Largest Lithium Intercept Yet at Key Brazil Project Marks Major Milestone

Source: Streetwise Reports 10/09/2024

Lithium Ionic Corp. LTHCF has announced significant drilling results at its Bandeira Lithium Project in Minas Gerais, Brazil. These results highlight the largest lithium-bearing intercept at Bandeira to date. Key findings include a 64.7-meter drill intercept grading 1.39% of Lithium Oxide (Li₂O), with portions grading as high as 1.67% Li₂O over 22 meters and 1.62% Li₂O over 20 meters.

This 175-hectare project forms part of a larger 17,000-hectare land package, with Bandeira currently representing approximately 70% of Lithium Ionic’s 60.1Mt global lithium resource estimate. The company aims to advance the project to production, bolstered by ongoing engineering and preparation for construction.

In the company’s news release, CEO Blake Hylands stated, “We are very excited to see the scale of the lithium deposit at Bandeira continue to expand while maintaining quality and grade. These results bode well for optimization opportunities as we continue progressing basic and detailed engineering in preparation for project construction.”

Lithium Sees New Growth Potential Amid Rising Demand

As Forbes reported on October 8, “A 50% rise in the price of a downtrodden lithium producer boosted investor hopes that a revival in the battery metal was possible after two grim years of oversupply and low prices.” The recent surge in lithium prices was seen as a signal of potential recovery, with industry participants noting that the surge “came at a critical time with funds needed to finalize a long list of expansion projects” which aimed to meet growing lithium demand in the energy and electric vehicle markets.

On October 8, Desjardins analysts Frederic Tremblay and Etienne Larochelle also reported on the Lithium Ionic. They gave the company a Buy rating and a CA$3.75 price target. This target price is a +345% premium from yesterday’s closing price of CA$0.85.

According to Elements, as of September 29, battery demand was projected to increase ninefold by 2040, with the battery industry’s capital expenditure “expected to nearly triple, rising from US$567 billion in 2030 to US$1.6 trillion in 2040.”

Elements reported that while lithium prices saw a recent decline, lithium-ion battery production continued to scale significantly, “driven by anticipated growth in the electric vehicle and renewable energy markets.”

Richard Mills of Ahead of the Herd noted on September 28 that “battery metals like lithium, cobalt, and nickel would see even faster growth, reaching more than three times the current demand levels by 2030, with lithium rising the fastest with a seven-fold increase.” The report also indicated that with recent rate adjustments, “lower rates should put pressure on bond yields and the U.S. dollar, which normally fall as commodity prices rise” creating favorable conditions for the mining sector.

Lithium Ionic’s Catalysts

According to the company website, Lithium Ionic has taken strides to fast-track Bandeira’s path to production. The company completed a Feasibility Study in May 2024, outlining a 14-year mine life with an expected production of 178,000 tonnes of high-quality, 5.5% Li₂O spodumene concentrate per year. This would carry a post-tax net present value of US$1.3 billion and an internal rate of return of 40%.

Furthermore, the company anticipates receiving the Concomitant Environmental and Installation License by year-end, a critical milestone that would authorize construction activities. Additionally, the project’s location within Brazil’s “Lithium Valley” offers the advantage of robust infrastructure, including access to low-cost renewable energy sources and proximity to key export facilities.

Positive Analyst Outlooks for Lithium Ionic

According to Canaccord Genuity on September 11, the recent approval of Lithium Ionic Corp.’s Final Exploration Reports marked a significant milestone for its Bandeira and Outro Lado properties. Analyst Katie Lachapelle maintained a “Speculative Buy” rating and set a target price of CA$2.50, representing substantial upside potential. Lachapelle emphasized that “with the Final Exploration Report permits in hand, LTH has proceeded to submit its Mining Concession application along with the Economic Viability Study for the Bandeira property.” She highlighted the pending approval of the Licença Ambiental Concomitante (LAC) as a “key catalyst” necessary for the project’s progression, as it would allow construction to commence.

Ownership and Share Structure

According to the company, management and insiders own 20% of the Lithium Ionic.

One of the insiders, President & Director Helio Diniz, owns 5.52%, Director Michael Lawrence Guy owns 5.10%, Director David Patrick Gower owns 2.56%, and Andre Rezende Gumaraes owns 2.52%, according to Reuters.

30% is held by institutional investors. Reuters reports Waratah Captial Advisors owns 7.01%, JGP Gestao de Recursos Ltda owns 2.69%, RBC Global Asset Management Inc owns 1.94%, Sprott Asset Management LP owns 1.55%, BMO Asset Management owns 1.30%, and IXIOS Asset Management SA owns 1.20%. The rest is retail.

Lithium Ionic has 158.58 million shares outstanding and 131.15 million free-float traded shares.

The company’s market cap is CA$135 million, and it trades in a 52-week range of CA$0.41 – 2.24 per share.

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. James Guttman wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
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