IM Cannabis: Early Mover Status Drives Growth in Multiple Legal Cannabis Markets

IM Cannabis (CSE:IMCC) Co-Founder and Chief Executive Officer Oren Shuster believes that entrepreneurs have to trust their “gut instincts” and follow the data to make good business decisions.

Earlier in his career, Shuster had co-founded with Rafael Gabay the Ewave software group, which was thriving with over 1,000 employees. Nevertheless, when the subject of medical cannabis came up during a meeting, Shuster’s instincts nudged him toward exploring its potential. 

“We started the Ewave technology group, and I quickly focused on healthcare technology. I’ve been one of the pioneers in developing web-based electronic medical records, radiology management and telemedicine solutions. But one day, a man talked to me about medical cannabis,” says Shuster. 

“As an entrepreneur, it got my attention, so I spoke with patients and doctors and collected data and feedback on medical cannabis. A light bulb went off in my head; I knew I had to do it – there’s something significant here for patients.”

With decades of experience in technology and medical ventures, Shuster then pivoted to co-found IM Cannabis, or IMC, in Israel.

In 2010, IMC sold its first batch of premium flower. The company is an outlier, and in a very good way, with operations in Israel, Canada and Germany, the world’s three largest federally legal markets.

Where most people see problems, entrepreneurs such as Shuster tend to see opportunity.

“A lot of cannabis companies went to Malta, as it was easy, but we went to Germany. A tough or challenging environment didn’t matter, as we have a strategic approach to Europe – not opportunistic,” says Shuster.

Germany legalized the medical use of cannabis in 2017. Shuster’s early push into the regulated German medical cannabis market has positioned IMC for high-octane growth as Europe’s largest economy presses ahead with plans to legalize cannabis for recreational use. German lawmakers are expected to introduce a draft bill on recreational cannabis legalization by the end of this year, according to media reports. 

“We’ve laid our foundation in Germany, currently one of the largest medical cannabis markets in the world, which is expected to rapidly expand as the German government enacts broad regulatory reform of cannabis use,” says Shuster. 

Undoubtedly, Germany legalizing cannabis for recreational use will be a seismic move for Europe. Tiny Luxembourg and Malta have given the go-ahead for people to grow and consume cannabis, but Germany is the continent’s biggest market.

Currently, IMC operates in Germany through its fully licensed EU-GMP subsidiary Adjupharm GmbH, which has built a logistics centre that allows it to repackage products. With the completion of the logistics centre, IMC has doubled its footprint in Germany to 8,000 square feet, upgraded its production facilities and increased its storage capacity to seven tons of cannabis. 

“IMC has a very clear strategy. What we’ve done is built the supply chain which starts with premium products in Canada going to our state-of-the-art EU-GMP facility in Germany. We are building it as the hub for the EU market,” explains Shuster. 

“We are in the best position to take a leadership position in the massive European market of 750 million people.”

In Germany, the IMC Hindu Kush strain has been a strong seller, helping make Adjupharm GmbH a top 10 cannabis company in the country. Adjupharm has initiated product licence applications to prepare for the launch of new high-quality THC products in the fourth quarter of this year and first quarter of 2023.

“We entered the Canadian market because we needed premium products for Germany and Israel. Our cannabis capacity in Canada is about 15,000 pounds (6,804 kilograms) annually, and we are not yet at full capacity. It’s all premium, indoor-grown Canadian cannabis,” notes Shuster.

“We are growing locally and selling in the Canadian market while supplying our other global markets. We’re also buying premium products from Canadian growers.”

IM Cannabis offers cannabis flower and strain-specific cannabis extracts under the IMC brand, plus dried flower, pre-rolls and pressed hash offerings under the WAGNERS and Highland Grow brands. IMC serves both medical and recreational consumers in Canada. 

IMC has launched a slew of new products in Canada in response to high demand for its WAGNERS and Highland Grow brands, which hold top-three spots in the premium and ultra-premium segments in Ontario, according to sales data from the Ontario Cannabis Store (OCS). 

