ATOME PLC (AIM:ATOM) is a ‘buy’ ahead of several upcoming catalysts that we believe will de-risk the path to its first production, that’s according to analysts at Stifel.
The stockbroker has initiated its coverage with a ‘buy’ rating and a price target of 130p, suggesting substantial upside to the current price of around 30p per share.
At the moment, ATOME’s market price represents just 25% of the net asset value (NAV) estimated by Stifel – and that’s before the project advances further.
It comes as ATOME has today announced it has signed up a key engineering contractor for the flagship Villeta project which, using hydrogen technology, aims to become the world's largest green fertiliser project.
“Demand for fertilisers is growing as the industry responds to an increasing population,” Stifel analyst David Round said.
“The green segment is expected to become increasingly important too, and potentially lucrative, particularly for companies like ATOME who are at the bottom end of the cost-curve.
“The attraction here is in the simplicity of the concept; ATOME will use a secured supply of renewable energy plus tried and tested technology to deliver cleaner fertiliser into the world’s largest nitrogen fertiliser import market.
“There are a number of upcoming catalysts that we believe can close the gap between the share price and our NAV.”
The Stifel analyst, meanwhile, sees Viletta generating a reliable and sustainable stream of free cash flow, which the broker expects to be between $65 million and $70 million per year over a 20-year project life span.
Inking EPC
ATOME on Monday announced the signing of a definitive engineering, procurement and construction contract with Casale S.A. for its Villeta green fertiliser project in Paraguay.
It’s a fixed-price, lump-sum contract – at a cost of US$465 million – and it sets a timeline of 38 months from final investment decision to production start.
ATOME confirmed detailed engineering has already started and mobilisation is underway.
"ATOME is delighted to announce the signing of our EPC Contract with Casale, on time and on track to our project schedule,” chief executive Olivier Mussat said in a statement.
“This underscores our ability to deliver final agreements and marks another milestone achieved as we advance to reach FID for the Villeta Project towards the end of H1 2025.”
Mussat also told investors that ATOME is addressing significant existing and projected demand for greener fertilizer, and, Villeta is intended to be a ‘pathfinder’ project, with the ATOME team set to develop a wider pipeline of projects.
Casale chief executive Federico Zardi, meanwhile, commented: "We at Casale are immensely proud to be an integral part of ATOME's world-first green fertiliser Villeta project in Paraguay.
“Through these technological advancements, we are delivering an extremely optimized design at Villeta, setting a precedent for sustainable fertiliser production at costs that are competitive with, or even lower than, conventional 'grey' fertilisers, paving the way to a sustainable agricultural future."
In London, Atome shares were up 3.7p or 13.2% on Monday changing hands at 31.6p.