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Millennial Lithium hits the jackpot

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Marc Davis
1 Comment|November 27, 2017

Everything counts in large amounts.
 
In which case, Millennial Lithium just hit the jackpot.
 
Yesterday, Millennial (TSX.V: ML) (Frankfurt: A3N2) surprised and delighted the investment community. It did so by announcing a far larger than expected maiden resource estimate at its Pastos Grandes brine lithium project in Argentina.
 
All told, a total of 2.13 million tonnes of high-grade lithium have been outlined, which clearly makes Millennial the new poster-boy of the red-hot lithium development sector.
 
This easily overshadows the 1.04-million-tonne proximal lithium brine deposit that made Lithium X the star player among the world’s lithium explorers in recent years — until now.
 
In fact, Millennial also identified an additional 878,000 tonnes of lithium in the “inferred category”. In other words, the overall resource estimate at Pastos Grandes promises to soon grow beyond three million tonnes.
 
Beyond that, there still remains plenty of scope to continue to further build on this resource base even further. To this point, this fast-emerging brine lithium deposit remains “open” (continuous) in all directions.  
 
Not surprisingly, Millennial’s share price has been rallying strongly lately, rising around 250% in the last three months. That’s because the lithium exploration sector is hotter than ever. Also, many investors have been betting on the likely announcement of a robust resource estimate at Pastos Grandes. 
 
The much-anticipated maiden initial resource figure for Pastos Grandes is a huge validation for the company’s business model, thereby setting the stage for higher share price multiples in the coming year.  
 
What does this all ultimately mean? In short, Pastos Grandes is shaping up to be a world-class, low-cost brine lithium deposit that is now on the fast-track towards a mining decision.
 
Earning the Ultimate Big-Dollar Validation 
In another milestone development, Millennial recently acquired a deep-pocketed financial partner in an unprecedented development for the lithium exploration sector.
 
More specifically, it’s the first time ever that a big-league Chinese conglomerate has invested in a publicly-listed lithium developer at such a relatively early stage in a company’s developmental cycle.
 
To be exact, Million Surge Holdings committed to investing $30 million in Millennial even before the announcement of Pastos Grandes’ initial resource estimate. This is not surprising considering China’s imperative to secure long-term lithium supplies for the electrification of its automobile industry.
 
In fact, Million Surge is a subsidiary of Shanghai-based Golden Concord Group (GCL), which is one of China’s largest developers of renewable energy. The deal gives this Chinese energy powerhouse a 17% stake in Millennial.  

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Pictured above is one of GCL’s power plants in China 

It’s a smart strategic transaction for both parties. Truth be told, Argentina’s riches of high-grade, low-cost brine lithium are key to bringing prolific new supplies on-stream, thereby making renewable energy far more affordable, and therefore far more popular.
 
Accordingly, Millennial has an early-mover advantage in its quest to help boost Argentina’s output along an expedited timeline. To this point, Millennial anticipates commencing to build the necessary infrastructure for pilot-scale production as early as H1 of 2018. Full-scale output is expected to come on-stream within three years.  
 
The deal also significantly de-risks Pastos Grandes’ developmental profile and provides financing for the undertaking of a preliminary resource estimate (PEA) — also scheduled for H1 of next year.   
 
In other words, having a deep-pocketed strategic partner come onboard means that Pastos Grandes can now be fast-tracked to commercialization.
 
Leveraging Argentina’s Lithium Riches
Pastos Grandes offers the competitive advantage of being ideally located among a cluster of the world’s lowest-cost but highest-grade lithium mines.
 
In fact, Pastos Grandes is located within the famed “Lithium Triangle”. This is where the world’s most lucrative lithium mines (and mines in-the-making) can be found among expansive salt flats in a mountainous hinterland region where Argentina, Bolivia and Chile all intersect.

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An aerial view of the Pastos Grandes Project, which is now revealed to be a world-class mineral asset

This remote, high-altitude expanse of salt flats boasts the highest concentrations of lithium in the world. It’s also the global hotspot that is expected to supply most of the world’s lithium needs in the coming decades. This is due to the consistently high grades among these deposits, as well as their amenability to low-cost mining methods.

This is why Millennial Lithium is involved in a total of four proximal lithium brine projects, encompassing approximately 28,500 hectares.
 
Investment Summary
I first began following Millennial’s rising star about a year ago. Some readers will recall me writing a series of articles discussing the company’s progress. And I am happy to report that this well-managed company has now executed on all of its promises to its investors.
 
The results speak for themselves. The company’s share price has been a stand-out performer in the lithium sector, and has outperformed most other stocks across-the-board.
 
Now its flagship asset, Pastos Grandes, is fast becoming a world-class lithium deposit due to its prolific size, its rich grades, and its amenability to low-tech, low-cost mining methods.
 
Such positive economics promise to make Millennial a dominant player at the heart of some of the world’s richest lithium fields.
 
Furthermore, Pastos  Grandes also represents an increasingly valuable mineral asset in a rising-tide market for lithium carbonate prices.
 
If all goes according to plan, Pastos Grandes is on track to be in full-scale production within three years, making it one of the first success stories among a new generation of high-grade, low-cost lithium mines.
 
In the interim, pilot-scale production is scheduled to begin as early as H2 of next year. This promises to be yet another major de-risking event. It will build upon this latest one, being the unlocking of the value of Pastos Grandes by way of the outlining of a massive, richly-mineralized brine lithium deposit.
 
Furthermore, the pending announcement of a preliminary economic assessment (an initial blueprint for a mine) at Pastos Grandes should be another big value driver in H2 of 2018.
 
In particular, it cannot be overstated that the announcement of a world-class lithium brine deposit at Pastos Grandes is clearly burnishing this small start-up’s role a truly meaningful player in the green energy revolution.
 
This is the reason why a large, well-financed Chinese clean energy developer has thrown its weight behind Millennial by joining forces with the intrepid explorer, while also significantly beefing up Millennial’s treasury.
 
However, it’s not just China’s electrified automobile industry that stands to benefit from Millennial becoming a prolific, next-generation lithium brine miner. Shareholders are sure to continue enjoying the ride of a lifetime as Millennial’s stock continues to power its way towards higher multiples.   
 
In other words, the best is yet to come.  
 
 
About the Author: Marc Davis has a deep background in the capital markets spanning 25 years. He is also a longstanding financial journalist, having worked for leading digital financial news agencies in North America and in London’s financial centre. He is also a former business reporter for CBC Television.
 
Over the years, his articles have also appeared in dozens of digital publications worldwide. They include USA Today, CBS Money Watch, Investors’ Business Daily, the Financial Post, Reuters, National Post, Google News, Barron’s, China Daily, Huffington Post and AOL.

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Comments

Wever1974
Well written , thoughts on , at what point the market gives ML the proper valuation . Still trading below lithium x as well as several other explorers . This maiden report truly highlights the unrealized value currrently given . The recent moves up in SP was a sector driven issue rather than individual merit issue. Should be closer to 300mil MC when viewed in proper context .
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November 28, 2017
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