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ION Energy is poised to be a player in Asia’s booming lithium market with its promising Mongolia project

Snapshot

The company has one of the largest exploration licenses in Mongolia and its Baavhai Uul project comprises over 80,000 hectares in the southeast

ION Energy Ltd. - ION Energy is poised to be a player in Asia’s booming lithium market with its promising Mongolia project

Quick facts: ION Energy Ltd.

Price: 0.315 CAD

TSX-V:ION
Market: TSX-V
Market Cap: $15.51 m
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  • On track to be Mongolia's first lithium brine miner
  • Strategic location in Mongolia with proximity to China and Russia
  • Strong management team with proven track record

What ION Energy Ltd does:

ION Energy Ltd (CVE:ION) is a lithium exploration company with its sights set on Mongolia. The Canadian company has won the first lithium brine mining license ever awarded by the Central Asian country.

The company’s Baavhai Uul lithium brine project is spread over nearly 81,000 hectares, and is strategically located in southeast Mongolia, 24 kilometers away from the Chinese border.

Armed with one of the largest exploration licenses in Mongolia, ION Energy is poised to become a significant player in Asia’s booming lithium market. Lithium-ion batteries have become the battery of choice in consumer electronics such as laptops and cell phones. China is now in the driving seat with a number of lithium battery factories and five new planned gigafactories. That bodes well for ION Energy, given the exploding demand for lithium in the region. 

Over two-thirds of the world’s lithium reserves are suspended in “brines” of highly concentrated salt-water. Traditional methods rely on the sun evaporating away the water content and waiting for the salts to precipitate out one by one. As lithium is one of the lightest elements in the periodic table, it is the last to come out of the brine mix, and a lot is lost along the way. Fortunately, the Baavhai Uul project is located in the arid Gobi Desert with high evaporation rates and low precipitation rates that are considered optimal for lithium brine extraction.

How is it doing:

ION Energy is fully funded to follow an aggressive growth strategy. The company recently told investors that it has started its geophysics study at the Baavhai Uul project. The work is aimed at identifying and mapping brine aquifers as potential targets for a series of drill tests.

Initially, the work is expected to focus on previously sampled areas and will take about six weeks to complete for the controlled-source audio-frequency magnetotellurics (CSAMT) program. A seismic program will follow and is expected to take around four weeks.

Previous programs conducted included surface brine sampling in 2016, which saw extremely encouraging results. Early results showed that all holes drilled contained significant levels of lithium. Target L8 returned values from 212 milligrams per litre (mg/L) lithium to 811 mg/L lithium, while Target L-11 returned sample values from between 311 mg/L lithium and 434 mg/L lithium from shallow samples. The project’s geographic location works heavily in favour of the company as it allows for a low-cost and year-round operating environment and low transportation costs to the Chinese and Russian battery markets.   

As drilling is the name of the game in brine exploration, the company owns a truck-mounted auger rig with the capacity to drill down to 20 meters, allowing the sampling of shallow lithium brine.

Meanwhile, ION Energy CEO Ali Haji has made solid additions to the company’s bench strength and developed a strong team in Mongolia. Mongolian mineral exploration veteran Enkhtuvshin Khishigsuren recently joined the company’s board. He has over three decades of mineral exploration experience in Mongolia and is credited with identifying targets that have resulted in the discovery of prospective gold and copper deposits in Mongolia.

The company now has a five-member board with CEO Ali Haji, Aneel Waraich, Matthew Wood, Bataa Tumur-Ochir and Khishigsuren. The company has also tapped lithium industry experts Paul Fornazzari and Don Hains as the company’s special advisers.

Fornazzari has been involved in the lithium industry since 2008 with the creation of Lithium Americas Corp. As the company’s chairman, he secured investments from Mitsubishi and Magna International, which helped launch the world-class lithium brine asset. Hains is president of Hains Engineering and an economic geologist with more than 30 years of experience. He focuses on energy minerals such as lithium and has worked on projects in China and Mongolia. John McVicar joined the company as its chief financial officer in September.   

Inflection points:

  • Strategic location in Mongolia in proximity to the large markets of China and Russia
  • Surface geochemical sampling of sediments and brine using auger drilling
  • Positive early results of brine sampling activities leading to deeper drilling
  • Growing demand for lithium as a geopolitically important resource, and a jump in commodity prices  

What the broker says:

Since ION Energy is still in the early exploration phase, analysts at Couloir Capital declined to specify a price target and rating, but estimated a C$34 million valuation based on the company’s planned exploration program, and future confirmation of the significant presence of lithium at Baavhai Uul.

“One of the largest and fastest-growing demand drivers for lithium is the usage of lithium compounds as electrolytes in lithium-ion batteries, which in turn are being utilized in electric vehicle (EV) batteries,” said Couloir Capital analyst Rob Stitt.

“The vast majority of the world’s downstream lithium processing capacity is located in China, and Baavhai Uul is conveniently located in close proximity to the China-Mongolia border, in an infrastructure rich zone.”

What the boss says:

In a recent exploration update, ION Energy CEO Ali Haji said: “We remain excited to explore the highly prospective Baavhai Uul license over the next quarter. The company is optimistic about the lithium market and, in our view, the start of the green revolution: a transition from fossil fuels to renewable energy mobilizing the planet sustainably.”

Contact the author Uttara Choudhury at [email protected]

Follow her on Twitter: @UttaraProactive

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ION Energy boss updates on geophysics study at Baavhai Uul lithium project...

ION Energy Ltd (CVE:ION) CEO Ali Haji tells Proactive it has recently started its geophysics study at the Baavhai Uul project, a 'pivotal' moment for the future development of Mongolia's lithium brine deposits. Haji says the work is aimed at identifying and mapping brine aquifers as potential...

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