QX Resources (ASX:QXR) announces letter of intent with Liberty Lithium

QX Resources Limited (ASX:QXR) Managing Director Steve Promnitz discusses the company's letter of intent with Liberty Lithium, the advantages of the project, the difference between brine and hard rock lithium, and the timeline ahead.

Paul Sanger: We are talking today with QX Resources (ASX:QXR). QXR has a market cap of $32m. We're talking with their CEO, Steve Promnitz. Steve, welcome back.

You've just released some news to the market that you've just signed a letter of intent with Liberty Lithium in the western USA. Why have you done this, what was the rationale behind it, and what are the current commitments following this letter of intent?

Steve Promnitz: So, as we've advised investors, QXR is focused on battery materials and we've been looking actually now at lithium brine projects for some time in different jurisdictions. This is in the right place, western US. Particularly with the support from both state and federal government, it's a great place to be. They're very keen to fill in that battery material supply chain. This project has a look a lot like things that I worked on in South America, deep basin, and if it pans out right, this would be a great project to have in our portfolio, or anybody else's for that matter.

The letter of intent buys us enough time to ensure that we've got the right structure. When you go into the US, you've got to make certain you've got the right legal and tax structure. It also ensures that we've got the time to do the due diligence properly, both technical and particularly on access to water and land. And so it will be a nice fit with the other projects we've got in our portfolio.

Paul Sanger: Tell us, what's so attractive about this current project?

Steve Promnitz: So, what appeals to me and also our management team is it is a lookalike for what I've worked on in the past in South America. You've got a large basin that's enclosed. It's got lithium at surface. The basin is deep. It's actually got some fluids coming up that bubble to surface with lithium in it as well. So, it's the right setting.

Of course, with exploration, you don't know until you try. It's got a couple of wells that are permitted, so we can get on. And, for a relatively small amount of money, we could do quite a bit of work over the next nine months and actually find out if this is the right sort of project, and we'll be structuring that properly during this due diligence period to make certain we get the right approach.

Paul Sanger: Steve, an obvious question. Why a brine project? It's well known that Australian investors have a preference for hard rock projects.

Steve Promnitz: Well, first of all, a number of your viewers will be aware that I do have a very successful history in developing lithium brine projects from scratch into significant projects, and was one of the pioneers with direct lithium extraction in South America.

Secondly, but most importantly, lithium brine projects have scale. Within our QX portfolio, we will continue to look at hard rock lithium projects, and they can come to market more quickly, but the beauty of a brine project is if you find the right one, it'll be producing for decades, and that's what the US needs, and particularly the end users, car makers, battery makers, they need serious projects with scale.

And then, last of all, we've actually had some very successful companies here on the ASX with brine projects that have developed from scratch, and so it's just a good fit together with our portfolio, and I think a good fit for Australian investors.

If you look at some of the majors here, they're either in hard rock and brines, or they're in hard rock and nickel, and so in our portfolio we can actually offer all of that to investors, and I think that'll make a key difference both here and also offshore.

Paul Sanger: Steve, to close up, what's going to be the natural next steps on this project, and in particular, you know, for moving things forward from a timeframe perspective?

Steve Promnitz: Well, what we've done is we've purchased about two months to ensure that the deal terms are right. We're talking about the obvious things, how you earn in, the money that's spent on the ground to ensure that the area's looked after, but we want to make certain we've got the right legal and tax structure to do that.

One of the advantages of this particular project is that they already have a team in the US, so we don't have to go and create our own team, we can just add to it. And so we just want to make certain that, over the next two months, we get all of those things locked in, and then we can come out to market with a deal that makes sense and ensure that we've actually looked at all the obvious things.

Once that's done, let's just say that we actually do get a deal done properly, then we move straight to an exploration stage. There's a couple of wells that are already permitted. We would also do some geophysics to add into some of our stuff, so that by the end of the year we should have brines, hopefully with the right sort of levels of lithium in them, and then we can send them off for test work and really get the whole project moving quickly towards probably a resource stage.

Paul Sanger: Steve, many thanks for coming in to see us again. Wish you the best.

Steve Promnitz: Thanks so much.