January 21st, 2022 | 12:43 CET
Standard Lithium, Noram Lithium, American Lithium - Mega Demand, Mega Opportunity
Table of contents:
"[...] China's dominance is one of the reasons why we are so heavily involved in the tungsten market. Here, around 85% of production is in Chinese hands. [...]" Dr. Thomas Gutschlag, CEO, Deutsche Rohstoff AG
Standard Lithium - Demonstration plant delivers EV lithium carbonate
Standard Lithium was a darling of investors last year. At the end of the year, it was up 339%. This year, however, the stock has disappointed so far. At its peak, it was down 40%. That is a bit surprising because, since Blue Orca Capital's short attack in November, calm seemed to have returned when Koch Investments Group bought Standard Lithium shares for USD 100 million, making it the Company's largest investor. The money will be used to pave the way to becoming a producer.
On January 20, the Company issued an update on its demonstration plant. This news could give the stock a boost in the coming days. The SiFT pilot plant could produce battery-grade lithium carbonate in a single process for the first time. Previously, this process required multiple crystallization steps. This breakthrough can be considered a milestone. In the meantime, the planning of the first commercialized plant is being driven forward. The team has been expanded, and external consultants have also been brought in.
Dr. Andy Robinson said, "We have continued to integrate processes into our El Dorado demonstration plant so that we now have the only continuous, around-the-clock plant in North America converting brine to carbonate." The Preliminary Front End Engineering and Design Study is expected to be completed in the second quarter of 2022, which is another step toward production. The stock has already jumped over 4% in Germany following the news and was last trading at EUR 5.98.
Noram Lithium - Clearly undervalued compared to the competition
Noram Lithium is based in Canada but operates mainly in the US. The Company's goal is to bring the Zeus Lithium Project, located in Nevada, into production and thus become a low-cost supplier of the coveted lithium. The property covers 1,133 hectares. Last August, the Company upgraded the resource estimate to NI 43-101 standards. The deposit hosts confirmed 363 million tons grading 923 ppm lithium and 827 million tons grading 884 ppm lithium as an inferred resource. Since the deposit is close to surface, low-cost mining is possible.
On December 8, the Company presented a preliminary economic assessment (PEA) that puts the project's net present value at about USD 1.3 billion. The independent analysts assumed a market price of USD 9,500 per ton of lithium carbonate equivalent (LCE) in the study. The current price is much higher, adding further value to the project. Annual production is expected to average 31,900t LCE. The mine life is 40 years. Until production is achieved, USD 528 million in capital expenditure will be required, but this will be recouped within 3.23 years.
The next step is preparing the preliminary feasibility study on which work is already underway. The drilling program foresees 12 new drill holes in the first quarter. Comparing the data from the study to competitors, it quickly becomes apparent that competitors often have higher operating costs and thus lower profitability but are valued much higher than Noram Lithium in terms of market capitalization. Fundamental Research sees it the same way and has raised the price target to CAD 1.76. Currently, the stock is trading at just CAD 0.85, offering more than 100% potential.
American Lithium - Second pillar uranium?
American Lithium owns two lithium projects as well as a uranium project. The uranium project is located directly next to the lithium project in Peru. For the Macusani uranium project, the PEA study gives a project value of USD 603 million. The investment costs would have been amortized after 1.8 years. There are about 24 million kg of uranium confirmed to NI 43-101 and another 32.7 million kg inferred. The Falchani Lithium Project also has a PEA. The project value is USD 1.55 billion with a sales price of USD 12,000/t lithium carbonate.
The Company's flagship project is located in Nevada, USA, called TLC Lithium. The mudstone lithium deposit is located near the Tesla gigafactory and covers an area of 3,343 hectares. Indicated resources are 5.37 million tons of LCE, with an additional 1.76 million tons inferred. On January 11, the Company announced that the authorities granted the permits for the next exploration steps. A total of 110 drill sites are planned to expand the resource. The first 6 holes of the drilling program, which started in early December, have detected large intersections of lithium-bearing mudstone.
Good news for the shareholders of the Canadian Company, as the share has recently been under considerable pressure. The prospect of new results from the largest project should release new fantasy again. The share exited trading on Tuesday at CAD 3.09. The next support levels are at CAD 2.70 and CAD 2.21. After the big sell-off, a rebound seems possible.
At the moment, the shares of many lithium companies are weakening. Volatility will remain high this year, which also offers opportunities. Standard Lithium hit a milestone with its announcement today. Noram Lithium is significantly undervalued compared to its peers, which is reflected in its market capitalization. The potential for a setback is likely to be lowest here. American Lithium has the most diversified position. New positive results on the TLC project could boost the stock.
Conflict of interest
Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may hold shares or other financial instruments of the aforementioned companies in the future or may bet on rising or falling prices and thus a conflict of interest may arise in the future. The Relevant Persons reserve the right to buy or sell shares or other financial instruments of the Company at any time (hereinafter each a "Transaction"). Transactions may, under certain circumstances, influence the respective price of the shares or other financial instruments of the Company.
In addition, Apaton Finance GmbH is active in the context of the preparation and publication of the reporting in paid contractual relationships.
For this reason, there is a concrete conflict of interest.
The above information on existing conflicts of interest applies to all types and forms of publication used by Apaton Finance GmbH for publications on companies.
Apaton Finance GmbH offers editors, agencies and companies the opportunity to publish commentaries, interviews, summaries, news and the like on news.financial. These contents are exclusively for the information of the readers and do not represent any call to action or recommendations, neither explicitly nor implicitly they are to be understood as an assurance of possible price developments. The contents do not replace individual expert investment advice and do not constitute an offer to sell the discussed share(s) or other financial instruments, nor an invitation to buy or sell such.
The content is expressly not a financial analysis, but a journalistic or advertising text. Readers or users who make investment decisions or carry out transactions on the basis of the information provided here do so entirely at their own risk. No contractual relationship is established between Apaton Finance GmbH and its readers or the users of its offers, as our information only refers to the company and not to the investment decision of the reader or user.