Stifel GMP has reiterated a 'Buy' on Neo Lithium Corp (CVE:NLC) shares, with an increased price target a day after the mining company closed on a $30.1 million equity financing.
The broker raised its price target to $3.90 a share from $3.70. Neo Lithium stock currently trades around C$3.13 a share.
It noted that Neo Lithium plans to use the net proceeds from the offering to fund development work at the 3Q Lithium Project and for working capital and general corporate purposes. More specifically, the company intends to use the majority of the proceeds to advance the construction of the concentration pond system at a commercial scale with a view to accelerating future production from the 3Q Project.
The firm noted that Neo Lithium is now flush with a cash balance of about $61 million.
“We continue to believe that this could be the last public equity financing required by NLC in order to put the 3Q Project into commercial production,” Stifel's analysts wrote in a note to clients.
The analysts also pointed out that Neo Lithium is benefiting from the committed investment from Chinese firm Contemporary Amperex Technology (CATL), which recently said it intends to subscribe for 860,870 shares in Neo Lithium to maintain its 8% stake after the recent fund-raising, generating additional proceeds of $2.62 million. This transaction is expected to close within the next 45 days.
“We continue to believe that the 3Q Project is one of the highest quality greenfield brine projects in development,” the analysts concluded.