American Lithium#: Back in the Field
Strong Tailwinds
American Lithium’s (CVEl:LI) share price following a strong rerating is up 330% YTD on the back of higher lithium prices and strong operational progress. As a result, the company has been able to strengthen its treasury with a C$35m raise taking total cash to around C$50m. The company is therefore well positioned to advance all three projects: the flagship TLC in Nevada, Falchani lithium and Macusani uranium in Peru. The company will be working to publish and update respective PEAs in Q1, Q2 and Q3 2022 incorporating the current and planned drilling and metallurgical testwork at each project.
Operations Progress
The company has announced that it is currently undertaking a drill programme at Tonopah to test the recently acquired Big Smoky acreage to the north of the current resource, which was capped only by the licence boundary. Six holes of the planned 15 have been drilled and intercepted strong thicknesses of claystone stratigraphy with samples now out for assay. LI is targeting areas of the licence where soil sampling has indicated elevated grades above 2,000ppm Li. These holes test the extent of the resource to the north, identify high grade zones for mine planning and also test the extent of mineralisation to the east of the current resource. A fault running through the property was thought to be the eastern boundary of the resource, however, reinterpretation suggests that this fault may have occurred post mineralisation. At over 7mnt contained LCE, the resource is already one of the biggest in the world making it amenable to large scale mining which will be needed if lithium demand projections are realised.
Recommendation and Target Price
This first 15-hole programme is a starting point for a further 12 months of significant work for LI; the company has three PEAs due out in 2022 and will therefore be advancing and derisking its entire asset base which we believe will unlock value. Furthermore, we expect continued support with the lithium backdrop remaining strong. Our analysis suggests that meaningful supply is not set to come into the market until H2 2022 at the earliest and with many of the most advanced projects in remote locations execution risk is high in the current climate of global supply chain issues and delays. This suggests that lithium prices and equities have further to run, and we are upgrading our valuation target for the company.
We reiterate our Buy recommendation and increase our target price 30% to C$9.00/sh.
Oliver O'Donnell, CFA, Natural Resources | T: +44 (0)20 3617 5180 | E: oodonnell@vsacapital.com
VSA Capital Limited, Park House, 16-18 Finsbury Circus, London EC2M 7EB | www.vsacapital.com
This email is intended solely for the named recipient. It may contain privileged and/or confidential information. If you are not one of the intended recipients, please notify the sender immediately, and destroy this email: any disclosure, copying to any person or any action taken or omitted to be taken in reliance on this e-mail, is prohibited and may be unlawful. Any views expressed in this message are those of the individual sender, except where specifically stated to be the view of VSA Capital Limited, its subsidiaries or associates. Whilst all efforts are made to safeguard inbound and outbound emails, VSA Capital Limited and its subsidiaries or associates cannot guarantee that attachments are virus-free or compatible with your systems and do not accept any liability in respect of viruses or computer problems experienced.
VSA Capital Limited will use your personal information to administer your account in order to provide any products and services you have requested from us. Your personal information will be kept secure and will not be shared with any other party unless you provide consent to that effect.
VSA Capital Limited is Authorised and Regulated by the Financial Conduct Authority and is a member of the London Stock Exchange.
The Company is registered in England with company number 2405923 at Park House, 16-18 Finsbury Circus, London EC2M 7EB.
Please consider the environment before printing this e-mail
unsubscribe from this list update subscription preferences