Millennial Lithium (ML.V) has now closed the second and final tranche of its C$30M deal with Golden Concord which is taking a substantial stake in the company by acquiring 2.5 Million shares at an average price of C$2.5 each.
The deal was concluded right before Millennial announced its maiden resource estimate for the Pastos Grandes project. In a previous report we mentioned we were expecting and would be happy with a total resource of 1.5 million tonnes of lithium carbonate equivalent (‘LCE’), but Millennial Lithium has blown us away with a 3 million tonne resource estimate, of which in excess of 70% is part of the measured and indicated resource category. With these 3 million tonnes LCE in the overall amount, we think Millennial’s Pastos Grandes is entering the top-10 of resource-stage brine projects worldwide, and is very likely one of the largest resources owned by a junior exploration company.
The average grade of 445 mg/liter isn’t the highest in the lithium triangle but should definitely be sufficient to report robust economics in an upcoming Preliminary Economic Assessment, planned for 2018. Additionally, the 11.5 Million tonnes of KCl will be a very welcome by-product credit.
The cash proceeds from the Chinese group will allow Millennial to continue to develop the Pastos Grandes lithium project whilst it also provides the cash needs to complete the purchase of the additional Pastos Grandes tenements from REMSA.
It’s also very interesting to note that Golden Concord’s subsidiary (Million Surge Holdings), specialized in clean energy is acquiring the stake without any additional rights or requirements. We were surprised to see no offtake agreement was mentioned in the original investment agreement (not even a Right Of First Refusal on an offtake agreement), which struck us as strange. We checked in with the Millennial management team during our recent visit to Vancouver, and they confirmed no offtake agreement or clause was included in the agreement. We can’t imagine a clean energy company which will start to produce batteries wouldn’t be interested in the lithium, and we think this initial strategic stake is a first step towards acquiring full ownership of the company/property.