By Steven Ralston, CFA
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Wealth Minerals (WML.V) (WMLLF) is a junior mineral exploration company that is well-positioned to benefit from its portfolio of prospective lithium projects in the Lithium Triangle. The company holds control over portions of several lithium salar projects in northern Chile (Atacama, Trinity and others). Management intends to advance its concessions through exploration programs and opportunistically acquire additional ones. The Agreement with ENAMI creates a path for the development of Wealth’s Atacama and Laguna Verde Projects. The Lithium Triangle appears to be the global sweet spot for low-cost incremental supply of lithium.
On February 11, 2019, Wealth Minerals provided a corporate update, which included announcements of fine-tuning the company’s lithium asset portfolio, a $1.5 million loan facility and of a renegotiated schedule for the option payment of the Atacama Project.
Lithium Asset Portfolio Update
Management continuous reviews the options on the mineral properties within company’s lithium asset portfolio. At times, adjustments are made. In this corporate update, several changes were announced. Three new properties (Flamenco, Vapor and Harry) entered the portfolio while two projects (Laguna Verde and Five Salars) were relinquished. The land package associated with the Laguna Verde (namely the Salar Green & Union concessions) is being retained and remains in good standing. The changes were implemented primarily to conserve cash by eliminating the need for additional option payments on those options being relinquished. The development of the Atacama and Trinity projects remains the main focus of management.
Acquisition of the Flamenco, Vapor and Harry Projects
Wealth Minerals has acquired three new projects (the Flamenco, Vapor and Harry Projects) for 1,450,000 common shares. The Harry Project increases the company’s land position in the Atacama Basin from 46,200 to approximately 54,100 hectares.
View Exhibit I
The 2,800-hectare Flamenco Project is located in the Salar del Huasco in northern Chile. The property may have consolidation potential. Freeport McMoRan, BHP Billiton and CODELCO have copper properties in the region. However, the biodiversity of the area (including a wide variety of fauna and a significant flamingo population), concerns for the aquifer, the shallowness of the salar (predominately salt marshes and seasonal ponds with depths of only 4-to-18 centimeters) and the creation of the Salar del Huasco National Park in 1996 (which encourages tourism) would appear to hamper commercial efforts to extract minerals.
View Exhibit II
View Exhibit III
The 4,200-hectare Vapor Project is located in the Salar de Ollagüe. On an adjacent property, Lithium Chile (LITH.V) completed a drilling program that identified a 180-meter zone of brine with grades of up to 480 mg/l Li, though the company cautions that these drilling results should not be inferred to be applicable to the potential Vapor Project.
View Exhibit IV
Relinquishment of the Original Laguna Verde Property and Five Salars Project
The size of the Laguna Verde Project was reduced with the option on the original 2,438-hectare Laguna Verde property having been relinquished. The option on the land package at Salar Laguna Verde (the Salar Green and Union concessions) remains in good standing. Simplistically, the areas with sub-surface drill targets that were determined by the Transient Electromagnetic (TEM) surveys completed in mid-2018 remain under the company’s control while the area with above-ground surface brine have been relinquished.
The option on the 10,500-hectare Five Salars Project was also relinquished in consideration for a payment of USD $500,000 to Atacama Lithium SpA, the underlying property vendor.
These most recent changes increased the area of the company’s lithium asset portfolio from 75,900 to 77,862 hectares.
Wealth Minerals has obtained a 1-year, 8% $1,500,000 loan from various lenders, who will also receive (in aggregate) 3,750,000 nontransferable bonus warrants, each exercisable into one common share at $0.40.
Other Previously Announced Financing
On January 30, 2019, Wealth Minerals closed a private placement of 3,942,500 Units, each consisting of one common share and one-half of 2-year warrant. Each whole warrant is exercisable into one common share at a price of $0.75. Priced at $0.40 per Unit, gross proceeds were $1,577,000. The securities were issued in Canada and are not registered in the United States under the Securities Act of 1933. The net proceeds will be used to fund mineral property option payments, property assessment and exploration costs and general & administrative expenses. The private placement was oversubscribed having been originally announced as up to 3,750,000 Units in size.
Revised Schedule for Option Payment of the Atacama Project
The terms of the Atacama option (dated October 28, 2016) has been renegotiated with Atacama Lithium SpA, the underlying property vendor. The Atacama Option grants Wealth Minerals the exclusive right to acquire a 100% royalty-free interest in 144 exploration mining concessions (pedimentos), which encompass 46,200 hectares in Chile’s Region II.
View Exhibit V
The remaining commitment of the option (USD $5,000,000 and 5,000,000 common shares) due on March 1, 2019 has been rescheduled. The payment of 5,000,000 shares was moved up to February 19, 2019 while the $5.0 million was extended out in tranches with $2.5 million drawn-out by almost a year (see table above).
