Technology Minerals PLC (LSE:TM1) offers a “uniquely focused” energy transition play, according to Arden Partners (AIM:ARDN) as it started coverage of the newly listed battery metals and recycling group.
Corporate broker Arden kicked off with a ‘buy’ recommendation and 7p a share price target, a 120% premium to the current price.
This was calculated using ‘twin-track’ net present value and price-to-earnings methodologies.
TM’s exposure to the green economy is via a 49%-owned business called Recyclus, which is able to process both lithium-ion and lead-acid batteries.
Operational start-up is already underway at Recyclus, which should provide significant revenue streams once up and running.
TM also has early-stage investments in metals that are critical to electric vehicle technology via a portfolio of mining projects.
“Technology Minerals offers uniquely focused, IP-protected exposure to battery recycling placing the company at the heart of the energy transition and circular economy,” Arden said in a 33-page note to clients.
“Operational start-up is underway which should drive rapidly rising profit and cash flow generation.”
In February, Recyclus opened its first battery processing site at Tipton in the West Midlands.
Management expects lead-acid battery recycling capacity to increase from an estimated 16,000 tonnes in the first full year of production, to around 80,000 tonnes by 2027.
“We believe that proof in the operation of the Recyclus business should see a significantly higher price with more to come from other valuation uplifts we have not yet quantified,” said Arden, referring to the valuation of the TM business.