ION Energy (ION) - Adds Copper Option to Lithium Story

Matthew Gordon had an opportunity to speak with Ali Haji, CEO and Director of Ion Energy, a Canadian company that controls some 110,000 hectares of lithium brine licences in resource-rich Mongolia. He shared with us recent happenings with the company’s business.

Company Overview

Ion Energy is engaged in the development of lithium resources in Mongolia. That country is well positioned to supply the world with lithium and Ion Energy’s vision is to help fulfil that by exploring and developing lithium brine assets within the country. 

Ion Energy’s leadership team has strong in-country experience, having successfully operated in Mongolia for over a decade. Mongolia is a successful mining and investment-friendly jurisdiction, and one of the fastest-growing economies in the world. 

What’s Going on in Mongolia and with Ion’s Recent Share Price Decline?

When Gordon last spoke with Haji in November, the share price of Ion was at 48. It has now fallen to about 36, a steep decline.  Haji attributed this to the current situation with Russia’s invasion of Ukraine. Much like many others in the Western World, he sees this as a war that is capturing the attention of the world that is very similar to what people have seen in previous eras. 

Mongolia, bordering Russia, is obviously something that investors will be concerned about. Mongolia was a Soviet satellite and is a neighbour of Russia. The country, however, is influenced by and very much supported by Germany, the US, India, Japan and Korea. 

Indeed, Haji believes that Russia isn’t much interested in Mongolia. Western interests, however, are interested. For example, Rio Tinto recently settled its debt of $ 2.4 Bn with the Mongolian government, indicating that it is keen on Mongolia as an investment proposition. Now the market players see that Rio Tinto is attempting to acquire Turquoise Hill for $2.5 Bn. Turquoise Hill has one of the world’s largest copper mines located in Mongolia. 

In fact, Haji envisions that Mongolia is ripe for more consolidation. And furthermore, he reiterated that the Eastern European conflict isn’t affecting the country all that much.

Financing Notes

In 2021, Ion Energy completed a public offering of 11,500,000 units at a price of $0.50 per unit for aggregate gross proceeds to the company of $5.75 M. These funds are dedicated to its exploratory program. Currently, the company has $4 M in the bank. 

Nature of the Lithium Deposits

Ion controls licences on two major lithium brine projects: Urgakh Naran, encompassing almost 20,000 hectares, and Baavhai Uul, covering over 80,000 hectares. Both of these focus on lithium-bearing paleo salars, which are ancient evaporative lake deposits in the shallow subsurface. The company’s initial assessment at Baavhai Uul indicates a lithium concentration of 1502 ppm, which is higher than the grades encountered by its peer competitors. In fact, that is a better concentration of lithium compared to the South American salars, where 1250 ppm is at the high end of the grade in the Atacama deposits. 

Ion has designed and developed a program that will de-risk these assets, in a manner similar to what companies have done in the Atacama. Up to this point in time, Mongolia has not had any sort of exposure to lithium brine. At the height of the pandemic, without access to the country, Ion chose not to spend excessive amounts of money on a full-scale program that might not have been successful. So the company started small using an auger drilling program. Given the 1502 ppm number, Ion now intends to kickstart a more comprehensive program that will allow it to de-risk the Baavhai Uul deposit in its entirety.

Is the Mongolian Government Supporting Smaller Companies?

Haji sees that question in two ways. Clearly the Rio Tinos of the world desire to come in and ultimately take ownership. So the fact that a company like Rio is now looking to consolidate in the country tells you that the Mongolian situation is promising. But beyond that, there are these early-stage projects, such as the ones Ion is evaluating, that continue on the de-risking path. 

As a company Ion Energy has consistently said that it is not a production story. The company would love to bring in a strategic partner for a small equity stake that ultimately allows it to leverage Ion’s intellectual capital, and then set itself up for an ultimate acquisition. 

Mongolia is ripe for these early-stage opportunities, according to Haji. The prime minister today is just over 40 and he's a Harvard graduate. The old guard from the Russian sort of socialistic state is now moving away. Younger individuals are stepping into the game and into the foray of entrepreneurship. They're educated overseas and they continue to advance the economy. So Mongolia, in Ion’s view, is very ripe for opportunity. 

Wendy Li: New Director at Ion

In March of this year, Ion strengthened its team with the hiring of its Strategic Director – Asia, Wendy Li. She brings more than 18 years of commercial and business development experience in Asia, including in Mongolia and China. Li worked at Noble, a major commodities trader in Asia and across the world, primarily out of Singapore. Her role was focused on offtake agreements for copper, gold, and coal out of Mongolia into the Chinese mainland. 

Li has a number of relationships with Ganfeng Lithium, as well as within the Jiangxi Province, and the rest of the world that exists within there, including DFD (Do-Fluoride New Materials Co., Ltd.). She will work to potentially bring them on board as an equity partner.   

This Year’s Program at Baavhai Uul

The evaluation program at Baavhai Uul will commence in April of this year and will cost CAD $0.75 to 1 M. Its main initial intent is to better understand the aquifer system. Flow rates will be measured and the company will then understand the hydrogeology and fluid dynamics at the deposit.  Also, samples will be taken and analysed using DNE pump platforms that will provide critical information on the quality of the assets and how quickly they can be brought into production. 

Once early resource indication is demonstrated, Ion can start to bring in the strategic partners to ultimately either become acquired or to be a partner from an intellectual perspective. Either way, the goal is to build these assets into production. 

Up to this point, Ion has really only scratched the surface without much access to the ground, said Haji. In the back of his mind, there is an interest in getting listed on the AIM (Alternative Investment Market of the London Stock Exchange) to obtain additional capital to help de-risk the deposit. 

Binding Term Sheet Signed with Aranjin Resources:

In February, Ion announced that it had entered into a binding term sheet that sets out the terms for an exploration joint venture with Aranjin Resources Ltd, (TSXV: ARJN), a Mongolian copper explorer The joint venture allows for both companies to grant one another reciprocal exploration rights to their respective exploration licences within Mongolia. This was initiated, in part, because during the auger program at Baavhai Uul, Ion found indications of both copper and nickel. 

Haji, who is also the chief executive at Aranjin, anticipates that the joint venture will provide synergies for each company, as both lithium and copper are battery metals. Ion now controls the largest swaths of land for copper and lithium in Mongolia, making it quite significant, given that the world is moving towards a clean, green energy future. Aranjin will be required to spend US $3 M on Ion’s acreage, essentially helping Ion de-risk its own assets. Aranjin is in the process of raising money to cover the $3 M cost.  

Closing Thoughts

Ion looks to be sufficiently funded for this year’s program. Additionally, if there's an option of a UK listing, then that aids Ion further, not to mention bringing in some new shareholders as well.

To find out more, go to the ION Energy website