Lithos Group Ltd. (LITS:CBOE.CA;LITSF:OTCQB) announced it has received its first revenues from several lithium producers, solidifying "multiple strategic relationships."
"These customer-driven pilot processing programs span the upstream segments of the value chain including conditioning, pretreatment, optimizing wash water recovery, and direct lithium extraction (DLE)," the company said in a release.
DLE from lithium brines could "significantly" impact the industry and revolutionize production, capacity, timing, environmental impacts, and permit issues, wrote a series of Goldman Sachs analysts in a research note released in April.
"Much like shale did for oil, DLE has the potential to significantly increase the supply of lithium from brine projects, nearly doubling lithium production/yield (taking recoveries from 40-60% to 70-90%+) and improving project returns," the analysts wrote.
Additional benefits include sustainability and environmental social governance (ESG) credentials for companies using the technology since the method vastly reduces the land and water use of evaporating ponds.
"A number of proven DLE technologies are emerging and being tested at scale," the analysts noted. "Though the application of technologies used in DLE processes may be fairly new to the lithium industry, many are already utilized across other commodities."
The Catalyst: Reducing Water Use, Environmental Footprint
Lithos' AcQUA™ process reduces water use by up to 98%, has higher lithium recovery, and a reduced physical and environmental footprint.
Current brine operations destroy up to 2,500 acres of land, consume billions of gallons of water per year, produce hundreds of thousands of tons of carbon dioxide, and take up to two years to evaporate, Lithos said. Of that, up to 80% of the initial resource is lost in the process, the company said.
AcQUA™ uses an electro-pressure membrane process to optimize pre-treatment of the raw brines and rapidly concentrates lithium chloride with multiple Direct Lithium Extraction (DLE) techniques. The company said its systems are fully commercialized and operate in the field at scale, processing a feed of 10,000 barrels a day.
The process "avoids the typical challenges faced by chemically intensive DLE technologies currently in development phase," the company said on its website.
Operating margins are modeled at about 78%, and the company estimates the lifetime value of a customer could be more than US$100 million under licensing or sales business models.
A 'Strong Buy'
Looking at the company's six-month chart, Technical Analyst Clive Maund wrote on January 26 that there was a possibility of the company's stock "breaking out into a new bull market soon, and probably very soon."
The chart is "greatly enhanced by the strongly bullish volume pattern, especially recently — we can see the persistent heavy upside volume so far this month that is driving the Accumulation line to new highs as the price approaches the completion of a bull Flag or Pennant that has formed in the vicinity of the 50-day moving average which is now turning up," Maund wrote.
A very important breakout looks "imminent."
Technical Analyst Clive Maund rated the stock a "Strong Buy for all timeframes."
"It will be very important because it will involve a breakout from the Pennant, a breakout above the third fanline of the Fan correction, and a breakout above the nearby quite strong resistance level shown all at about the same time," he noted. "It will thus have great technical significance and should mark the start of a major bull market in the stock."
Maund rated the stock a "Strong Buy for all timeframes."
Analyst Ahmad Shaath of Beacon Securities noted on January 22 that the company is currently in the demonstration phase of AcQUA™, which is patent-pending, with key customers.
"Two fully operational DLE processing facilities have been commissioned in Bessemer, Alabama, and Denver, Colorado, where LiTHOS is focused on processing continental brines from resource owners in Argentina, Chile, and the United States," the analyst wrote.
Lithos said it's now under contract with four of the largest lithium brine producers in the world. The company also said that after a previous US$1.3 million U.S. Department of Energy grant, it was pre-qualified to apply to the department for a grant worth US$30 million.
Lithos applied in December and noted support for the application from Alabama's congressional delegation, including Sens. Katie Britt and Tommy Tuberville, both Republicans.
The company has started a lab-scale pilot plant to conduct small-scale optimization of the technology with the aim of designing a field-based pilot plant in Bessemer to become operational at the end of the second quarter.
"LITS aims to achieve the milestones and necessary construction activities required to complete an operational commercial pre-treatment lithium production facility by Q4/24," Shaath noted.
The company said it has engineered 17 customized AcQUA™ flowsheets, and that the technology is being vetted by one of the largest procurement construction and commissioning firms for "multiple, multibillion-dollar lithium projects."
Metal Vital to Reducing Carbon Footprints
Battery storage will be "pivotal" in reducing carbon footprints globally, according to Energy5.
"As the demand for clean energy continues to rise, it is crucial to invest in research, development, and implementation of battery storage technologies," the company wrote. "Embracing such innovative solutions will not only help combat climate change but also create a more resilient and sustainable energy infrastructure for generations to come."
Lithium is a soft, silvery metal with highly reactive and flammable properties. It's also used to strengthen alloys, as a high-temperature lubricant, and as a drug to treat bipolar disorder.
The market for the metal is projected to grow from US$2.5 billion in 2023 to US$6.4 billion by 2028 at a compound annual growth rate (CAGR) of 20.4% from 2023 to 2028, according to a report by Markets and Markets.
"The market has observed stable growth throughout the study period and is expected to continue with the same trend during the forecast period," the report said.
Streetwise Ownership Overview*Much of the world's supply of the metal comes from South America's "Lithium Triangle," a vast area of salars (salt-encrusted depressions) at the intersection of Argentina, Bolivia, and Chile.
Ownership and Share Structure
About 53% of Lithos is held by insiders and management, the company said. According to Reuters, this includes CEO Taylor with nearly 15% or 12 million shares, Independent Director Michael Westlake with 0.75% or 600,000 shares, and Independent Director Kevin McKenna with 0.05% or 40,000 shares.
About 16% of the company is held by strategic entities. The rest is retail.
Lithos has a market cap of CA$51.5 million with about 81.7 million shares outstanding. It trades in a 52-week range of CA$0.96 and CA$0.485.
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Important Disclosures:
- Lithos Group Ltd. is a billboard sponsor of Streetwise Reports and pays SWR a monthly sponsorship fee between US$4,000 and US$5,000.
- As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Lithos Group Ltd.
- Steve Sobek wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
- 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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