Proposed Spin-Out of Newly Acquired Chilean Copper Assets
On December 4, 2018, Wealth Minerals announced management’s intent to spin-out two newly acquired Chilean copper projects (the Escalones Copper Porphyry Project and the Cristal Copper Porphyry Project) in an entity known as Wealth Copper. Management anticipates the timing to be in the spring of 2019 and contingent on shareholder approval, a final court order from the Supreme Court of British Columbia and approval for listing Wealth Copper on the TSX-V.
Management became aware of these opportunities through its constant exposure to deal flow in Chile. Rather than dilute the company’s focus on lithium projects, it was decided to take advantage of these copper prospects and spin them out to shareholders of Wealth Minerals. Currently, the spin-out is anticipated to be one common share of Wealth Copper for every three common shares of Wealth Minerals with a concurrent CAD $5 million private placement by Wealth Copper resulting in TriMetals Mining (TMI.TO) owning at least 30% of Wealth Copper, shareholders of Wealth Minerals holding approximately 30% and the private placement shareholders owning approximately 40%.
View Exhibit VI
The Escalones Copper-Gold Porphyry Project encompasses 59 exploitation concessions covering 16,100 hectares, some of which host porphyry and skarn copper-gold mineralization. The project is located 35 kilometers east of CODELCO’s well-known El Teniente underground copper mine. A NI 43-101-compliant mineral resource estimate on the Escalones Porphyry Copper Project was completed in July 2014.
View Exhibit VII
Located in northern Chile about 10 kilometers from the border with Peru, the Cristal Copper Porphyry Property encompasses approximately 900 hectares in three exploitation concessions. A NI 43-101-compliant Technical Report on the Cristal Copper Property was completed in March 2018. It is believed that the property hosts a porphyry copper mineralization deposit at depth as supported by a fault zone and airborne geophysical data surveys (magnetics, gravity, and electromagnetic) conducted by BHP Billiton between 2012 and 2014. A circular doughnut-shaped anomaly (approximately 3 kilometers in diameter) was defined by the reduced-to-pole magnetic data while the electromagnetic data suggests a northwest-trending topographic ridge underlies the volcanic cover-rocks at a depth of at least 600 meters. Wealth Minerals signed a letter of intent (LOI) on August 30, 2018 with New Energy Metals Corp. (ENRG.V) to acquire the Cristal Property.
View Exhibit VIII
Webcast of CEO’s Presentation at NobleCon 2019
On January 28, 2019, Henk Van Alphen, CEO of Wealth Minerals, presented at the 15th Annual Investor Conference hosted by Noble Capital Markets. The presentation should remain available for 90 days thereafter at: http://noble.mediasite.com/mediasite/Catalog/catalogs/noblecon-2019.
Major Corporate Event in 2018
On March 19, 2019, Wealth Minerals announced the formation of a strategic alliance with ENAMI (Empresa Nacional de Minería aka National Mining Company of Chile). Under current Chilean regulatory framework, lithium can only be exploited by the Government of Chile, a Chilean state-owned company or special operational contracts specified by the President of Chile. Only three (3) entities qualify to advance lithium projects to production in Chile; ENAMI is one with the other two being CORFO and CODELCO. ENAMI was founded in 1969 as a state company to promote the success of small-and-medium sized Chilean mining companies by providing toll milling and processing services. ENAMI is partnered with CCHEN (La Comisión Chilena de Energía Nuclear aka the Chilean Nuclear Energy Commission), the governmental agency that grants lithium export quotas.
Brief 2018 Industry Review
Lithium mining companies were pressured in 2018 over concerns that an oversupply situation would occur starting in 2019. In the second quarter of 2018, LCE prices began to decline sharply, pressuring all lithium stocks, including producers and juniors. During 2018, the Global X Lithium & Battery Tech ETF (LIT) declined 30.4%.
However, at the same time, the future demand for lithium appears robust with many industrial companies, particularly EV manufacturers, announcing their anticipated need for lithium for use in battery applications. We believe that the demand for lithium will surpass the available supply in the next few years. Historically, supply projections have been overestimated due to the inability of lithium producers to ramp up production of battery-grade lithium in a timely fashion.
Headquartered in Vancouver, British Columbia, Wealth Minerals Ltd is a junior exploration company that is building a portfolio of highly prospective lithium-brine mineral concessions located within the Lithium Triangle, currently targeting properties within salars situated in Chile. However, management’s scope for potential lithium-in-water and brine candidates extends beyond the region in the search for prospective mineral properties.
Not only has management positioned the company to benefit from the upcoming expected growth of demand in the lithium space, but also continues to seek the acquisition of additional interests in prospective concessions. The company continues to constantly review and evaluate a number of properties in the region and then aggressively pursues control of the attractive ones that would complement the current portfolio of concessions.
In the near future, the Lithium Triangle is poised to become even more dominate as the major source of lithium in the world not only due to the vast identified lithium resources in the region, but also because brine production more cost-competitive relative to hard-rock and clay sources of lithium.
With the tipping point toward higher lithium prices on the horizon and with brine deposits poised to be a major contributor to low-cost incremental supply, lithium exploration & development companies of the Lithium Triangle, with their blue sky potential, appear to be well positioned to benefit from higher lithium prices.
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By Steven Ralston, CFA