Millennial Lithium (ML) – Clearing The Final Hurdle

Millennial Lithium Corp.
  • TSX-V: ML
  • Shares Outstanding: 83M
  • Share price C$1.10 (24.06.2020)
  • Market Cap: C$88M

Interview with Farhad Abasov, CEO of Lithium Developer, Millennial Lithium (TSX-V: ML)

We’re big believers in the EV revolution. All the evidence points toward huge growth for battery metals. Lithium plays, and will continue to play, a crucial role in the batteries that will power the EV revolution.

Millennial Lithium is one of our favourite lithium stories. The management team has an excellent track record of making investors money. The lithium market has been depressed for the last few years courtesy of massive and premature oversupply, primarily from Chinese-grade lithium. Most lithium companies are currently hunkered down, waiting for price discovery. Rather than competing with the low-grade percentile of the market, Millennial Lithium is aiming to corner the battery-grade segment.

Matthew Gordon talks to Farhad Abasov, 24th June 2020.

Millennial Lithium happens to own one of the most advanced lithium projects in the world, its advanced-stage flagship Pastos Grandes Lithium Project in Salta Province, Argentina: the ‘Lithium Triangle.’ It’s a brine project; for those who want to know how exactly that will affect their investment decisions, click here. It’s in the lowest cost quartile for production. Impressive.

Pastos Grandes had some great numbers in its feasibility study:

  1. Proven Lithium Carbonate Equivalent (LCE) reserves of 179,000t.
  2. Probable LCE Reserves of 764,000t.
  3. Robust economics for a 24,000t/y battery-grade LCE operation.
  4. An entirely reasonable CAPEX of US$442M.
  5. An OPEX of US$3,388/t of LCE.
  6. An NPV of US$1,030M.
  7. An IRR of 24.2%.
  8. A substantial c. 100,000t pa potash byproduct (4 potash: 1 lithium), which produces an additional US$25M in revenue.

The big stumbling block for Millennial Lithium has been the Environmental Impact Assessment (EIA). This issue is not of the company’s making; instead, it is a delay that had been induced by the Argentinean political elections in November 2019. Moreover, COVID-19 threw another spanner in the works. Investors may worry that the political issues/slow permitting process may form part of a wider risk thematic within Latin American mining jurisdictions. Personally, I think Abasov has this under control comfortably.

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The new administration has now approved the company’s EIA, rendering Millennial Lithium a shovel-ready business. There are a few small operational permits still to sort, but these appear to be mere technicalities. In the meantime, the company has been hard at work successfully consolidating its land position: no mean feat in the midst of a global pandemic.

For investors looking forward, the big question regards the financing of Pastos Grandes. Once the few additional permits are signed off, Millennial Lithium will need to decide which partner to opt for, and it is not short of choices. There is currently very little investment in new lithium projects, but advanced lithium projects still find capital easy to come by. The most likely route appears to include the involvement of a major strategic partner coming into the fold, though investors will be crossing their fingers for minimal dilution. Several large energy players with no current involvement in the lithium space have declared their interest in Millennial Lithium. These companies would bring with them innovative new lithium processing technologies, which could boost recoveries and improve economics. The management team is using the current lockdown as an opportunity to conduct individual due diligence from their own homes. Expect an announcement by September/October on how exactly Millennial Lithium plans to structure this potential deal.

What did you make of Farhad Abasov and Millenial Lithium? Comment below and we will respond.

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