Ion Energy CEO Ali Haji joined the Investing News Network to discuss his company’s history of operating in Mongolia.
ION Energy CEO Ali Haji joined the Investing News Network to discuss his company’s history of operating in Mongolia, including the company’s flagship Baavhai-Uul lithium project.
ION Energy’s management team has over a decade of experience working in Mongolia, including the successful establishment and sale of companies such as Hunnu Coal.
ION Energy’s familiarity with the region made Mongolia an easy choice for the home of the company’s next project. ION Energy has secured an 81,000 hectare license in the southern Gobi region of Mongolia and is expected to commence an exploration program on the project in 2020, focusing on two main targets. Based on previous exploration work, the company believes the main aquifer on the property is relatively shallow at around 20 meters below the surface.
Below is a transcript of our interview with ION Energy CEO Ali Haji. It has been edited for clarity and brevity.
Investing News Network: Please provide our investor audience with an overview of ION Energy and its operations.
ION Energy CEO Ali Haji: ION Energy was founded in 2017 with the sole purpose of obtaining a lithium exploration license in Mongolia. We wanted to be first-movers in the region and were issued an 81,000 hectare license, the largest license ever to be granted to a private company. The licensed land is in the southern Gobi region of Mongolia, about 30 kilometers from the Chinese border. Our operations today are fairly early stage — we are going to begin our exploration program in January after our listing. The program includes a US$500,000 drilling program as well as some geochemical analysis and sampling. We expect to receive results in the late summer of this year. We also have our own auger drill and hardware to pursue this exploration program without any dependency on a third party.
INN: What is the status of ION Energy’s flagship lithium brine project Baavhai-Uul?
AH: Baavhai-Uul is a very early stage exploration project with an exploration program that is ready to kick off. We’ve identified two targets that we have obtained the original samples from. That exploration program will entail drilling at 200 meter separation points around our targets, which will then be expanded to 400 meters to get an understanding of how big the aquifer is. Early work done by the Russians in the 1950s and the Mongolians in the 1990s shows that the brine aquifer will be about 20 meters deep, which is significantly less deep than some of the brine projects that you see in the Lithium Triangle in South America.
INN: What originally attracted ION Energy to Mongolia as a mining jurisdiction?
AH: We’ve had a lot of in-country experience over the last 10 to 15 years in Mongolia. Our chairman founded a company by the name of Hunnu Coal on the Australian Stock Exchange and listed that company for AU$20 million. He subsequently sold the company to Banpu of Thailand for half a billion dollars about 14 months later. It was Mines and Money’s deal of the year and really allowed us to build a footprint in Mongolia.
About two years ago my chairman was able to secure a purchase from Centerra Gold to establish Steppe Gold (TSX:STGO), which is a near-term producer in Mongolia’s Dornod province. Mongolia has always been of interest to us and it has been known for quite some time as the last frontier in mining.
The true attraction to Mongolia for lithium, in particular, has to do with the pollution that you see in Ulaanbaatar. The infrastructure is old Russian infrastructure. They’ve been burning coal for decades and lithium has truly been understood or referred to as a green metal, one that will allow for a lot of energy-hungry nations to convert their old archaic infrastructure to more environmentally friendly systems. Mongolia is a fantastic country; we’ve had a lot of experience there, and lithium allows us to reduce the dependency on coal in the long-run. Our project has been very much supported by the government and they’ve worked hand-in-hand with ION to ensure that we have a sizable license with a roadmap to success.
INN: How important is the Baavhai-Uul project’s proximity to China?
AH: I think it’s extremely important, the reason being that the Lithium Triangle is thousands of miles away in Latin America. A lot of the terrain that you encounter in Latin America is quite challenging to operate in. Lithium projects in that area also require evaporation ponds that are about 3,000 to 4,000 meters above sea level. You then have to ship your product down to an area where you can build a processing plant. Then you have to take your product to port and move it on the back of a ship across the ocean into China.
We are only 30 kilometers from the Chinese border and we operate in a geography that is very easy to traverse. There’s no need for specialty vehicles. You can use a regular SUV; even our truck-mounted auger will traverse the entire license on its wheels with no anticipated issues thanks to the terrain. We’re at about 1,100 to 1,200 meters above sea level with about 250 days of sunshine and very high winds that aid in the evaporation process. We also have a railway that is utilized by some of the major mining companies in Mongolia just west of us. We can put our finished product, which will be carbonate, onto trains in the Beijing area, where most of the lithium is processed, which is about 250 to 300 kilometers from our license.
That keeps our costs low. We’re not shipping product around the world. Our geography is very conducive to what we’re trying to achieve, and China being home to 53 percent of the world’s lithium refineries makes our proximity to China that much more compelling as an investment opportunity.
INN: How do you see the lithium market evolving heading into 2020?
AH: It’s a great question. We’re in the midst of our initial public offering today. Lithium equity prices over the last year are down, as an index, over 55 percent and prices have also been negatively affected by about 20 to 30 percent in the last couple of years. The retail push that helped list these companies at incredible valuations has now balanced out. Economically viable projects are now better understood by both retail and sophisticated investors.
I see the market being one that grows. We might have a small dip in lithium prices next year, but I believe that coming in at this level of the cycle, when it is close to the bottom, and having a production profile in the next two to three years really allows us to be successful in the lithium space.
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