Millennial Lithium (ML) - Funding Imminent

Millennial Lithium is focused on the development of its flagship lithium brine project, Pastos Grandes, situated in the province of Salta in the Lithium Triangle of Argentina. Lithium producers in the Triangle include SQM, Albemarle, Livent Corp. and Orocobre.

Millennial Lithium has recently completed a Feasibility Study (FS) on its Pastos Grandes Project which yielded Proven Reserves of 179,000t of Lithium Carbonate Equivalent (LCE) and Probable Reserves of 764,000t of LCE. 

We catch up with Farhad Abasov, CEO of Lithium Developer, Millennial Lithium having previously spoken in November this year.

Company Overview

Millennial Lithium is a Lithium Brine developer. They have a project in the Salta Province of Argentina and at this point, are one of the most advanced Lithium Brine projects in that part of the world with the Feasibility Study completed, with environmental permits in place, and they’re also running their pilot operations. The company itself is listed on the Toronto Stock Exchange Venture, but they trade both in Toronto and also Frankfurt.

The Macro: Major Developments & Interest Growth

Lithium's profile has picked up in the last 3 to 4-months and people are starting to notice it, especially the Piedmont deal with Tesla, etc. The Millennial Lithium share price has doubled in the last month as the lithium price has stabilised. The price now is at about CAD$6,700/t, maybe around CAD$7,000/t depending on the market which is much better than it has been in the last 12 or 18-months. The supply side of the industry has been affected by the low lithium price and some production has been curtailed, put on the back burner, or perhaps been cancelled altogether. 

There's also been an interesting development in Australia, with the sale of Tianqi’s shares to IGO. A major development, because it shows renewed interest in the sector from other major players, both mining players and of course players within the wider battery chain itself which is very positive.  

Major producers in South America, Albemarle and SQM, had announced large expansions but have now moderated their plans. So, they're not going to suddenly jump from 60,000t of production per year to 180,000t which would affect supply. 

Looking at the numbers, there are a lot more sales of EVs now worldwide, led by China but there are also pretty good sales in Western Europe. There has been a lot more effort on the part of the industry players to affect or to lobby governments worldwide. If you look at the UK for example, they already plan to go 100% EV by 2030. In the US, they've set up an organisation called ZETA, the Zero Emission Trading Association and the major players from within the industry chain, including Tesla, Albemarle etc are all part of that initiative to lobby the US government to make sure they also go 100% EV by 2035.

In China specifically, the demand for EVs has gone up with sales up over 100%, and the situation in Western Europe is quite similar. The demand picture is coming back to normal after Covid. Lithium-Ion batteries are used not only in Electric Vehicles but also in other applications and these sales are up by almost 25% worldwide, and in Europe up by over 100%. The combination of all of these factors has led to a spike in some stock prices specifically, in development Lithium companies and producers. 

Following Covid, a lot of governments have brought forward timelines for 0-Carbon emissions carbon credits type initiatives which is interesting to all battery metals, including Lithium.

2020 Progress & Process Going Forward 

In the first quarter of 2020, Millennial Lithium consolidated their land position in Pastos Grandes Salar in Salta, thus consolidating their foothold in the area. Now, they're the largest operator in Pastos Grandes, which is important as to have a dominant position in the Salar. which we achieved as I said in the first quarter of this year. Last year, they had applied for the approval of their environmental impact assessment report which got this summer. 

Millennial Lithium is trying to prove that they can actually produce Lithium Carbonate of battery-grade using the flowsheet that they have shown in the Feasibility Study. It is a traditional approach to both extraction and the processing of Lithium Carbonate using the evaporation ponds. The product will be analysed and will be qualified by third parties as a battery-grade material to determine the route for the product and, of course, financing.

Goals & Timeline for 2021

Millennial Lithium has the advantage that almost all of their key technical team reside in Salta Province in Salta city, so it was much easier to continue operations without any major disruption, and even without any disruption of supplies. Going forward, they have significant work ahead which is primarily financing. The plan on the technical side is basically to finish the first stage of the operations, to produce the first batch of Lithium Carbonate of battery-grade in the first quarter of 2021, and quickly increase to 3t/pm which is the capacity of the plant. 

On the financing side, they need capital from 2 major sources. The first is from strategic large, industrial players from both within the battery chain and outside. The second is bringing in an off-taker or a couple of off-takers. They plan to produce 24,000t of battery-grade Lithium Carbonate and they would like to have at least a couple of off-takers there for diversification and obviously for risk mitigation purposes. The potential off-takers can bring substantial capital to the table which is vital to enable them to start construction next year, as soon as possible.

They are now quite advanced with both the strategic side and the off-takers and are ready to sign the agreements but need to make sure that the strategic side will be comfortable with the off-take agreement that they are planning to sign. And, depending on the kind of strategic financier they use, they may or may not need an off-take agreement because they could be the actual end-users, so could take the entire production themselves. 

In the first quarter of 2021, they plan to have clarity on the strategic partner or strategic financier, which will determine whether they will need an off-take or not, and if they do then are the terms acceptable to the strategic investor? 

Millennial Lithium needs to confirm their technical approach going forward. They are currently using evaporation, a pond route, in their pilot operations which the Feasibility Study is based on. One of the parties they have been talking to is keen to use that particular methodology with a little bit of adjustment. But they could go with a potentially different strategic partner who has quite a different approach, and wants to use some type of direct extraction technology which also has its pros and cons.  So, it's not just the financing that they're trying to put together, but also the technological approach that is attached to the financial package that will come inevitably with the selection of the other partner.

Direct Lithium Extraction (DLE) seems attractive from a technical perspective, as there is no need for evaporation ponds and importantly, you don't have to wait for 18-months for the evaporation to bake the Lithium to a certain grade.  With DLE, the brine is literally pumped through the plant. However, there are quite a few competing direct extraction technologies out there and none of them have been proven at a large scale. Technically, Millennial Lithium feels much more comfortable with the evaporation approach.

Millennial Lithium is keen to stick to their original timelines, which is basically to wrap up the strategic financier by the end of the first quarter, get off-take done and start construction right away, in the second quarter of next year. That will put them in production in the second half of 2023. If they go with a different technical approach, it will obviously lead to significant changes to their timelines of about 6 to 8-months, but if they get a fantastic offer on that new approach then, they might opt for that.

Financial Position

They have about CAD$6.5M in the bank and their cash burn has come down dramatically in the last few months, because they've finished all the programmes. The only thing they're running is the pilot operation which needs about CAD$100,000 a month to run the plant. Overall annual cash burn is about CAD$5M a year, so they can run the company for 3-years without actually going back to the market and trying to raise any capital. All the focus has been on not raising any short-term capital, but finding the financing that will all be earmarked for construction.

Millennial Lithium has had a good year and they have some big decisions to make in Q1/21 and Q2/21. It will be interesting, in this environment, to see how they do.

To find out more, go to Millennial Lithium's Website.