GREY:MGXMF - Post by User
Comment by
Millertime98on Dec 18, 2017 12:44am
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Post# 27175904
RE:Revenue potential paradox basin
RE:Revenue potential paradox basinI'm going to drop some knowledge here folks.
First off. Something is not an asset if you can't access it. Just because there's 6 BBOE in the ground in the Paradox play doesn't mean it is acccessible or even economical to try and recover the potential resource. This entire Basin has only produced 50mmboe over its entire production life so far. Its not an easy play. Chance of success on (COS) is average only 6% on the entire play. Huge red flag. Would you risk hundreds of thousands to millions of $$$ for only 1/20 chances of hitting decent pay? No. Thats why MGX doesn't have a drill program running. This Paradox play is all PR as far as I'm concerned untill this company puts their money where their mouth is and starts a drilling program. As for any lithium pay, 14,000 tons is close to what Orocobre (1B mkt cap) will produce next year in lithium carbonate. So 19,000 tons really is not a resource. Also the pricing would likely be much lower than $7,000/ton as MGX can only concentrate the lithium to 5% purity. They would have to have an offtake agreement with a processor and so the prices MGX would get would get for their concentrate would likely have a steep discount. I'm thinking in the range of $3,500/ton. All in all this Paradox play is not a lithium play, its an unconventional oil play. Cash flow from lithium would be marginal on Paradox and MGX knows it. They also know the risks of the play. Hence the lack of a drill program. And so, to answer the 30 billion dollar question, as long as it isn't producing anything, its worth a few hundred grand in PR costs as a trendy eye catcher, "PETRO-LITHIUM". DYOD.
Cheers