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Thursday, October 29, 2020

Micro-Cap Focus on LITHIUM X ENERGY C COM NPV (OTCMKTS:LIXXF)

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LITHIUM X ENERGY C COM NPV (OTCMKTS:LIXXF) is a micro-cap play in the lithium space. The stock has been on a bit of a roller coaster ride of late, swinging back and forth between $1.25 and $1.75 for the better part of the past 6 months. In that time, the lithium space has generally received a ton of press and this stock has gone through a rather promotional course along the way. So, the big question here that looms is as follows: What will it take to break it out above the range highs?

To answer that question, we will need to take a look at the company’s own statements about itself recently released to market. But we will also have to come into that discussion with a bit of perspective. In terms of recent behavior, we’ve witnessed 27% piled on for shareholders during the trailing month. The situation may be worth watching. LIXXF is a stock whose past is littered with sudden rips. Moreover, the stock has seen interest climb, with an increase in recent trading volume of just shy of 130% above the average volume levels in play in this stock over the longer term.

LITHIUM X ENERGY C COM NPV (OTCMKTS:LIXXF) trumpets itself as a company that operates as a lithium exploration and development company in Argentina and the United States.

LIXXF owns a 50% interest in the Sal de los Angeles project comprising 8,156 hectares located in Salta Province, Argentina. It also owns a 100% interest in the Clayton Valley South project consisting of 477 federal placer mining claims covering approximately 9,540 acres located to the southwest of Tonopah, Nevada; and holds an option to acquire a 100% interest in the NSP Lithium claims covering approximately 5,480 acres located in northern Clayton Valley, Nevada.

Lithium X holds option agreements on 15,020 acres (6,078 hectares) in Nevada’s Clayton Valley and land positions both north and south of Albemarle’s Silver Peak lithium brine mine, North America’s only lithium producer, making the Company the largest claim holder in the Clayton Valley. Clayton Valley North covers approximately 5,480 acres (2,217 hectares) in northern Clayton Valley, Nevada. The claims are contiguous to private lands and placer claims belonging to the lithium production facility of Albemarle Corporation. Historic drill information and a geophysical survey show the property covers basin-fill sediments which are similar to the sediments currently producing lithium brines. Two Albemarle production sized wells lie along the boundary. The Company has also acquired the Clayton Valley South Expansion (“Clayton Valley South”), totaling approximately 9,540 acres (3,861 hectares). The property is strategically located contiguous to the Silver Peak lithium mine operated by Albemarle Corp. on the northern boundary, the Clayton Valley South project operated by Pure Energy Minerals Ltd to the east and the Neptune property owned by Nevada Sunrise Gold Corporation to the west.

The company was formerly known as Royce Resources Corp. and changed its name to Lithium X Energy Corp. in November 2015.

Lithium X Energy Corp. was founded in 1997 and is headquartered in Vancouver, Canada.

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At this point, we are most interested in the company’s Sal de los Angeles project.

The Sal de los Angeles Project was acquired as an interest on April 15, 2016 at 50% in PLASA from Aberdeen. In consideration for the 50% interest, the Company issued 8,000,000 common shares to Aberdeen. A finder’s fee of 160,000 common shares of the Company was paid to a third party.

The Project apparently includes 32 mining claims covering approximately 8,156 hectares in the province of Salta, Argentina. Pursuant to the agreement the Company has the option to acquire an additional 30% interest after incurring $3,000,000 in exploration and development expenditures over a two-year period and completing a Feasibility Study on the Project.

According to our read of the situation, in order to exercise the Option, the Company must issue common shares to Aberdeen valued at $5,000,000 based on a 10% discount to the 20-day volume-weighted average price (VWAP) of its common shares at the date of exercise.

So, basically, the shares issued in relation to this transaction were valued at $1.89 per share, being the closing share price of the Company on April 20, 2016. In the event the Company does not exercise the Option, Aberdeen has the right for a 30-day period to acquire a 1% interest in PLASA back from the Company for $166,000 in cash. In the event that the Company does not meet the expenditure commitment or complete the Feasibility Study within two years, the Company must transfer 20% of the PLASA shares back to Aberdeen, resulting in the Company holding 30% of the outstanding PLASA shares

At this time, carrying a capital value in the market of $101.5M, LIXXF has a significant war chest ($12.39M) of cash on the books, along with total assets above $24M, which compares with very little total accumulated debt.

Obviously, as we stated last time, the real story here will be about whether or not these assets can be developed in a manner that truly takes advantage of the market opportunity presently in place as demand for lithium-derived batteries flourishes, and if that demand opportunity expands are sticks around. Longer-term investors in this space must weigh these questions with care. We will update the story again soon as developments transpire. For continuing coverage on shares of $LIXXF stock, as well as our other hot stock picks, sign up for our free newsletter today and get our next hot stock pick!

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