The world is slowly beginning to wake up to the importance of minerals, as supply chains continue to feel strained worldwide.
Recently, the United States announced a new investment in the domestic production of minerals and materials crucial to creating a wide range of technological devices, including computers, smartphones, batteries, household appliances and vehicles, as inflation continues to spiral driven by commodity prices.
Rare earth minerals will be essential for this green transition which is quickly approaching. However, China is the world’s leader in manufacturing lithium batteries and continues to outpace the globe in demand for EVs.
Lithium prices are surging as electric-vehicle sales are accelerating and newer models continue to hit the marketplace.
As this demand continues to skyrocket, prices should continue to appreciate as the lithium market is expected to see its most significant shortages on record in 2022, according to Benchmark Mineral Intelligence.
China has already started to increase the sticker prices of its EV models to reflect these shortages properly.
ION Energy: (TSX-V: ION)
ION Energy is an exciting lithium story I have been following for a while now.
It is Mongolia’s first lithium brine explorer and developer guided by an excellent management team working towards untapping the country’s lithium potential.
Naturally, ION already has a very distinctive advantage vs. peers due to its geographical location as it resides on China’s doorstep. Mongolia offers a low-cost year-round operating environment to pursue an aggressive growth strategy.
The company’s flagship asset is the Baavhai Uul project, representing one of the largest exploration licences in Mongolia at +81,000 hectares.
The company has already made significant exploration progress.
In December 2021, the company reported that it encountered lithium brines from its maiden drill program and announced a new discovery.
To date, 50% of drill holes have been returned from the program, with the highest result so far being 1,502ppm lithium.
Unexpectedly, the company announced a new copper and Nickel discovery located at the center of the Baavhai Uul licence, which ultimately led to the company recently announcing a strategic alliance with a Mongolian copper explorer.
To provide the Gold Telegraph readers with an update, I am pleased to be joined once again with ION’s CEO, Ali Haji, to further elaborate on these developments and provide readers with a general update on the company:
Alex Deluce:
Thanks, Ali, for taking the time once again to update the Gold Telegraph readers on ION Energy.
It has been a while since we have chatted, and the company has been very busy.
Can you provide a bit of an overview of the company’s two exciting assets in Mongolia for new readers?
Ali Haji:
Thank you for this opportunity, Alex, and for sharing ION Energy’s story with your readers.
Since publicly listing on TSXV in 2020, our team is very pleased with everything that we’ve been able to accomplish in 2021, especially related to our two exciting assets.
Our 100%-owned flagship Baavhai Uul project represents the largest and first ever lithium brine exploration licence ever awarded in Mongolia. Its +81,000 hectares in south-eastern Mongolia is situated just 24 km from the Chinese border, placing us very strategically next to our neighbour: the world’s superpower in battery manufacturing, with the largest consumer demand for electric vehicles.
We recently completed our maiden exploration program on this site, which incidentally was the first ever drilling program successfully completed on a lithium salar project in Mongolia. We’ve now shared preliminary drilling results with the marketplace; a strong illustration to our investors that we have what we say we have! These findings are very exciting to our ION Energy team, with results up to 1,502 ppm Lithium in clays and evaporites with the hole averaging 700 ppm Lithium from 0.5m to 3.5m depth. We were also able to share news of a newly-found lithium discovery: White Wolf Prospect.
We also just shared news of a copper and nickel discovery at this site, and it has led to further excitement for the ION Energy team around our battery metals potential in the Asian regional supply chain!
As part of our aggressive growth strategy, we were also successful this past year in closing a highly-sought after public offering co-led by PI Financial and Stifel GMP. Why is this important when speaking to ION’s two lithium brine assets? Closing this deal ensured that our exploration efforts for the two projects would be fully funded through to the end of 2022 and beyond.
And this deal happened right on the heels of our exciting second licence acquisition: Urgakh Naran, which means The Rising Sun. This asset puts ION on the path to being Mongolia’s primary lithium brine explorer and developer. This highly prospective Lithium Brine licence covers over 20,000 hectares in the Dorngovi Province. And the maiden exploration program is scheduled to commence in the coming weeks.
Like the rest of the world, especially our mining peers, the pandemic has impacted timing around accessing our sites and encountering significant delays with the labs. As eager as we are to keep moving and have tangible results from each site, we have ultimately put the health and safety of our team as the priority in this current environment.
This recent JV announcement with Aranjin Resources, included more of our lithium brine assay results, as well as news of a copper and nickel discovery. Now that things are opening back up, and with this new exploration potential, we will continue to share positive results from our exploration programs, every few weeks.
Alex Deluce:
You have mentioned a recent JV announcement and copper discovery: tell us more about the importance of this for ION’s longterm growth strategy?