The WAGNERS pre-roll catalog at the OCS has expanded with the launch of Tiki Rain, Blue Lime Pie and  TRPY ZLRP pre-rolls. Two new 3.5g dried flower stock keeping units (SKUs) – Tiki Rain and Purple Clementine – were launched in addition to an expansion of the concentrate portfolio, with the introduction of soft black hash and 3.5g soap bar hash. New product rollouts include Frost Bite, Leviathan and Space Jagger, according to the company.

“There are distinct advantages to being in different markets in diverse phases of maturity. The Canadian market is the most mature, fully legalized market with a variety of products. We’ve gained insights from being in an ultra-competitive market and can carry those insights to less mature markets,” says Shuster. 

IMC produces a full suite of distinct strains – Roma, Tel Aviv, London, Dairy Queen, Mango Mint, Lemongrass, Pecan Pie, Mimosa – and at least three different oils. The premium brands are aimed at high-end consumers and benefit IMC with premium pricing and higher margins.

“Most of our products are premium and occupy the highest category, as consumers are willing to pay more for quality and artisanal brands,” says Shuster.

While focusing on revenue growth, Shuster has also rigorously pursued cost and margin efficiencies at IMC. For its second quarter ended June 30, 2022, IMC reported C$23.8 million in revenue, a 114% increase from the same period in 2021.

IMC sold 3,210kg of dried flower during the quarter, at an average selling price of $5.72 per gram, compared to 1,842kg for the comparable quarter in 2021, at an average selling price of $3.92 per gram. 

IMC chalked up the jump in revenue to more medical and recreational cannabis sold at higher average selling prices per gram in Israel and Canada. The company’s gross profit, before fair value adjustments, was $5.6 million during the quarter, compared to $0.6 million in the second quarter of 2021.

“At the end of Q2, we had $5.8 million in the bank. We’ve accelerated along the path to profitability with increased revenue, operational streamlining and a focus on cost reduction,” says Shuster. 

“We are seeing growth and a revenue run rate of almost $100 million annually.

IMC has launched its Canadian WAGNERS brand in Israel and plans to bring new medical cannabis products to the country later this year. 

IMC’s de facto company, Focus Medical Herbs, closed its Sde Avraham cultivation farm in Israel, resulting in cash cost savings of $2.5 million per year. It has also finalized the sale of SublimeCulture and restructured its operations in Canada, yielding $4 million in annual cash savings.

A cautious risk-taker, Shuster has connected the dots of opportunity by building a diversified company with a global cannabis supply chain.

“I take calculated risks. I never put all my eggs in one basket, which is why IMC is geographically diversified with operations in Israel, Canada and Germany,” says Shuster.

“On legalization, we are primed to target new adult-use recreational cannabis markets in Germany and capture substantial market share across Europe.”

This story was featured in Canadian Securities Exchange Magazine.

Learn more about IM Cannabis at https://imcannabis.com.

Trulieve Cannabis: Staying True to Proven Growth Plans and Core Values Turns Trulieve Into a Cannabis Powerhouse

Trulieve Cannabis (CSE:TRUL) is one of the cannabis industry’s major success stories, with many of its biggest achievements occurring in the four years since it became a publicly traded company. The Trulieve team focused on innovating and leading Florida’s medical cannabis market at first and then expanded into new jurisdictions, the prudence of its strategy confirmed by strong profitability.

Importantly, this seed-to-sale, fully integrated multi-state operator is also making a mark by supporting the communities it calls home and championing cannabis policy reform.

As Trulieve Chief Executive Officer Kim Rivers explains, community and advocacy have been at the heart of the brand since the beginning.

In one example, Gadsden County, a majority-minority community in northern Florida where Trulieve built its first cultivation facility, has seen the company grow to become its leading employer, according to Rivers.

