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Lithium Co. Releases Robust Feasibility Study
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Lithium Ionic Corp. (LTH:TSX; LYHCF:OTCQX) is the cheapest of all the players in the region, according to a Clarus Securities research note.

Clarus Securities analyst Varun Arora, in a research report published on May 30, 2024, provided an update on Lithium Ionic Corp. (LTH:TSX; LYHCF:OTCQX) following the company's release of a positive feasibility study (FS) for its Bandeira lithium project in Brazil. The analyst maintained a Speculative Buy rating and a target price of CA$8.00 on the stock.

"LTH announced the results from Feasibility Study at its Bandeira project, which is located next to CBL's producing mine, as well as Sigma's Phase 2 Barreiro project," Arora noted. The analyst highlighted the robust economics demonstrated in the FS, with an NPV to Capex ratio of approximately 4.9x and globally top quartile margins.

"Bandeira's FS has confirmed robust economics with NPV:Capex of ~4.9x and globally top quartile margin with an operating cost of US$444/t and AISC of <US$600/t vs developer peers at ~US$660/t; LRS US$599/t, Sigma US$523/t & CBL ~US$550/t," Arora stated.

The analyst emphasized the significant near-term upside potential beyond the FS results, suggesting that the study is "only a snapshot in time, offering immediate upside from the expanded M&I resource reported in April 2024 as well as from conversion of inferred resources into the mine plan." Arora estimates a potential for up to a 40% boost in mine life and a 30% increase in NPV to approximately US$1.7 billion.

Lithium Ionic's strategic plans include advancing the Bandeira project towards production, with the company aiming to become Brazil's next operating lithium mine by H2/2026. Arora highlighted several key advantages for LTH, including:

1. Early submission of permitting application in November 2023
2. Secured grid power connection and water rights for Bandeira
3. Permitting process progressing well, with mine construction approval expected in Q3/2024
4. Completion of the FS, which is a material de-risking milestone

The analyst also noted multiple catalysts for Lithium Ionic over the balance of 2024, including potential non-dilutive funding opportunities, 50,000 meters of planned drilling, construction permit approval, and the commencement of initial mine development.

Clarus Securities' valuation methodology for Lithium Ionic is not explicitly stated in the provided report excerpt. However, given the analyst's focus on the project's NPV and comparison to peer companies, it's likely that a combination of discounted cash flow analysis and peer comparisons is used to derive the target price.

With a Speculative Buy rating and a target price of CA$8.00, representing a substantial potential return from the price at the time of the report of CA$0.89, Clarus Securities views Lithium Ionic as an attractive investment opportunity in the lithium sector.

Arora concluded that despite its robust project economics and strategic advantages, "at CA$123 MM mkt cap, LTH is the cheapest of all the players in the region."

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Important Disclosures:

  1.  Lithium Ionic Corp. is a billboard sponsor of Streetwise Reports and pays SWR a monthly sponsorship fee between US$4,000 and US$5,000.
  2.  This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company. 

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Disclosures for Clarus Securities, Lithium Ionic Corp., May 30, 2024

Clarus Securities Equity Research Disclosures As of the Date of this report, Clarus Securities Inc. and its employees held in a position exceeding 1% of the fully diluted number of shares outstanding of the company. Within the last 24 months, Clarus Securities Inc. has managed or co-managed a public offering of securities of this company. Within the last 24 months, Clarus Securities Inc. has received compensation for investment banking services with respect to the securities of this company.

General Disclosure The information and opinions in this report were prepared by Clarus Securities Inc. (“Clarus Securities”). Clarus Securities is a wholly-owned subsidiary of Clarus Securities Holdings Ltd. and is an affiliate of such. The reader should assume that Clarus Securities or its affiliate may have a conflict of interest and should not rely solely on this report in evaluating whether or not to buy or sell securities of issuers discussed herein. The opinions, estimates and projections contained in this report are those of Clarus Securities as of the date of this report and are subject to change without notice. Clarus Securities endeavours to ensure that the contents have been compiled or derived from sources that we believe are reliable and contain information and opinions that are accurate and complete. However, Clarus Securities makes no representation or warranty, express or implied, in respect thereof, takes no responsibility for any errors and omissions contained herein and accepts no liability whatsoever for any loss arising from any use of, or reliance on, this report or its contents. Information may be available to Clarus Securities or its affiliate that is not reflected in this report. This report is not to be construed as an offer or solicitation to buy or sell any security. No part of this report may be reproduced or re-distributed without the written consent of Clarus Securities.

Conflicts of Interest The research analyst and/or associates who prepared this report are compensated based upon (among other factors) the overall profitability of Clarus Securities and its affiliate, which includes the overall profitability of investment banking and related services. In the normal course of its business, Clarus Securities or its affiliate may provide financial advisory and/or investment banking services for the issuers mentioned in this report in return for remuneration and might seek to become engaged for such services from any of such issuers in this report within the next three months. Clarus Securities or its affiliate may buy from or sell to customers the securities of issuers mentioned in this report on a principal basis. Clarus Securities, its affiliate, and/or their respective officers, directors or employees may from time to time acquire, hold or sell securities discussed herein, or in related securities or in options, futures or other derivative instruments based thereon. Analyst’s Certification Each Clarus Securities research analyst whose name appears on the front page of this research report hereby certifies that (i) the recommendations and opinions expressed in the research report accurately reflect the research analyst’s personal views about the Company and securities that are the subject of this report and all other companies and securities mentioned in this report that are covered by such research analyst and (ii) no part of the research analyst’s compensation was, is, or will be directly or indirectly, related to the specific recommendations or views expressed by such research analyst in this report.

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