We just announced a strategic alliance with Aranjin Resources, an emerging copper exploration company in Mongolia. As I mentioned, ION’s recent drilling at Baavhai Uul (BU) resulted in a new copper discovery. We remain committed to our lithium brine exploration vision, however this discovery has the potential to monetize our company’s potential. Aranjin’s exploration team will be moving over to ION’s BU site to understand if the newly-discovered copper anomalies are resource worthy. And ION now has access to a significant amount of new acreage across Mongolia for the purpose of lithium exploration, through Aranjin’s exploration licences.
Alex Deluce:
With this new exploration potential and the exciting lithium brines assay results encountered at Baavhai Uul, what does the company have planned in the coming months in terms of continuing to advance this exciting project?
Ali Haji:
As mentioned earlier, the ION Energy team is feeling the impacts of the global pandemic. We have slowly been sharing assay results from Baavhai Uul’s maiden drilling program. In fact, we have only been able to release %50 of our assay results thusfar. But we know that the considerable unanticipated delays that we’ve been experiencing, are similar to those that our peers are currently facing across the sector.
We continue to look for ways to strengthen our team, to enable our longterm vision and are currently finalizing the addition of a regional director with relationships and access to Asian Lithium giants.
I’m already planning to be onsite in Mongolia in April, accompanied by our technical advisors, to kick-off our hydrogeological sampling work at Baavhai Uul. After not being able to be in-country for over two years, it will be important for me to spend time with our team face-to-face, as well as be there for the vital next steps in our exploration program.
The ION team has always been clear that we are also actively engaged in discussions with potential strategics to leverage their existing expertise in this space to move ION’s potential further. Advancing those talks continue to be a priority for our company’s growth strategy in 2022. The current electric vehicle demand vs battery metals supply is showing us that regional value chain partnerships could be the solution to this real issue.
Alex Deluce:
Can you touch on Mongolia’s untapped lithium potential and why ION has a competitive advance vs. its peers from a geographical standpoint (close proximity to China)?
Ali Haji:
Mongolia is a very investment-friendly jurisdiction, especially when it comes to the mining sector. Minerals and resources are also a significant contributor to the country’s GDP. The Mongolian government has even established a Sovereign Wealth Fund (SWF) as part of an overall strategy to manage growing revenues from mining exports.
Our team is confident that our vision starting from 2017, in recognizing that another Green Revolution was imminent, has already positioned us with competitive advantage. As I touched on earlier, we are well-poised to become Mongolia’s primary lithium brine explorer, and our flagship site is situated a mere 24km from the Chinese border.
The last 12 months has been a flurry of activity, as governments incentivize electrification plans through their post-Covid economic recovery packages and the world continues on this path. We’re seeing battery supply chains starting to be built out in the US and Europe, yet the numbers consistently show that China is still leading on all battery-related fronts. They consume 53% of the world’s lithium and produce over 70% of the world’s batteries. China also refines approximately 80% of all lithium that goes into batteries worldwide.
Regional supply hubs are inevitably going to continue to grow, both from a practical perspective and a sustainability measure. Our proximity to the Chinese market is very strategic, and we are excited at the prospect of fueling the Asian continental supply chain.
Alex Deluce:
Finally, Ali, can you touch on your present outlook for the lithium industry? It certainly is a very exciting time to be in the space as we are clearly in the middle of a green revolution.
Ali Haji:
This is a great way to end our conversation, as the Green Revolution and electrification story is just beginning! Before I address the global phenomenon, I would like to take this opportunity to share that ION Energy’s vision isn’t just focused on continental battery metal supply chains. We are fully committed to enabling Mongolia in its own green shift from fossil fuels as they start to move towards a cleaner, greener technology. Our local-first vision is very important to the team, and stems out of years of relationships and trust with the Mongolian government and investors.
2021 ended with an increased amount of M&A activity within this sector: the recent Zijin C$960M acquisition of Neo Lithium, the Lithium Americas $400M one of Millennial Lithium, and Koch’s US$100M private placement with Canada-based Standard Lithium. This consolidation across the sector is indicative of a push to ensure that supply requirements are met for the future. And with recent news of Rio Tinto’s challenges in eastern Europe in their pursuit for more battery metals, they will clearly be looking elsewhere to reallocate their capital. What better place than Mongolia? Rio Tinto has a renewed working relationship with the Mongolian government, and continued interest in operating in this jurisdiction…and ION Energy is a high-potential battery metals explorer in Mongolia!
Globally, we see governments & privates committing billions of dollars towards the revolution, most recently with the US $1.3 trillion package. The Detroit Auto machine has recently announced an additional $55bn toward electrification. But these are just announcements. The real work is still starting, and of course, that all begins with the raw material supply for batteries. Bloomberg keeps highlighting that the global demand for lithium will increase eight-fold by 2030, as EV adoption increases and the battery sector expands. Daily, we’re seeing news of rising copper and nickel prices, due to rising demand and dwindling supply. This further reinforces ION’s positioning in the Asian battery metal supply chain hub.
This truly could not be a more exciting time for ION Energy, to have already started exploration efforts in an untapped jurisdiction, at the very beginning of this Green Revolution!
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