“We’ve had a material impact on the jobless rate there and pride ourselves on the difference we’ve made in that community,” Rivers says. “That story has been repeated in other communities that we’ve gone into, particularly on the cultivation and manufacturing side of the business.”

Since its launch in 2015, Trulieve has expanded quickly, now operating more than 4 million square feet of cultivation and processing capacity, more than 175 dispensaries and with operations in 11 states. The company is the largest medical cannabis operator in Florida, having recently celebrated the sixth anniversary of its first retail sale in the state, and is a top player in its other core markets of Pennsylvania and Arizona.

As it grows, the company has been able to keep its values of community and advocacy at the forefront by entering into new markets with specific characteristics. “Where we chose to make investments and how we chose to go into a community is thoughtful and purposeful,” Rivers explains. “It allows us opportunities to have a deeper connection with the communities, customers and patients that we serve.”

In addition to Trulieve’s internal community-focused initiatives, such as its supplier diversity program, the company works with a range of organizations, including the Epilepsy Foundation and veteran’s and children’s initiatives. Rivers also highlights the support of individuals qualifying for expungement of low-level cannabis offenses.  Among other benefits, expungement provides these individuals the opportunity to remove the conviction from their record, to participate in the industry and to vote to influence future cannabis policy.

A combination of customer focus and financial discipline has allowed Trulieve to thrive where other cannabis companies have not, Rivers notes.

“We made the decision early on to focus on branded products through branded retail, and we’re not shy or hesitant about growing our scale in both supply chain as well as our retail network,” she says. “That gives us the ability to build more durable relationships with the customer and have more control over the customer journey.”

This approach is clearly working, with the company reporting strong Q2 2022 results despite a challenging macroeconomic backdrop, including pressure on the company’s wholesale segment.

Trulieve reported a 49% year-over-year revenue increase in the quarter to US$320.3 million, including a 3% rise in retail revenue to $298.6 million. “We’re proud to see strong customer loyalty continue in the first half of the year,” says Rivers.

The company also posted a 17% EBITDA increase to $110 million and finished the quarter with $181.4 million in cash. 

The success of Trulieve’s approach is also evidenced by its expansion of operations into other markets, including Arizona, California, Massachusetts and Pennsylvania. Almost one-third of the company’s retail operations were located outside of Florida as of the end of the second quarter.

While Rivers notes that each new market has unique challenges due to differing regulations, Trulieve has found many aspects of its Florida business model to be transferrable, including operating and manufacturing procedures and market analysis.

According to Rivers, the company has been thoughtful in terms of how it can share resources across its broader platform and gain efficiencies where possible, citing the company’s nutrient program as an example.

Currently, the company is unable to transport cannabis products across state lines, but it can transport nutrients, and its nutrient blends are used across all of its sites in the US. “We also do a good bit of our research, development and innovation work in Florida because we have the ability to do that at scale,” she says.

Rivers also points to the company’s team as a key strategic advantage. “We have individuals who have operated within our Florida market and been a meaningful part of our scaling of operations from when we were initially three stores to now more than 100 stores in the state,” says Rivers. “Being able to take these lessons and apply learnings across different markets has been invaluable.”

For Trulieve, the year 2022 is about organic growth, as more states enhance their medical cannabis programs and pivot toward recreational use. Rivers says the company has focused on its branded products and branded retail while optimizing the portfolio of Arizona-based Harvest Health & Recreation, which the company acquired in a $2.1 billion all-stock deal in October 2021. 

As part of that effort, Trulieve divested non-core assets and operations, one recent example being the decision to discontinue wholesale operations in Nevada. 

“Sometimes it’s just as important what you don’t do as what you do,” Rivers says. “The goal is to enter 2023 as a stronger company positioned for the opportunities we see ahead of us.”

Despite recent remarks by political leaders in support of cannabis policy to cover state banking or criminal justice, Rivers notes that progress around cannabis reform on a federal level has been slow.

