Byron Capital Initiates Coverage of LI

JON HYKAWY, Byron Capital Markets (07/22/2010)
"The properties owned by Lithium One would, if evaluated dispassionately, place the firm high on anyone's list of lithium exploration juniors. LI holds a claim on a high-producing salar with historical data that places the chemistry within that at a world-class level. The effect of sharing the salar with FMC [Lithium Corporation] is mitigated by the rock formations of Farallon Catal and the separation this provides. While we have only limited drill results regarding the subsurface brine, a major core-drilling program has just begun and results should be forthcoming shortly.

On the strength of Sal de Vida alone, LI has every opportunity to succeed, but by combining low-cost output from Sal de Vida with the speed and flexibility of the James Bay hard rock project, the company can show strengths that few others in the market can match. From what we have seen, LI has also been blessed by very good brine chemistry at Sal de Vida, and what appears to be good chemistry within the James Bay deposit. Our DCF model, using a 16% discount factor, has suggested a target price of $1.50; therefore, we initiate coverage on Lithium One with a Speculative Buy recommendation."

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