As Lomiko Metals Inc. (TSXV: LMR) (OTC: LMRMF) (FSE: DH8B) continues to advance its high-grade La Loutre flake graphite property in Quebec, the company has received some good news from its technology unit, which is part of a deal that entails a $1.4 million cash injection.
Over the past few years, Lomiko has been heavily invested in technology and electronic devices. The graphite developer could soon reap the rewards of this investment following a transaction announced last year involving its subsidiary Lomiko Technologies Inc. and Netherlands-listed Promethieus Technologies NV.
Lomiko Technologies currently owns 18.15% of SHD Smart Home Devices Ltd., which develops and manufactures intelligent home automation and security devices. It also owns 40% of Graphene Energy Storage Devices, a developer of low-cost graphene-based supercapacitor devices.
Below is a summary of Lomiko’s past transactions centered on SHD:
SHD Smart Home Devices
In February of 2016, Lomiko Metals and its engineering partner MegaHertz Power Systems Ltd., a BC-based cleantech startup, launched a new company focused on Internet of Things (IOT) technologies.
The new venture, SHD Smart Home Devices, would develop, manufacture, distribute and sell the Spider Charger in-wall USB charging device.
The global IOT market was projected to become a trillion-dollar industry by 2023, with the smart home and building automation market alone growing at a CAGR of 29%, representing an “enormous opportunity for both Lomiko and SHD.”
As quoted in Lomiko’s news release:
“There are currently 130 million established households in North America and a healthy seasonally adjusted annualized rate of 1.3 million housing starts. In addition, offices, hotels and coffee shops are also potential markets for USB charging devices. If only one or two USB charging devices are installed in new homes and retro-fitted into current homes undergoing renovations, there will be a healthy demand for these IOT products.”
At the time, major companies such as Leviton, Legrand, Pass & Seymour and others have recognized this new market and have launched similar devices, the company pointed out.
Previously, Lomiko Technologies was the exclusive licensee of three devices designed by MegaHertz Power Systems.
With the new company launch, a number of new concept designs, technology licenses, patent applications and intellectual property would be amalgamated into SHD in order to penetrate the smart home market for IOT and seek out revenue streams.
USB Spider Charger Launch
To accelerate the launch of the USB Spider Charger, in March 2017, Lomiko announced the signing of an agreement with both MegaHertz Power Systems and SHD Smart Home Devices Ltd.
Under the existing agreements, Lomiko and MegaHertz have been working on completing safety certification for the Power Converter for LED lighting systems, the USB Spider Charger devices, and coordinating partnerships with manufacturers located in China, India and Canada.
As quoted in the news release:
“SHD plans to enter into negotiations with IoT distributors to sell the Spider Charger and other related devices in North American markets. Lomiko will share its network of industry connections to help grow the venture and then enjoy the SHD equity multiplier without being burdened with any engineering, new product development, IP or associated marketing costs as the Spider Charger and SHD suite of IOT products are rolled out.”
Under this new agreement, Lomiko would contribute to SHD any and all R&D, trademarks, its e-commerce website, contacts and intellectual property created under its previous license agreements with MegaHertz.
The parties mutually agreed to transfer the existing license agreements to SHD, focus the development of IOT products and business under SHD, and target the development of a revenue stream and initial public offering for SHD.
Following the transfer of its assets to SHD, Lomiko would control nearly 20% of the shares of SHD.
The agreement received TSX Venture Exchange approval in May.
Trademark & Funding
In September 2017, Lomiko Technologies announced it had been granted the Spider Charger trademark from the Canadian Intellectual Property Office. Patent for the device, now manufactured through SHD, was originally filed in November 2015.
Shortly after the trademark approval, SHD began to garner significant investor interest and was able to raise $5 million from a private equity group to develop a series of new home and building automation devices.
Also in September 2017, SHD entered into discussions with US-based Automated Building Devices (ABD) for the sale and distribution of spider charger units to homebuilders across Western USA.
Later that year, Lomiko increased its ownership in SHD to 25.13% through an exercise of warrants and started discussions on the potential use of blockchain technology for IOT software security applications.
Another milestone was reached in 2018 when the US Patent Office accepted SHD’s design patent for the Spider Charger wall-mounted multifunctional electrical receptacle.
In early 2018, following initial discussion on blockchain adoption, Lomiko Metals announced the launch of Promethieus Cryptocurrency Mining Corp. in partnership with SHD.
Originally, Lomiko and SHD each owned 25% of the new company (Lomiko also owned 25% of SHD at the time).
Promethieus was established as a cutting-edge cryptocurrency mining company focused on a variety of digital currencies including Ethereum, Ripple, Monero, Litecoin, Dash, and Z-Cash.
A month after its launch, Promethieus introduced its Golden Goose for Cryptocurrency Farm Mining operations. The Golden Goose was developed by the engineering team at SHD to address concerns regarding heat and power management to make the device suitable for mining farm use.
