April 5th, 2022 | 11:58 CEST
Varta, Standard Lithium, Edison Lithium: Shares profit from e-mobility
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"[...] In 2020, the die is finally cast in the automotive industry towards electromobility. [...]" Dirk Harbecke, Executive Chairman, Rock Tech Lithium Inc.
Edison Lithium: in the slipstream to success from Albermarle and Livent?
The largest lithium deposits are located in South America. Edison Lithium, which operated as Edison Battery Metals until the end of 2021, is active there. In June 2021, the Canadian mining explorer secured the rights to two areas in Argentina with a total of 148,000 hectares. These are located in the well-known lithium triangle between Bolivia, Argentina and Chile. The Salar de Antofalla project covers 107,000 hectares and is currently the focus of Edison. Initial tests indicated that lithium and potassium were observed to a depth of over 500 meters. Potash and lithium have been detected in soil throughout the region. "Edison's Antofalla Salar consists of semi-contiguous claims to the north and south, located on either side of Albemarle's tenures in the center of this area. In management's view, this huge block of lithium claims represents a very impressive entry point for Edison into the emerging lithium sector," said Nathan Rotstein, CEO of Edison, on the occasion of the acquisition. Industry heavyweight Albemarle previously bought a claim within the Antofalla region in 2016 and at the time expected the region to have the third-largest lithium brine reservoir in the world. Livent, one of the world's largest lithium producers, is also active less than 20km from Antofalla.
In addition to lithium, Edison is also active in a second exciting area: cobalt. The Company owns a 4,440-hectare cobalt project in northeastern Canada. Three historic mines are located there. Historic production on the property had up to 4% cobalt content. With commodity prices skyrocketing, the mines are becoming attractive again. The share also appears to be attractive - or at least not expensive. Since the beginning of December 2021, the share has been trading around CAD 0.090, resulting in a market capitalization of around CAD 16 million. Should there be positive news from the projects in the current year, higher prices are likely.
Standard Lithium: Support from Lanxess and US government
The Standard Lithium share has jumped up again. Like Edison, this is an explorer. However, project development is well advanced and the market capitalization is a whopping CAD 1.8 billion. Standard Lithium's project in the US state of Arkansas could soon become the largest lithium project in North America. Standard has strong partners such as the German chemical group Lanxess and the American conglomerate Koch Industries. After an all-time high of around EUR 11 in October last year, the share price crashed to below EUR 5. This was also due to an attack by a short-seller. In the meantime, the share is again trading at around EUR 8 - and rising. The project in Arkansas is making good progress. In February 2022, Standard Lithium and Lanxess agreed to accelerate the path to commercial exploitation of the Arkansas Project, and a feasibility study is underway. In addition, support is coming from the US government. It supports - for example, financially - American mine operators who extract raw materials to produce e-car batteries. In this way, the e-car market is promoted, and independence from foreign suppliers is reduced.
Varta: Investors continue to wait for details
Varta's shares gained more than 7% yesterday. The battery manufacturer had published figures last Thursday. These were just above analysts' estimates: Total sales +3.8% to EUR 902.9 million, adjusted EBITDA of EUR 282.9 million and net income of EUR 126.0 million. But what investors have been hoping for for months was again missing: concrete statements on partners in the new area for batteries for e-cars. Thus, the experts at researchanalyst.com were also disappointed. Varta is optimistic about the future despite all the burdens - for example, in supply chains. The pilot production for large-format lithium-ion round cells is running according to plan. However, announcements regarding the high-performance battery V4Drive were again awaited in vain. With the current business plan and a P/S ratio for 2023 of 3, the Varta share is still not cheap. The recently burdened chart situation and the great uncertainty about the development status have not yet gone from the table. The complete study is available here.
E-mobility is the future. However, the commodity markets do not seem to be able to keep pace with this. The prices of lithium, cobalt, etc. are exploding, and companies such as Standard Lithium and Edison Lithium are profiting. The battery market also offers potential. But Varta must be more concrete regarding partners and future prospects.
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