However, she remains hopeful that the encouraging discussions will morph into actual policy. “It’s very apparent that this is a popular issue due to the amount of conversation that it is getting before the midterm elections,” says Rivers.

One particularly important jurisdiction for Trulieve going forward is the southeast US. Rivers says the company has been “very bullish” on this region, citing recreational cannabis initiatives in Maryland as just one reason.

Another key area for growth is recreational cannabis opportunities in the company’s home state of Florida, which already has an 800,000-patient-strong medical cannabis market.

Trulieve backs the Smart and Safe Florida Act, a proposed constitutional amendment that would allow the recreational use of cannabis by people aged 21 or older in Florida. The company is hoping it will appear on Florida’s November 2024 ballot. Trulieve has contributed $5 million to help get the proposed amendment on the ballot.

“That will be a massive catalyst for our industry and certainly for our business, with 21 million residents in Florida and up to 130 million tourists visiting the state a year,” Rivers concludes. “We think our strategy will continue to serve us well in emerging markets as they develop but certainly also as the landscape on the federal side transforms.”

This story was featured in Canadian Securities Exchange Magazine.

Learn more about Trulieve Cannabis at www.trulieve.com

Beau Whitney on Data-driven Economic Models for Cannabis | The CSE Podcast Ep29-S2

The CSE’s Barrington Miller is joined by Beau Whitney, Founder of Whitney Economics, to discuss data-driven trends in cannabis globally, including US legalization, emerging markets, and environmental, social, and governance (ESG). The conversation also addresses how Whitney Economics uses data to help cannabis operators navigate the industry.

Here’s an overview of what Barrington and Beau discuss in this edition of The Exchange for Entrepreneurs Podcast:

00:00 – Introduction
02:00 – Global trends in the cannabis industry
03:28 – The cannabis industry in Canada and the US
07:05 – How do American cannabis companies differ from coast to coast? How is the industry shaped by state legislation?
11:33 – How do ESG (environmental and social governance) mandates tie into the valuation of multi-state operators?
14:40 – Is the current economic data contributing to the liberalization of cannabis policy in the US?
16:52 – What are the data points that have shifted over the last 7 years?
19:32 – Have there been any surprising individuals, organizations, and corporations that have reached out to collaborate?
22:59 – Within the business of data, who are Whitney Economics’ competitors and/or collaborators?
24:29 – Key findings from the business report that Whitney Economics published in 2020

About Beau Whitney

Whitney Economics was founded in October 2014 by Beau Whitney, in Portland Oregon. Mr. Whitney is currently the Chief Economist for the National Industrial Hemp Council (NIHC) and the National Cannabis Industry Association (NCIA). A member of the American Economic Association, the Oregon chapter president of the National Association of Business Economics and a participant in meetings of the Oregon council of economic advisors, he is widely regarded as one of the country’s leading cannabis economists. A registered member of the European Industrial Hemp Association, Mr. Whitney is also a member of multiple local regulatory advisory committees throughout the U.S. including the Oregon Liquor Control Commission (OLCC) RAC for both hemp and cannabis.

Learn more about Whitney Economics at https://whitneyeconomics.com/

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Canadian Securities Exchange Magazine: The Cannabis Issue – Now Live!

Welcome to the latest issue of Canadian Securities Exchange Magazine, your source for in-depth stories of entrepreneurs from a wealth of different industries.

Since launching just under a decade ago, the agility of the commercial cannabis industry has been nothing short of remarkable. As the global leader in publicly-listed cannabis securities, the Canadian Securities Exchange is acutely aware of just how nimble the various stakeholders in the industry have had to be in the face of various multifaceted challenges. 

In this issue of Canadian Securities Exchange Magazine, we feature executives from six of the most influential CSE-listed cannabis companies, as well as industry experts, who provide their perspectives on how the cannabis industry can maneuver through the current market conditions and where they see the industry going.

