-air technology via its wholly owned subsidiary ZincNyx Energy Solutions Inc. (a private company acquired from the mining giant Teck Resources in December 2017). Think Tesla's Powerwall and Powerpack but without lithium, powerful, quick charging, and low cost; this innovative regenerative zinc-air flow battery technology is designed for energy storage in the 5 kW to 1 MW range for extended periods of time. The tech allows for low cost mass storage of energy, and can be deployed into a wide range of applications, including utility-scale storage and power grid load stabilization, long term backup power for industrial, commercial, and military facilities, remote location off grid and micro grid applications, and diesel generator replacement or hybridization.

 

MGX's innovative regenerative zinc-air flow battery technology is immune to the growth of zinc dendrites which have traditionally plagued zinc-air flow batteries, and the Company has begun commercial development for the mass production of its scalable 20kWh capacity zinc-air mass storage battery. Unlike conventional batteries, which have a fixed energy/power ratio, MGX’s technology uses a fuel tank system that offers flexible energy/power ratios and scalability. The storage capacity is directly tied to the size of the fuel tank and the quantity of recharged zinc fuel, making scalability a major advantage of the flow battery system. In addition, a further major advantage of the zinc air flow battery is the ability to charge and discharge simultaneously and at different maximum charge or discharge rates since each of the charge and discharge circuits is separate and independent. Other types of standard and flow batteries are limited to a maximum charge and discharge by the total number of cells as there is no separation of the charge and discharge components.

Fig. 1 (above) Principles of operation Zinc-Air Battery.

 

The key difference between the Tesla Powerwall versus MGX's ZincNyx Fuel Cell Battery is the ZincNyx storage capacity is much larger; in order to increase storage simply increase the size of the fuel tank and add more fuel (zinc in this case). To increase storage of a Tesla battery you have to add both output and storage capacity. This decoupling of output power and storage is key and makes the ZincNyx system much cheaper in terms of storage capacity. So the real question is how much energy can you store, not just what is the rated output capacity. In terms of size, the system will be about the same size from 5kW to 20kW, as everything is shrinking in size in the production design phase at the moment with the exception of the fuel tank itself. A standard 5kW system will have 40kWh storage, the new 20kW system will have 160kWh storage. The target price, like others in this space, has been US$250/kWh for an 8 hour backup system. This would result in $10,000 for the 5kW system and $40,000 for the 20kW system. Depending on the application and configuration, the price can be significantly higher or lower. The fuel cells, needed for output, are the expensive part of the battery. With economies of scale, prices would go down.

 

MGX Minerals is targeting mid-2019 for large scale manufacturing of its ZincNyx Fuel Cell Battery and already has manufacturing partners in place.

 

 

Recent related news:

3) Industrial Minerals Project, in Invermere, BC, Canada

 

The Driftwood Property contains a valuable magnesium deposit, a significant asset of the Company that is expected to have a PEA published this Q1-2018 (targeting the end of February). This project originates from MGX Minerals early days, before the Company began advancing next generation energy technologies. The magnesium deposit is a strategic holding that MGX will look to have its JV partner advance. We understand MGX Minerals has employed extensive test milling and is looking at a capex of ~$100M, with a daily throughput of ~1,100 tpd, a total production of ~2.7Mt MgO, there will be the option to mill it on site, or alternately MGX could ship a 25% concentrate across the border for double revenues for magnesium metal.
  

4) Numerous Lithium Holdings

 

MGX Minerals has amassed a sizeable portfolio of lithium holdings (too numerous to list here for the sake of brevity). MGX is the largest holder of Li brine holdings in North America, it has ~2 million acres under staking options under a variety of arrangements. Below is a synopsis of two projects of significance, that are currently being meaningfully advanced:

 

110,000 acre Petrolithium project in the Paradox Basin of Utah -- The first large scale integrated petroleum and lithium exploration project in the United States. The Project is located next to the Lisbon Valley oilfield located within the Paradox Basin, Utah which has shown historical brine content as high as 730 ppm lithium (Superior Oil 88-21P) and past production of oil exceeding 50 million barrels. MGX recently completed 3D seismic geophysics to outline subsurface geological formations and structures favorable for accumulations of oil and gas as well as lithium brine bearing formations. The survey included ~9,000 source points.

MGX Minerals’ Joint Venture Partner Power Metals is advancing the Case Lake Lithium Property -- encountering exceptional grades / quality intercepts; ie...

      - 1.79% Li 186ppm Ta (Tantalum) Over 6m,

      - 2.07 % Li2O and 213.96 ppm Ta Over 18.0 m,

      - Samples up to 7.14% Li2O on Surface,

      - 26.0 Metres of 1.94% Li2O and 323.75 ppm Ta

  

 

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We have identified the following additional research links for further DD on MGX Minerals Inc.

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This bulletin may contain forward-looking statements regarding future events that involve risk and uncertainties. Readers are cautioned that these forward-looking statements are only predictions and may differ materially from actual events or results. Articles, excerpts, commentary and reviews herein are for information purposes and are not solicitations to buy or sell any of the securities mentioned.
 

 
Contact information:
Simon Levinson, Editor in Chief

and Fredrick William

Market Equities Research Group
s.levinson@marketequitiesresearch.com

 

 

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