Developing Canada’s Lithium from Oil Wells
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MGX Minerals (CSE:XMG) is a diversified Canadian mining and technology company with interests in advanced material and energy assets throughout North America. The company has entered into strategic partnerships to develop extraction technologies for minerals like lithium and magnesium from unconventional sources such as oilfield brines. The purpose of developing these technologies is to make use of mineral extractions to fuel the new energy economy.
MGX has successfully extracted lithium from heavy oil wastewater and is the first mover of a new technology known as “petrolithium”. The Company has also used similar new technology to extract lithium from geothermal brines.
In December 2017, MGX signed a definitive agreement to acquire zinc air battery developer ZincNyx Energy Solutions. Now a subsidiary of MGX, ZincNyx has developed a modular energy storage system that can store between 5 kilowatts and 1 megawatt, providing low-cost energy storage. The technology can be deployed in a variety of applications including power grid load stabilization, long-term backup power and remote location off-grid applications.
“We believe in investing in technology and innovative processes that disrupt how the energy industry thinks and operates,” stated MGX President and CEO Jared Lazerson. “Our newest technological advancement offers yet another first-mover opportunity into a large and often stagnant sector hungry for new ideas.”
Alongside developing its mineral extraction technologies, MGX has also formed a subsidiary, PetroLithium Corporation of America, that is actively exploring for lithium brines in the United States, starting with the Paradox Basin in Utah. Within this endeavor, MGX has acquired numerous lithium properties in Canada and the US.
In 2016 MGX released a maiden NI 43-101-compliant mineral resource estimate for its British Columbia-based Driftwood Creek magnesium project, which outlined 8 million tonnes grading 43.31 percent magnesium oxide. The company has secured a 20-year mining lease for Driftwood Creek, and has also completed a 100-tonne bulk sample.
- First Mover Advantage: First to recognize petrolithium potential and to develop a business strategy around the new technology
- Investment in new energy-focused technology companies like PurLucid and ZincNyx
- Aggressive Acquisition: Over 2 million acres of lithium-brine properties acquired to date in North America
- Proof of concept using proprietary, patent-pending design process
- Partnerships in place with major oil and gas companies to conduct well sampling
- Water treatment units nearing deployment
- 100-tonne bulk sample, 20-year mining lease and a maiden NI 43-101 resource estimate completed for the Driftwood Creek magnesium project
- Near-term production with low capital development costs and a straightforward permitting process
- Magnesium recovery rates of up to 100 percent from lithium brine bulk samples
- Environmentally friendly operations – magnesium processing results in virtually no tailings.
Petrolithium: Extracting Lithium from Petroleum Brine
Lithium is a material ideal for portable storage applications, most notably lithium-ion batteries used in smartphones and electric vehicles (EVs). As the global EV market continues to experience phenomenal growth, experts predict that the lithium used to make smartphone and EV batteries could be in short supply. Goldman Sachs has projected demand for lithium to triple by 2025 to 570,000 tonnes.
Lithium is found all over the world, in both hard-rock deposits and evaporated brines and the bulk of the world’s lithium brine production comes from salars in the prolific lithium triangle hosted in Bolivia, Chile and Argentina.
The two methods for extracting lithium are solar evaporation and hard-rock mining, two relatively ineffective approaches. In response to this market gap, MGX Minerals appears to have found an alternative within an unlikely source: depleted oil wells. As petroleum in a well gets drilled out, it is replaced by a saltwater brine that is useless to well operators since it contains less than 1 percent petroleum. The wastewater is sent back down the well, or pumped into storage tanks, at added cost.
Research that began in the 1990s revealed that the brine found in some oil fields contained significant amount of lithium. As the Chemical Institute of Canada explains it, initial attempts to isolate the lithium focused on solar evaporation, with the usual 18-month time frame, but the delay was reduced to just one day thanks to technology developed by Alberta-based PurLucid Treatment Solutions. PurLucid’s technology allows for the recycling or controlled release of oilfield wastewater and eliminates downhole or alternative storage, one of the largest operating costs for the oil and gas industry today.
In what is considered a world first, last fall MGX formed an acquisition agreement with PurLucid and began buying up mature oil fields from well owners happy to unload their unproductive properties. Many of these lithium-containing wells are in Alberta. According to the Alberta Geological Society, the Leduc and Swan Hill formations contain up to 140 mg/l of lithium-bearing water. MGX has compiled the historical data and acquired over 60,000 hectares of potential petrolithium brines throughout the province.
“Petrolithium” is produced by separating the oil from the lithium-bearing brine, yielding a precipitate with concentration of lithium carbonate 95 percent or greater. The patent-pending process harvests lithium and other metals from brine that would otherwise be disposed of.
In July 2017, MGX and PurLucid were granted exclusive patent rights for the recovery of metals and minerals from produced wastewater brine in the oil and gas sector, providing the company to deliver fully integrated solutions to operators in the industry.
Adding to its extraction technology portfolio, MGX announced in November 2017 that PurLucid had developed proprietary high-temperature filtration for the purification of geothermal brines and the associated extraction of lithium and other minerals. Geothermal brines, like oilfield brines, contain concentrated amounts of metals and dissolved salts.
MGX and PurLucid are currently operating a manufacturing facility in Calgary, Alberta where the company has recently commissioned the commercial-scale, pre-treatment nanoflotation and nanofiltration NFLi5 lithium recovery system. The system is capable of processing 750 barrels of brine per day and additional capacities to the system are expected to come online in Q1 2018.
Lithium Property Acquisitions
MGX has also been actively pursuing lithium-bearing brines in the United States as well, through its subsidiary PetroLithium Corporation of America, formed in January 2017. Initial areas of interest included the Paradox Basin and the Smackover formation that covers Arkansas, Texas and Louisiana.
In February 2017 MGX acquired 23,000 acres in the Lisbon Valley oilfield of southeastern Utah, near Moab, where historical lithium brine content has been reported as high as 730 ppm. This was followed by additional staking of land packages adjoining the property in April 2017, which was unitized with the initial land, bringing the total land package to 110,000 acres of combined oil and gas leases. As its first foray into the United States, MGX plans to conduct well sampling in the Lisbon Valley and design multi- zone wells optimized for maximum flow of oil, gas, lithium and magnesium brine
Additionally, in August 2017, MGX executed a letter of intent to acquire the entire US petrolithium and spodumene-bearing pegmatite portfolio from its partner, Power Metals Corp. Under the terms of the proposed agreement, MGX acquired 100 percent of Power Metals’ two petrolithium assets and a 30 percent stake in its four hard-rock properties. Within this portfolio, Power Metals has continued its work in its Case Lake property, which has presented new spodumene discoveries, surface sample results of 7.14 percent Li2O and drill results of up to 1.94 percent Li2O and 323.75 ppm tantalum over 26 meters.
Magnesium Market: Growing Demand for Strategic Metal
MGX Minerals is looking at niche markets for magnesium oxide—a key component in materials used to produce steel, cement and glass—including in waste water treatment and the manufacturing of wallboard. Magnesium oxide is beginning to significantly replace lime as the PH-balancer in the treatment of waste run-off from factories and mines, which is currently the largest use of CCM. Magnesium oxide in wallboard is commonly used in Asia. Exterior and interior wallboards made with magnesium oxide are known to be fire-resistant, mold proof, non-toxic, offer some structural integrity and hold up well in water.
As part of its relationship with PurLucid, MGX has been developing and optimizing an approach for magnesium extraction. In a reported case in October 2017, pretreatment conducted by the company was able to extract all of the 76,000 mg/L of magnesium from a bulk sample of lithium brine. The magnesium was extracted in the form of magnesium hydroxide, a commonly used industrial mineral with primary use in environmental applications such as municipal wastewater treatment and desulphurization of flue gases from power plants.
“Removal of very high levels of magnesium opens up a large number of global lithium brine sources for consideration that were previously considered too high in magnesium,” said Lazerson. “This represents a triumph of technology over perceived resource quality, in particular, that the magnesium has been extracted in a common form of widely used industrial mineral compound.”
Key Projects: Driftwood Creek Magnesium Project, British Columbia
MGX Minerals’ Driftwood Creek property covers 776 hectares across three mineral tenures in the Driftwood mining district 164 kilometers north of Cranbrook, BC. Currently there are only two magnesite deposits in production in the US and Canada. The company believes that Driftwood Creek could be one of the best undeveloped magnesite properties in North America.