Then in April 2018, it was reported that Promethieus plans to go public in Europe.
The company’s ownership structure was revised following a board meeting in May, after which it was decided that Lomiko would own 20% of Promethieus.
By the end of that year, in preparation for its initial public offering, Promethieus had also changed its name to Promethieus Technologies and switched its business focus to identifying investment opportunities in electric vehicle infrastructure, clean energy, IOT and blockchain.
Application for its European listing was filed in February 2019. A listing on the Dutch Caribbean Securities Exchange was confirmed the following year.
Tech Asset Sale
In April of 2019, Lomiko Metals agreed to sell the Lomiko Technologies subsidiary, which held a near 20% stake in SHD, to Promethieus for a total consideration of $1.23 million.
Lomiko Metals would also receive over $190,000 in reimbursed expenses paid on behalf of Promethieus.
Together, the sale represents a cash injection of $1.42 million to Lomiko, which retains its 20% interest in Promethieus following the technology asset transfer.
This transaction was approved by 99.76% of Lomiko shareholders at the November 2019 AGM.
Closing of the asset sale remains subject to Promethieus completing a financing and stock exchange approval.
New US Patent Approval
While all parties await the Lomiko Technologies sale to conclude, Lomiko’s SHD investment continues to make strides in its technology development on its way towards production.
This week, SHD was awarded a new patent from the USPTO for its IOT Power Hub wall-mounted receptacle. The publication date for the patent is July 15, 2021.
“This is an excellent development for SHD and opens up licensing and manufacturing opportunities,” Lomiko stated in the June 25 news release.
“SHD continues to investigate licensing and manufacturing opportunities and aims to complete Underwriters Laboratory (UL) certification for the product and continues research and development of products related to power conversion, heat management and electric vehicle charging equipment.”
Publication of the patent means good news for SHD, and it is now ready to be funded by Promethieus, with no foreseeable hurdles to licensing agreements. It’s expected that Promethieus will raise $5 million in the next round of financing.
An injection of funds from the SHD asset sale — and possibly more from its Promethieus investment in the future — could offer an extra boost to Lomiko Metals as it directs its full attention to developing its battery materials properties in Quebec.
The company is currently working on a preliminary economic assessment (PEA) for the La Loutre flake graphite property, its flagship project, located 117 km northwest of Montreal and 53 km east of Imerys Carbon and Graphite’s Lac des Iles mine.
The property consists of one large contiguous block of 42 mineral claims totaling more than 2,500 hectares.
Originally explored for base and precious metals, historical reports showed graphite to be present on the property in quartzite and biotite gneiss and in shear zones where the graphite content ranges from 1-10% on surface including visible flakes.
A recent grab sampling and mapping program confirmed a graphite-bearing structure of approximately 7 km by 1 km, with results up to 22% graphite in multiple parallel zones 30m to 50m wide. Another 2 km x 1 km area consisting of multiple parallel zones, 20m to 50m, includes up to 18% graphite.
The property has an estimated resource of 18.4 Mt of carbon flake graphite (Cg) grading 3.19% in the indicated category and 16.7 Mt at 3.75% in the inferred category, using a cut-off grade of 1.5% Cg.
“La Loutre has proven to be a large and high-grade area worthy of further investment,” Lomiko CEO Paul Gill stated in a news release earlier this year.
The new PEA will include the latest drill results from the property’s Graphene Battery zone to the south and the EV zone to the north.
A successful metallurgical flowsheet development program was carried out this year on samples from both zones, which generated a combined concentrate grading 97.8% total carbon at 93.5% graphite recovery — meeting its objective of upgrading La Loutre mineralization to at last 95% total carbon.
“These very encouraging results of initial testing suggest that La Loutre graphite may be suitable for high-end industrial use,” Lomiko’s Gill commented on the test results.
Continuing with the theme of EV battery materials, the company recently announced a major acquisition in the form of a lithium project located in the James Bay region of Quebec.
The Bourier property boasts a total ground position of 10,252 hectares in a region of Quebec that is known to host several lithium deposits.
According to Lomiko, Bourier is “potentially a new lithium field in an established lithium district,” and the plan is to explore the property in detail for battery minerals discoveries, not only lithium but also nickel, copper and zinc.
And with lithium prices forecast to soar to new highs due to the increased uptake of electric vehicles and battery storage in the coming decades, industry-wide sentiment on battery mineral explorers like Lomiko is as bullish as it gets.
As evidenced by the numerous financings it had completed this year, totalling nearly $5 million, there’s already plenty of investor support for Lomiko’s graphite (and now lithium) operations.
Lomiko Metals Inc.
TSXV:LMR, OTC:LMRMF, FSE:DH8C
Shares Outstanding 174.8m
Market cap Cdn$22.7m
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