The CSE-listed companies featured in this issue include:

Check out the Cannabis Issue of Canadian Securities Exchange Magazine here:

 

Paul Rice and Michael Perron on Indigenous Communities and Business | The CSE Podcast Ep28-S2

The CSE’s Barrington Miller is joined by President and CEO of Dable Advisory and Consulting Services Paul Rice, and CFO, Transaction Advisory, Corporate Development, and Corporate Strategy of Kinza Consulting Michael Perron in this special edition podcast to discuss the history of business for Indigenous communities, how steps for reconciliation can be taken, and hopes for the future.

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Blockchain Venture Capital Inc. (CSE:BVCI) Joins the CSE for a Virtual Market Open

The CSE warmly welcomed Blockchain Venture Capital Inc. (CSE:BVCI) for a virtual Market Open on August 18, 2022. 

Blockchain Venture Capital is a financial services company providing an innovative technology infrastructure to participants in the emerging blockchain and distributed ledger technology industry. They’ve developed BVC-Chain, a public, decentralized blockchain built on open blockchain technologies; BvcPay, a mobile app developed on BVC-Chain that functions as a digital asset wallet; and CADT, a digital asset that is 100 percent backed by the Canadian dollar.

CEO Richard Zhou and other members of the Blockchain Venture Capita team kicked off the day’s trading, and Director Justin Poy shared more about the company’s vision and mission. 

For more details about the CSE, including information on other Market Opens, please visit the CSE website or follow us on social media.

Relevant Gold Corp. (CSE:RGC) Joins the CSE for a Virtual Market Open

The CSE warmly welcomed Relevant Gold Corp. (CSE:RGC) for a virtual Market Open on August 11, 2022. 

Relevant Gold is a North American gold exploration company founded by exploration geologists with a focus on the acquisition, exploration, discovery and development of district-scale gold projects in the US state of Wyoming. 

CEO Robert Bergmann and other members of the Relevant Gold team kicked off the day’s trading with their “Wyoming-style” virtual Market Open. 

For more details about the CSE, including information on other Market Opens, please visit the CSE website or follow us on social media.

Spotlight on Darcy Krohman

Your education and experience are at a unique intersection of finance and mining. What made you decide to pursue this career trajectory?

During my undergrad, I completed several business courses which set me on a path to pursue the Chartered Accountant program, articling with KPMG. My intent was always to integrate finance and mining, as, from my perspective, the subject matter and information derived from these two disciplines provide the “nuts and bolts” of the operations of any mining or mineral exploration company.

Where did your career in mining start?

My first jobs in the mining space were with the UBC working for a PhD student and mapping a large region near the Mascot Gold Mine in the Similkameen Valley of southern BC, followed by summers working for BHP-Utah Mines in the Coastal Mountains of BC and on Vancouver Island at their Island Copper Mine.

What’s the most important thing you’ve learned during your time at the CSE?

The importance of patience and flexibility while working with issuers to achieve their objectives. Many junior companies do not have the in-house expertise or resources to address many of the complex issues to get their companies and mineral projects past the exchange listing “finish line.” EThe services the CSE provides for listing and ongoing continuous disclosure processes are integral to obtaining a positive outcome for the company, investors and the CSE.

What is the most important thing mining companies need to consider when going public?

The single most important aspect of any company, public or private, is having the right people doing the right functions. The mining industry is littered with examples of good projects significantly impaired by management with the wrong skill sets. Mining companies, like all companies who decide to go public, must also realize that the rules of the game change once you decide to go public. The assets of the company are no longer solely for the benefit of the directors, officers, management and insiders, and there is an ongoing obligation to account for those assets.

From your perspective, what are some challenges that public mining companies are currently facing?

In a complex industry like mining, there are numerous challenges faced by public companies. Some of these include identifying resources, dealing with longer lead times, developing new technology, finding qualified labour, working in remote and complicated jurisdictions, and complying with corporate social responsibility to stakeholders, Indigenous peoples, and the environment.

