As many cannabis related stocks are reaching new highs, stock prices of many lithium companies are reaching new lows - partly because of the recent decrease in the price for lithium. A good chart to refer to for lithium and other commodity prices is:
https://tradingeconomics.com/commodity/lithium
For example, the year high for Desert Lion Energy (CSE: DLI) was around $2.35. It is trading today around $.10. The year high for International Battery Metals (CSE: IBAT) was about $1.38, it is currently trading around $.18.
MGX Minerals (CSE: XMG / OTCQB: MGXMF / FSE: 1MG) has been holding up a little bit better. The year high was about $1.96 and it is currently trading between $.75 and $.80. Even though MGX is not a pure play lithium company, I believe it’s major asset is its rapid lithium extraction technology with partner PurLucid.
I had a chance to speak with the President of MGX Minerals, Jared Lazerson. The interview is below:
JGR: For the nine months ended April 30, PurLucid recorded nearly $3M in revenue and $1.1M in net income. Is it revenue from recurring business or an one-time milestone payments?
JL: Part of the revenue was reported from the government grant and part from the system MGX bought from Purlucid.
JGR: How difficult is it to scale manufacturing of the systems should demand for it greatly increase?
JL: Systems scale relatively easily because you’re adding filters. The timeframe is relatively quick – a little over a month or so.
JGR: Any updates on the status of the ZincNyx spin-out?
JL: The expected timeframe for the IPO is between October-December of this year. We are working hard to make this happen.
JGR: Are you considering the spin out of any other divisions?
JL: We are always looking for creative ways to increase value for shareholders. We will consider doing more spin-offs.
JGR: The cash burn appears to be rather heavy right now, but a lot of that has to do with the acquisition of assets and increased stake in PurLucid. Are you able to provide an estimate as to when the company will be cash flow positive?
JL: By the end of the year we expect PurLucid to be generating greater revenue. The deployment of the lithium extraction commercial system is expected by the first quarter of 2019 (7500 barrels per day).
JGR: Is there anything else you would like to add?
JL: We are very growth focused. There are basically 3 aspects of the company: technology, growth areas and resources. We are looking at unique opportunities along with moving current projects forward.
JGR: Thank you for your time.
JL: You’re welcome Kal.
I believe a key driver for the company is to start to sign some major contracts. The market and investors seem to be anticipating some sort of progress and update in that area. I am looking forward to seeing what Q4 brings.
Happy Investing!
Dr. Kal Kotecha
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