Sign up to SCR Digest, our FREE weekly newsletter, and receive our Notes emailed directly to you.
Email Address *
First Name
Mailing Lists *

WML.V: Wealth Minerals Successfully Completes Capital Raise

By Steven Ralston, CFA



Executive Summary

• Wealth Minerals (TSX:WML.V) is junior mining company pursuing a strategy of accumulating early stage exploration lithium projects within the Lithium Triangle, initially properties located in Chile.
     ◦ Management’s strategy is to increase shareholder value by gaining control of prospective lithium exploration concessions that encompass salars.
     ◦ The Lithium Triangle, particularly in Chile and Argentina, appears to be the global sweet spot for low-cost incremental supply of lithium.
• Wealth Minerals is transitioning a focus on acquisitions to one on development, initially at the Laguna Verde, Atacama and Trinity projects, though management continues to monitor and evaluate other lithium properties within the Lithium Triangle.
     ◦ At the Laguna Verde Project, a drilling program remains underway at two targets, one east and the other west of above ground brine lake
     ◦ At the Trinity Project, a 3-hole drilling campaign was scheduled to begin in the mid- 2018 timeframe.
     ◦ The Atacama Project received positive geophysical results (MT and TEM surveys) in December 2017. A drilling campaign to test brine in the southwest corner of the license area is anticipated to begin after drilling at the Trinity Project is completed.
     ◦ During the first fiscal quarter of 2018, $308,318 was spent on the exploration and evaluation of the company’s properties.

View Exhibit I

     ◦ Thus far, since July 26, 2016, Wealth Minerals has entered into formal option agreements for multiple prospective lithium properties. After consolidating several properties into one project, the company now controls four projects (Atacama, Trinity, Laguna Verde and Five Salars) which encompass 75,500 hectares.
• Lithium pricing update
     ◦ Spot prices rallied to $25,000 during the fourth quarter of 2017.
     ◦ Thus far during 2018, spot pricing has been under some pressure due to:
          ‣ in mid-January, a contract between SQM and CORFO was announced sparking concerns over increased supply coming to market
          ‣ in late-February, Morgan Stanley forecasted a scenario of lower lithium prices as a consequence of an anticipated surplus by 2022
          ‣ we expect that the expansion of supply will come on line slower than anticipated and that the increase in global demand is being under-estimated
• The recent election in Chile resulted in a pro-business, pro-investment President who is expected to be very friendly to the advancement of lithium mining projects

Capital Funding Thus Far During Fiscal 2018

During the first fiscal quarter of 2018 (ending February 28, 2018), equity financing activities provided Wealth Minerals a total of $6.9 million to help finance the company’s activities and fund the necessary option payments to maintain its formal option agreements in good standing. During the quarter, the company closed the first tranche of the non-brokered private placement for 4,577,879 shares at a price of $1.60 each for net proceeds of $6,906,734. In addition, 80,000 shares were issued through the exercise of options providing proceeds of $89,600.

Subsequently, on May 18, 2018, Wealth Minerals issued 5,678,236 Units (1 share and a ½ share purchase warrant) under a private placement at a price of $1.10 per Unit. Gross proceeds were $6,246,060. The warrants have an exercise price of 1.50 per share and expire in two years. An additional 297,871 Units were issued as finder’s fees.

Then on June 13, 2018, Wealth Minerals issued an additional 108,000 Units and 500,000 common shares were issued under the final tranche at a price of $1.10. Gross proceeds were $668,800. Finder’s fees for the final tranche included 49,955 Units.

The net proceeds from the company’s placements are intended to fund option payments, exploration work, general and administrative expenses and working capital.

WMLLF Upgraded to OTCQX

On May 14, 2018, Wealth Minerals announced that its WMLLF stock began trading on the OTCQX® Best Market, an upgrade from the OTCQB® Venture Market. The upgrade to the OTCQX market opens the company’s stock to a wider investor audience, which is a key part of management’s capital market strategy. Many institutions, and some individual investors, limit their investments to NYSE, NASDAQ and OTCQX listed equities and avoid venture exchange securities. WMLLF now has the opportunity to be more widely-held.

Strategic Alliance with ENAMI

On March 19, 2018, Wealth Minerals announced that the company had entered into an agreement with ENAMI (Empresa Nacional de Minería aka National Mining Company of Chile) to form a strategic alliance that should result in a JV partnership for the development and commercialization of Wealth Minerals’ Projects in the Salar de Atacama and Laguna Verde. Management anticipates that it will be 24-month process to formally form and efficiently structure the JV, which will be 90% owned by Wealth Minerals and 10% owned by ENAMI with free-carried interest.

View Exhibit II

First Fiscal Quarter Results

On April 30, 2018, Wealth Minerals reported financial results for the first fiscal quarter ending February 28, 2018. For the quarter, the company reported a loss of $4,299,085 ($0.04 per diluted share) versus a loss of $3,542,064 ($0.05 per diluted share) in the comparable-quarter last year. Total expenses increased 21.4%, primarily due to a 201% increase in Share-based compensation and a 26.9% increase in consulting services, offset slightly by exploration and evaluation expenditures declining 67.5% and professional fees being reduced 31.4%.

The weighted average number of common shares outstanding increased 37.2% YOY to 102, 324,545. During the quarter, 9,942,504 shares were issued pursuant to lithium project acquisition agreements, through private placements, for the exercise of options and as settlements for accounts payable and loans payable. At the end of the quarter, 107,327,066 shares were outstanding.

Working capital improved sequentially to $4.9 million from $1.9 million and the end of fiscal 2017 (November 30).

During the quarter, the company made two option payments:
• For Salar de Atacama Project - 4,000,000 shares
• For the Laguna Verde Project - 1,000,000 shares

Lithium Pricing Update

After the steep run-up during the first half of 2016, spot lithium product pricing (battery-grade 99.5% lithium carbonate Li2CO3) corrected slightly and dipped below $18,000 during the first quarter of 2017 despite continued demand for lithium concentrate and lithium carbonate. However, spot pricing began to firm and strengthened during the third quarter of 2017 after Xin Guobin, China’s Vice Minister of Industry and Information Technology, announced at an auto forum in Tianjin on September 9th that Chinese regulators are working on a timetable to phase out the production and sales of fossil fuel vehicles. Spot prices rallied to over $25,000 during the third quarter of 2017. Thus far during early 2018, spot pricing has been under some pressure, especially after a contract was announced between SQM (Sociedad Quimica y Minera) and CORFO (Corporación de Fomento de la Producción - Chile’s governmental agency for the promotion of production) in mid-January, which allows SQM (NYSE: SQM) to produce up to 216,000 tonnes of lithium carbonate annually through 2025, which raised concerns about a potential oversupply situation.

View Exhibit III

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. Management is positioning the company to benefit from the upcoming expected growth of demand in the lithium space.

SUBSCRIBE TO ZACKS SMALL CAP RESEARCH to receive our articles and reports emailed directly to you each morning. Please visit our website for additional information on Zacks SCR. 

DISCLOSURE: Zacks SCR has received compensation from the issuer directly or from an investor relations consulting firm, engaged by the issuer, for providing research coverage for a period of no less than one year. Research articles, as seen here, are part of the service Zacks provides and Zacks receives quarterly payments totaling a maximum fee of $30,000 annually for these services. Full Disclaimer HERE.
User ID:
Remember my ID: