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Wealth Minerals (WML.V) Closes Private Placement & China Makes Significant Announcement

10/09/2017
By Steven Ralston, CFA

TSX:WML.V

Summary


• Wealth Minerals (TSX:WML.V) closes private placement for gross proceeds of $3.875 million, helping fund management’s foray into the Lithium Triangle.
• China’s Vice Minister of Industry and Information Technology, announced that Chinese regulators are working on a timetable to phase out the production and sales of fossil fuel vehicles, sparking a rally in lithium-related stocks.
• The Lithium Triangle, particularly in Chile and Argentina, appears to be the sweet spot for low-cost incremental supply.
• Wealth Minerals is well-positioned to benefit from its highly prospective lithium projects (totaling over 55,000 hectares; 71,800 hectares if counting concessions under LOIs) all located in Chile.

Most Recent Financing

On September 28, 2017, Wealth Minerals closed a non-brokered private placement and issued 2,583,700 common shares priced at $1.50 per share providing gross proceeds of $3,875,550. Haywood Securities Inc. and Canaccord Genuity Corp. received cash finders' fees of $113,841.00 and $31,447.50, respectively. Net proceeds are intended to finance option payments on mineral property options, costs for assessing potential acquisitions of additional lithium properties and expenditures for exploration work on existing lithium projects, in addition to funding G&A expenses.

To date, Wealth Minerals has been very successful funding the company’s operations and initiatives through its equity financing activities. Net proceeds have been utilized to finance option payments on mineral property options, costs for assessing potential acquisitions of additional lithium properties and expenditures for exploration work on existing lithium projects, in addition to funding G&A expenses.

Government Regulation to Bolster Lithium Demand 

On September 9, 2017, at an auto industry event in Tianjin, Xin Guobin, China’s Vice Minister of Industry and Information Technology, announced that Chinese regulators are working on a timetable to phase out the production and sales of fossil fuel vehicles. The Chinese Ministry stated that “relevant research” has begun in order to compose a timeline with an initial goal of having at least a fifth of Chinese automobile sales comprised of electric and plug-in hybrid cars by 2025. 

As measured by the Global X Lithium & Battery Tech ETF (NYSE LIT), the announcement sparked a 14%+ rally in lithium-related stocks over the subsequent seven market days as lithium carbonate prices spiked up in China.

The announcement follows similar plans announced by the French and UK governments in July 2017. In early July, Nicolas Hulot, the French Ecology Minister, announced plans for “an end to the sale of petrol and diesel cars by 2040.” A couple of weeks later, Great Britain made a similar announcement under a draft plan to improve air quality through the reduction of automotive emissions.

Wealth Minerals


Management has recognized the increasing interest in lithium brines located with the Lithium Triangle, especially Chile. Rising prices of the lithium compounds, especially lithium carbonate, appeared to be forerunner of an expected potential future supply shortage of high-grade lithium to feed the demand being generated by Electric Vehicle (EV) manufacturers and builders of battery gigafactories. The company’s business plan is comprised of acquiring greenfield lithium concessions, advancing the properties through exploratory studies (brine sampling, geophysics and drilling) to an extent that they appear technically feasibility and economically viable and then developing these properties into revenue generating operations. 

Management is positioning the company to benefit from the upcoming expected growth of demand in the lithium space and continues to seek the acquisition of additional interests in prospective concessions. 

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