Pac Partners has prepared a new research report on Latin Resources Ltd (ASX:LRS, OTC:LRSRF), retaining its buy recommendation for the company and 12-month target price of $0.52 per share.
The report comes as Latin continues resource infill and expansion drilling on the 63.5 million tonnes resource grading 1.3% lithium oxide at the Colina deposit within the Salinas Lithium Project in Brazil.
Results from the latest batch of assays include high-grade lithium oxide over mineable thickness, typical of the characteristics seen to date at the Colina deposit.
This included one of the largest-ever intersections encountered at the Salinas Project with 32.92 metres at 1.62% lithium oxide from 325.19 metres, including 27.81 metres at 1.80% lithium oxide from 325.19 metres.
The results are largely from infill holes, drilled to increase the confidence of the resource, which currently sits at 65% measured and indicated.
Drilling will continue with 16 rigs on site drilling resource infill, resource expansion, metallurgical and geotechnical holes.
A resource upgrade is due for completion in the current quarter, followed by a definitive feasibility study (DFS) in the third quarter of 2024. The DFS will expand on the PEA, which contemplated a low-cost project producing 405,000 tonnes per annum of spodumene concentrate at an all-in sustaining cost (AISC) of US$536 per tonne from a project capex of US$308 million.
Latin held $52 million in cash at the end of December 2023.
Pac Partners' investment view
“The next resource upgrade at Colina will show a robust resource with an increase in the measured and indicated categories, which currently sit at 65%.
“We do not envisage overall resource tonnes to grow in any meaningful way in the next update, however, we should expect a further increase in tonnes by the end of the year. The company would ultimately like to attain 100 million tonnes for the greater Salinas project.
“We see the next catalyst in the stock to be an update on offtake discussion which should be by the end of Q2 2024. The DFS scheduled for completion in Q3 will add further confidence in the low cost project as the company looks to commence project financing late 2024, construction in 2025 and first production in 2026.
“We maintain our buy recommendation on LRS and our target price of $0.52/share.”
At the time of the report’s publication, last week, Latin was trading with a $0.18 share price and with a market capitalisation of approximately $504 million.