MILLENNIAL LITHIUM (OTCMKTS:MLNLF) A Story of Riches to Riches

As had been the news around the globe, lithium is slowly taking over the electronics space, specifically due to the proliferation in the number of electric cars being produced. Given this, companies positioned to take over this space would benefit from an ever-growing demand thus ever-rising revenue.MILLENNIAL LITHIUM (OTCMKTS:MLNLF) is one of the companies that has taken up the challenge and invested significant resources in this space. The acquisitions it has made within the industry have totaled over $6.9 million with over $3.2 million incurred in expenditure to carry out such acquisitions.These investments in lithium extraction have been costly to the shareholders who have waited a long while for them to payoff.Finally they have!News reaching the public on the tests carried out on the sites have been positive, much to the joy of shareholders who have since reaped the benefits of a surge in the company’s share price.Since the release of some of the major announcements in the beginning of September, the share price has risen by over $0.85 to close just shy of $2 at $1.85, an 85% increase. This price surge, coupled with a commensurate increase in trading volumes, got the attention of the market as one of the highest over this period as can be seen below: MLNLF Daily ChartSuch an increase in share price would usually mean that the company is generally doing something, or at least one major thing, right. Therefore, over the course of this piece, we will be assessing the possible ‘right decisions’ that the company’s management has made as well as detailing our belief in the expected share price movements going forward.Background, Growth and SuccessMLNLF, initially known by the name ‘Redhill Resources Corp’ was incorporated in 2005 and is headquartered in Vancouver, Canada. The name later changed to Millennium Lithium Corp in June 2016. It has since been focused on the acquisition, exploration, and development of lithium mineral properties and oil and gas resource properties.Over their term, they have amassed significant resources which have enabled them double down on their standing in the industry, growing both their financial base as well as their asset base.Previously, they had engaged in projects in the petroleum and natural gas space in Montney, Alberta, Canada, which was later abandoned given that its financial ramification to the company was in excess of the amounts derived from the project over its useful life. Since then, the company has been more prudent in its endeavors in this field, something that seems to be working well for them.Currently, their funds have been significantly invested in one main product: lithium.A recent article published on this site goes further to explain how they have invested in this space detailing the four major projects they chose to work in. For first time readers, one may obtain this read here.Given that their operations have already been debunked above, we found it important to further dive into their finances while touching a bit on the new developments that are expected to affect the company’s valuation, both which are detailed below.Developments and FinancialsMore developments affecting the company’s operations can be read in the article referenced above. We will, however dwell on the company’s share issue which, in our view, was a major plus for them.In August this year, MLNLF filed a prospectus detailing its intent to offer up to C$5 million in shares on the market. This move is in line with other industry players in capital intensive projects who prefer equity to debt as an investment method. Moreover, given their investment-payoff horizon, such was to benefit them by the addition of cash which would be used to finance their exploration activities.However, the good news came where they further vamped up this bid to C$10 million.Such an increase would signify the fact that management believe they can raise a lot more from the market which means that they believe the market sees the value they are expected to add to their investment. Therefore, with the successful completion of the above, a higher valuation would be attached to them in the long run.This is not far from the truth.The company whose market capitalization stands at $81.9 million has been performing spectacularly in the past with their books being a reflection of this.Despite their net loss rising by over $2.3 million, a loss which was driven by their heavy investment in the Argentinian lithium exploitation projects, their financial base still holds strong.Over the month between February and March 2017, their cash position rose by over $2.8 million to stand at $5.8 million in March. Moreover, their working capital surplus also went up $2.5 million to close at $6.3 million. Given the nature of their operations, management intends to use this money to fund future investments given the nature of the industry as stated above.Their mining property by March rose to $6.9 million, an excellent growth trend in our view significant of their investment in the sector: $3.2 million in expenditure over the same period. Total assets grew by over $12 million to close the period just shy of $14 million.The above figures, coupled with the share issue, paint a very rosy picture on the financial standing of MLNLF. With the investment they have made in the past and their expected growth trajectory, these roses are about to blossom in the near future.ConclusionMLNLF proves the fact that heavy investment in a field has a weighting on the returns reaped. They have invested with zeal and the latter is therefore going to come to their doorstep not long from now. Investors would be prudent not to miss out on this as we walk into the future with MLNLF.We will be updating our subscribers as soon as we know more. For the latest updates on MLNLF, sign up below!Disclosure: We have no position in MLNLF and have not been compensated for this article.