What are some misconceptions about mining you think people should know?

Probably the amount of environmental damage a mine will have if developed responsibly. To maintain our current standard of living, metals have to be produced, and environmental impact and surface disturbance will, unfortunately, occur. However, that impact can be mitigated by using evolving technologies, completing a cost-benefit analysis at each stage, and complying with professional and industry standards. Canada has high environmental standards, and I believe the export of these standards will help improve the acceptance of mining as a sustainable industry worldwide.

This story was featured in the Canadian Securities Exchange magazine.

Québec Nickel: High grade at the core of a business plan to supply vital metals to the clean energy sector

Experienced executive David Patterson wanted to be ahead of the nickel curve when he formed a new Québec-focused company in September 2020, foreseeing growing demand for metal in the clean energy sector.

Patterson moved quickly, approaching Glenn Mullan, Chief Executive Officer of Val-d’Or Mining, ultimately leading to then-private Québec Nickel buying what is now the company’s 15,000-plus hectare Ducros nickel, copper and PGE project from Val-d’Or Mining for 3,589,341 special warrants.

In July 2021, Québec Nickel (CSE:QNI) listed its shares on the Canadian Securities Exchange, and in November of the same year raised approximately $7.5 million. 

At Ducros, the company is embarking on an extensive exploration program pursuing high-grade mineralization. Currently underway are airborne and ground surveys as well as an aggressive 20,000 metre, multi-phase drill program encompassing the 2022 exploration season. 

Canadian Securities Exchange Magazine caught up with Patterson, Québec Nickel’s Chief Executive Officer, recently to learn more about the company’s plans.

Québec Nickel is exploring for high-grade nickel in the Abitibi, yet the area is better known for its many gold and VMS deposits, with only low-grade nickel occurrences. Talk to us more about your vision.

We believe that our Ducros property has all the necessary features to produce a high-grade nickel deposit. On our property we see geologic structures in an area with high volumes of mafic and ultramafic rocks. This unique combination of geological setting and geology give the Ducros the potential to host an economic nickel ore body. 

In a broader sense, what’s the difference between higher and lower grades in nickel?

All things being equal, a high-grade deposit will have a smaller ecological footprint and can better withstand volatile metal prices. A low-grade deposit may be economic at the current metal price, but could not sustain an operation if prices drop significantly.

How is your current drilling and exploration program going? What have you discovered so far, and what do you hope to achieve?

The COVID variant Omicron slowed our exploration activity at the start of 2022. However, in early February we were able to begin both our airborne VTEM survey as well as Phase I drilling on the Ducros. Our most recent press release has a detailed description of the rock types we have encountered. We will need to wait for assays for the current holes, and we anticipate having them in the next month or so.

Can you tell me more about the Ducros project and why you are excited by it?

We believe we have a large project area that has seen very limited exploration activity. Previous work by other independent operators on small portions of the property has provided our technical team with evidence that the area has a significant volume of mafic and ultramafic rocks. This is a similar geological setting for most of the magmatic sulphide nickel discoveries in the last 100 years.  

In addition, limited drill programs conducted in 1987 and 2008 show that there are nickel occurrences in these rock types. Our 2020-2021 exploration program of geological mapping, geochemical sampling and geophysical surveys has given us confidence that we are in the right geological setting. Our 43-101 Technical Report from 2021 discloses channel and grab samples from the Fortin showing outcrops that contain over 2% copper and 0.5% nickel with elevated platinum and palladium values.

Can you say more about your executive team, their background, and what you bring to the company as CEO? 

On our board of directors, we have people with tremendous nickel exploration experience as well as expertise in finance and accounting.

Our technical team has considerable experience in nickel exploration, with both brownfield and greenfield discoveries that have gone into production.  

As for me, I have helped finance large nickel exploration projects in Canada over the last 25 years. I believe the team that we have brought to Québec Nickel can find an economic ore body and has the experience to be able to develop the project through to production. 