MGX Minerals has secured a 20-year mining lease for the Driftwood Creek magnesium project. A 100-tonne bulk sample and an NI 43-101 resource estimate have been completed. Results include:
- Measured and Indicated mineral resource totaling 8.028 million tonnes grading 43.31 percent magnesium oxide.
- Inferred mineral resource totaling 846,000 tonnes grading 43.20 percent magnesium oxide.
- Bulk of resource is located less than 100 meters from surface, creating opportunities to expand mineral resource along strike and at depth with further drilling.
Assay data from a 16-hole infill drill program will be used to upgrade the resource estimate and provide information for a Preliminary Economic Assessment (PEA). Mine construction is targeted for fall of 2017 with mining operations slated for summer 2018.
Silicon Market: Catching the Solar Wave
As an important ingredient in solar panels, silicon is expected to be in high demand particularly from China which is aggressively pursuing renewable energy as an adjunct to traditional coal-fired power plants. According to Transparency Market Research, the demand for silicon metal is expected to surge at a CAGR of 4.3 percent between 2016 and 2024, worth an estimated US$3.4 billion.
MGX Minerals plans to capitalize on the lack of silicon producers in western North America as it embarks on a plan to develop three high-grade silicon projects in British Columbia: Longworth, Koot and Wonah. All three properties are located in southeastern BC, where quartzite mineralization is considered high purity and similar to other producing silica mines. They have the potential to be developed into open-pit mines with established beneficiation methods, and are in historical mining districts accessible to roads, railways, labour and electricity. Plans for exploration and permitting activities on the properties commenced in late 2017.
Marc Bruner – Chairman of the Board
Marc Bruner was Ultra Petroleum’s founding Chairman where he was involved in developing the Pinedale Anticline in Wyoming, which is now recognized as one of the largest unconventional natural gas fields in the United States. He is also the past Chairman and CEO of Falcon Oil & Gas Ltd. While serving these companies, Marc Bruner oversaw negotiations and contracts with global oil and gas companies including Halliburton, Exxon Mobil, Questar Gas and Hess Corporation. Previously, Mr. Bruner founded Pennaco Energy Inc. to explore and develop coal bed methane properties in the Powder River Basin of Wyoming and Montana. In March 2000, the company was sold to Marathon Oil for US$550 million.
Jared Lazerson – President, CEO and Director
Jared Lazerson has worked in the mining and technology industries since 1994 with companies including Osprey Systems (GPS and Digital Mapping), United Helicopters, Copper Island Mines and Manto Resources. He holds a BA in International Relations from the University of Pennsylvania.
Michael Reimann, PhD – CFO and Director
Michael Reimann graduated in Engineering Physics from the Royal Military College of Canada, and obtained a Ph.D. in Physics from the University of British Columbia. He has over 45 years of experience in senior corporate management in both public and private companies. Most recently he served as CFO of Skana Capital Corp and PNG Gold Corp, both TSXV-listed companies.
Andris Kikauka, PGeo – Vice-President of Exploration and Director
Andris Kikauka is a geologist with over 30 years of experience. From 1996 to 2012 he was the Project Geologist overseeing exploration programs at Goldrea Resources. Kikauka is Project Geologist for Rio Minerals, a mineral exploration and geotechnical consulting firm, and is a director of American Manganese Inc. (TSXV:AMY), which is focused on mineral properties and commodities used in the steel industry. He was previously a director of Navarre Resources (TSXV:NRV.V) from 1991 to 1996. He holds a B.Sc. in Structural Geology, Mineralogy and Petrology from Brock University.
Lyndon Patrick, LLB – Director
Lyndon Patrick is a Vancouver-based, independently practising lawyer. He has practised in British Columbia since 2001 in the areas of litigation and real estate. He holds an LLB from the University of Alberta, and an MA and BA from the University of British Columbia. Patrick is an independent director of the company.
Christopher Wolfenberg – Director
Christopher Wolfenberg is a Partner with the law firm of Fasken Martineau LLP. Prior to his current position he was a Partner with Norton Rose Fullbright. He provides practical advice to select clients active in the mining, technology and energy sectors and has acted as an officer and director of numerous public, private and non-profit entities. He holds a Bachelor of Social Sciences from the University of Ottawa, a Bachelor of Laws from Queen’s University and a Master of Laws from Cornell Law School. He is a member of the Law Society of Alberta.
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