Critical Metals

Junior explorer and developer MGX Minerals gained on Monday following the announcement that it will form a strategic alliance focused on developing industrial minerals properties. It has also entered a joint venture agreement for a BC silica property.

On Monday, Canadian junior MGX Minerals (CSE:XMG) announced that it has formed a strategic alliance to develop industrial minerals properties with Zimtu Capital (TSXV:ZC) and Electra Gold (TSXV:ELT). As part of the deal, MGX has entered a joint venture agreement to obtain up to a 50-percent interest in the Longworth silica property.

As part of the arrangement, MGX and Electra will acquire shares of each other, with MGX providing technical services to Electra and Electra performing industrial minerals sales and marketing services for MGX.

MGX’s president and CEO, Jared Lazerson, said in a statement, “[t]hrough this Alliance MGX has found uniquely qualified strategic partners that forms a cornerstone for continued rapid advancement of the Driftwood Creek magnesium property. Furthermore, the Alliance creates a multitude of opportunities for additional acquisition and development of near-term revenue generating opportunities in the industrial minerals sector starting with Longworth Silica.”

Investors were also positive on the news — shares of the company jumped 30 percent on Monday, or 6 cents, to close at $0.26.

About Longworth and the joint venture

Under the terms of the joint venture agreement, MGX can acquire up to a 50-percent undivided interest in the Longworth property by spending $100,000 on exploration within the next year — including eight diamond drill holes. The company must also complete a mineral resource estimate within 18 months.

Listed as one of the top silica occurrences in British Columbia by the province’s geological survey, the Longworth claims were held at one time by Silver Standard Resources (TSX:SSO,NASDAQ:SSRI), which conducted metallurgical work on the property.

High-purity silica has a number of applications: it can be used to produce silicon, ferrosilicon and silicon metal, and is also used by oil and natural gas producers in the form of frac sand. To be sure, those options are being considered by MGX. Lazerson pointed out that Longworth has a prime location, stating, “it’s really close to the BC natural gas fields.” While Lazerson stressed that it’s too early to tell whether BC natural gas producers will be able to use silica from Longworth, he is optimistic about the project’s potential.

What does silica have to do with magnesium?

MGX is also interested in the possibility of producing ferrosilicon at Longworth. That’s because ferrosilicon is one of the primary elements needed to produce magnesium alloys using the Pidgeon process — the other is magnesium oxide, which MGX has at its flagship Driftwood Creek magnesite project. “We’re very, very likely to produce ferrosilicon,” said Lazerson. Certainly, nothing has been decided yet, but the CEO did suggest that “if you have magnesium oxide and you have ferrosilicon, I think you’d probably want to at least look at producing magnesium.”

Though the Pidgeon process is widely used in China, Lazerson noted that companies in North America use mostly electrolytic processes. However, the Pidgeon process has an advantage. Namely, it can be done on a smaller scale, which would allow MGX to start small, incrementally ramping up its operations, if it were to go that route.

What’s next?

For now, MGX is preparing to move ahead with exploration at Longworth. The company has already begun a technical evaluation of the property, and plans to focus initial exploration efforts on the Snow claim, where sampling of an outcrop has returned consistently high-grade SiO2.

Certainly, given its industrial metals focus, Monday’s joint venture was an important step forward for MGX. Investors interested in the critical metals and industrial metals spaces will be watching the company to see what sort of move it makes next.

 

Securities Disclosure: I, Teresa Matich, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: MGX Minerals is a client of the Investing News Network. This article is not paid-for content. 

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