How would you sum up the company’s opportunity to a potential investor?

I believe that we are in the early stages of a metal super cycle, that we have chosen the right metal given this super cycle and we have the right people to guide the successful development of the company.

This story was featured in the Canadian Securities Exchange magazine.

Learn more about Québec Nickel at https://quebecnickel.com/.

International Battery Metals: Technology to support clean, consistent lithium supply takes a big leap forward

Technological breakthroughs are where the big money is often made in the stock market, and International Battery Metals (CSE:IBAT) is a perfect example. As it entered the fourth quarter of 2020, the company’s shares could be picked up for around $0.10. More recently, those same shares have changed hands as high as $7.40.

It is a success story based on solutions in an industry crying out for them, one where inefficiency is clashing with a generational shift in consumption to create high prices and serious concerns about future supply shortages. Given the move toward greener economies, not to mention regional resource security, it might not come as a surprise that lithium is the prized product we are talking about.

International Battery Metals Chief Executive Officer Dr. John Burba can truly be described as a technology pioneer in the lithium extraction industry. Now at the helm of his own company, the pace of his achievements is only picking up momentum.

Dr. Burba spoke with Canadian Securities Exchange Magazine in late March about the company’s technology and how he sees it contributing to a better macro climate for the lithium industry, and the global environment, in the years ahead.

We will explore your technology and the company’s success in a moment, but can you begin with your view on the state of lithium supply and demand and how it shapes your strategy?

I’ll start off by saying that I think the lithium industry today is where the oil and gas industry was in about 1910. There are strong analogies.

If you go back to what was happening in the early 20th century, people did not really know much about how to get oil and gas out of the ground successfully. The process was very dirty. Pollution was ignored. It was just a nasty process. Of course, that has improved in the decades since.

The lithium industry is not that different. There are two major supplies of lithium today. There is hard rock mining, which is spodumene. Basically, companies are mining this in a variety of places and sending it to China for processing.

Then there is lithium extraction from brines, and you either have solar evaporation, which is very damaging, or you have FMC’s process, which I invented when I worked for FMC. That approach is better but still has drawbacks.

The industry has old processes that are not as efficient as they need to be, and significant issues on top of that with environmental damage. That is the backdrop to where we are. We have a tremendous shortage looming over us, and that is why prices are so high for lithium right now.

If the world continues producing lithium the way it does, the shortages are going to get worse. It will negatively impact the number of vehicles that can be produced and the number of batteries that can be produced. People will start using less efficient batteries and that is not going to be good for the transition we hope to see.

Can you quantify industry efficiency for us?

To give you a few examples, recovery rates for these processes are not very high. If you look at solar evaporation in Chile, they only recover about 20% to 30% of the lithium and the rest is wasted on the desert floor. FMC’s process recovers around 40% to 45% of the lithium.

Lithium is the only industry I’m aware of that tolerates such abysmal recovery rates. Most industries would be going crazy if they were wasting over 50% of their desired product.

So, these are the burdens that this industry is bearing right now. And the answer is not going to come from big established companies. They are simply not capable of, or not interested in, radically changing the industry so that it becomes efficient and responsive to the needs of the world.

In a recent press release, Universidad de Santiago de Chile stated that your technology is the “only one capable of separating lithium without leaving a significant impact on the environment.” Walk us through what differentiates your approach.

When you look at lithium extraction, one hears a lot about direct lithium extraction (DLE), and many start-up companies preach that as if it’s some new thing. The DLE concept actually began at Dow Chemical in the late 1970s and the 1980s, so that idea has been around for a long time.

Basically, it is about having a technology that can selectively pull lithium from the brine and let everything else go by. We are using a proven form of direct lithium extraction that is based on an absorbent that a friend of mine and I invented back in the 1990s. We have improved it since then, but it was groundbreaking at the time.

