First Phosphate Corp. (CSE:PHOS, OTCQB:FRSPF) has earned a ‘Buy’ rating from Fundamental Research in initial coverage, with the firm’s analysts seeing the stock more than doubling from its current price.
The analysts see First Phosphate at a fair value of C$1.15, implying upside of 160% from its share price at their time of writing.
Fundamental highlighted First Phosphate’s strategy to become a key supplier of lithium iron phosphate (LFP) battery materials through a fully vertically integrated supply chain based in North America.
The company controls its process end-to-end, from mining high-purity igneous phosphate in Quebec to producing cathode active material (CAM) for LFP batteries.
The analysts believe this approach positions First Phosphate to serve a wide range of rapidly expanding markets.
“LFP batteries support key markets like electric vehicles, and energy storage systems, and are gaining traction in rapidly growing sectors such as AI data centers, robotics, and automation,” they wrote.
A cornerstone of the investment case is the company’s flagship Bégin-Lamarche project in Quebec, where a 2024 Preliminary Economic Assessment (PEA) outlined a 23-year open-pit operation producing 900,000 tonnes per year of phosphate concentrate.
The study returned a robust after-tax net present value (NPV8%) of $1.6 billion and an after-tax internal rate of return (IRR) of 33%, based on a long-term phosphate price of US$350 per tonne. For comparison, the current spot price is approximately US$315 per tonne, and the five-year range has fluctuated between US$140 and US$700 per tonne.
Despite the strength of the project’s economics, Fundamental noted that First Phosphate is trading at just 2% of the project’s NPV, which suggests the market has yet to price in the potential value of the company’s assets and development pipeline.
Igneous phosphate advantage
Unlike most phosphate mined globally, which is derived from lower-grade sedimentary rock typically used for fertilizers, First Phosphate’s igneous phosphate is viewed as especially well-suited for LFP batteries, Fundamental noted.
“Igneous phosphate, recognized for its high purity, is the preferred choice for the LFP battery market, as it meets the stringent purity standards required by the technology sector,” the analysts wrote. “In LFP batteries, phosphate makes up 50% to 55% of the cathode and about 10% to 15% of the total battery weight.”
To support its integrated strategy, First Phosphate is developing two downstream plants: a 190,000 tpa phosphoric acid facility using concentrate from Bégin-Lamarche, and the First Saguenay iron phosphate plant, targeting 2026 production with a $76 million capex, a 10-year lease, and a secured tech partner.
The company has also gained early commercial traction, signing offtake agreements for 22% of its planned concentrate output and 32% of its future acid production. Notably, the US Export-Import Bank has offered up to $170 million in financing to support procurement from American suppliers.
Looking ahead, Fundamental’s analysts pointed to several near-term catalysts that could support valuation re-rating for First Phosphate. These include infill drilling to upgrade resource confidence at Bégin-Lamarche, progress on the feasibility study and permitting, further development of the Saguenay iron phosphate plant, additional offtake agreements, and advancement on financing.
“We believe First Phosphate offers rare exposure to a vertically integrated, North American LFP battery supply chain backed by high-purity igneous phosphate—critical for meeting EV and energy storage demand,” they wrote.
“With a strong PEA, multiple downstream projects underway, and strategic offtake and financing agreements already in place, First Phosphate is advancing toward becoming a key domestic player in the LFP battery market.”