Lithium Ionic Corp. (LTHCF) is making waves in the lithium market, with BMO Capital Markets issuing a glowing ‘Outperform’ rating and a target price of CA$1.25 per share, representing a potential 40% return for investors. The optimism stems from recent drilling results at the company’s Bandeira project in Brazil, which have yielded the thickest lithium oxide intercept discovered to date.
BMO analyst Greg Jones highlights the significance of these new drill results, stating they “continue to highlight the exploration potential at the property and could potentially provide for optimization opportunities.” Jones further emphasizes Lithium Ionic’s position as “one of our preferred lithium developers.”
The company is currently trading below the peer median, with a share price of around CA$0.89, valuing lithium carbonate equivalent at approximately US$40 per ton compared to the US$60 median.
The positive outlook for Lithium Ionic is further bolstered by the recent drill results from Bandeira, which revealed several significant intercepts. Notably, hole 24-276 yielded a substantial 64.7 meters of 1.39% lithium oxide (Li2O), including a remarkable 22-meter segment with 1.67% Li2O and another 20-meter segment with 1.62% Li2O. Additionally, hole 24-266 yielded a 13-meter segment with 1.11% Li2O, including a 5-meter segment with 1.51% Li2O.
The company’s potential for further optimization and growth is significant, as these new results have emerged after the completion of the feasibility study (FS). Lithium Ionic possesses multiple strategies to capitalize on these positive developments:
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Extending Mine Life:
The company can incorporate the resources defined after the FS cutoff date, thereby extending the mine’s operational lifespan.*
Production Profile Optimization:
Lithium Ionic can upgrade and integrate near-surface inferred resources to create a smoother and more efficient production schedule.*
Prioritizing High-Grade Material:
The company can strategically prioritize the processing of higher-grade material earlier in the mine plan.Beyond the recent drill results, BMO identifies several key reasons why Lithium Ionic stands out as a preferred lithium developer:
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Low Capital Requirements:
The Bandeira project’s relatively low capital requirements, estimated at US$290 million by BMO, provide a significant advantage.2.
Early Production Potential:
Lithium Ionic is poised to be among the first developers in BMO’s coverage universe to achieve production, benefiting from a well-established permitting process and a second-mover advantage, following the lead of its neighbor Sigma Lithium Resources.3.
Vast Exploration Potential:
The Bandeira property encompasses a large, underexplored area, presenting substantial opportunities for resource expansion.4.
Additional Project Development:
Lithium Ionic has a second project in development, Salinas, in Brazil, with a preliminary economic assessment expected by the end of 2024.5.
Undervalued Potential:
The company’s current valuation is considered undervalued by BMO.The positive outlook and growth potential for Lithium Ionic make it a compelling investment opportunity within the lithium market, with its strong performance driven by promising exploration results and a strategic roadmap for optimization and expansion.