This material will selectively recover lithium from a saturated brine. And the selectivity is astronomically high.

The reason that matters is because there is not that much lithium in even the best resources. In that Atacama brine that everybody loves, you have about 2,000 parts per million lithium. If you look at Alberta, you are talking about 50 to 80 parts per million.

The lithium concentrations are low and you have to have something that will pick up the lithium and leave behind everything else.

We have improved our process so that – and we still have to prove this – but we are expecting to see recovery rates substantially higher than 60%. And we are hoping for recovery rates in the range of 90% to 95%.

The second thing is we intend to inject the brine back into the formation rather than putting it onto the ground and letting it evaporate. The problem with letting it evaporate is that you create salt flats all over the place, and salt is very detrimental to ecology.

The third thing, and perhaps the most important for jurisdictions such as Chile, is that our technology enables us to recover vast amounts of water. We will be recycling about 98% of our process water. In the Atacama, for example, they don’t recycle any water with solar evaporation.

What about the equipment itself? Are there positive environmental aspects to your physical footprint at a project?

We have been able to shrink the size of the processing equipment and that has allowed us to modularize and develop a mobile plant concept. We can put modular equipment in place, assemble it, turn it on and begin processing lithium in a short period of time.

When we are done, we pick up the equipment and eventually you won’t be able to tell that we were ever there. We can build one of these plants in months, rather than years.  

I will add that our omnibus patent for this mobile and modular process has been issued.

What is the status in terms of commercialization? And what is the commercialization plan?

I’m glad you brought that up, because if we can’t make money, we can’t do a good job on the environment. We have two contracts with a company called Scorcia Minerals. They have substantial resources and we have a contract with them in Chile and Argentina providing exclusive rights to use our equipment there.

Our arrangement sees us receive a royalty on final sale of the product. They buy the equipment from us on a cost-plus basis, we operate on a cost-plus basis, and we own 10% of each project.

We are focused on North America right now and I would say that in the next two years we intend to have one of our units extracting lithium in the United States. We also intend to build a lithium carbonate hydroxide facility in the United States so that we have a North American base for significant lithium production.

Once we are established in North America, we are also open to Africa, Europe and other places where they have good resources.

Give us a look at your future and where the industry is going. How big do you think you can get and how does your company maintain a leadership position?

We have passed a tipping point from the standpoint of transportation and electrification. In the first question, I made the analogy to the oil industry a hundred years ago. I think lithium is going to see a lot of the same drive that oil did.

Some people will ask why not sodium, or why not potassium? It comes down to basic chemistry. Lithium is the best. Its transport numbers are the fastest, which means it will zip across a cell very rapidly, and go into crystals very rapidly, and it has a very high half-cell potential. So, when you look at this, all of it bodes well for powerful, high-capacity batteries. It is not likely we are going to find a battery chemistry that works better than lithium.

And then how do we remain relevant? We have to do every one of our projects in a credible and honest way and we have to be successful in everything that we say. We are not into predicting. We want to do it and then explain what we’ve done. Our accomplishments need to be real and measurable. That is the kind of thing that serious investors like.

Anything we have missed?

Right now, the biggest driver of success in the industry is time to market. We have exceedingly high prices. If I can start today and have a plant operating in 18 months, as opposed to six years, I have already won the game. That is where the mobile and modular extraction comes into play. We can get in rapidly, and we can expand a facility rapidly. It is like LEGO – you just plug it in.

I’d also point out that high recovery rates and things of that nature flow through to low operating costs. And something we have not talked about is that capital costs for our modular system are substantially lower than for traditional plants. We don’t have to put in foundations or construct big buildings. We don’t have a cast of thousands to support 24 hours a day. This makes it much easier to finance a plant and that makes it easier for us to expand. These are the reasons I am very optimistic about our future.

This story was featured in the Canadian Securities Exchange magazine.

Learn more about International Battery Metals at https://www.ibatterymetals.com/.