VSA Capital Market Movers – American Lithium


VSA Morning Miner, 18/11/20

American Lithium (CVE:LI)

American Lithium (CVE:LI) has announced a new drilling programme of six holes to allow exploration to the north and northwest of the existing resource. This resource boundary was limited by the northern limit of the company’s exploration acreage and with the announcement in July that the company had acquired an additional 52 claims contiguous to its current land package equating to 1,074 acres this drilling programme will seek to confirm this.

American Lithium’s resource which is currently over 7mnt contained LCE extends from surface and is shallow. The six holes in this programme will therefore be capped at 400ft as the dip of the structures is not expected to change substantially where the lithium bearing structures are projected to extend into the new claims.

Crucially this will provide additional material for the company to progress its metallurgical testwork. The results to date demonstrated success using a hydrothermal process with acid with lithium recoveries of over 90% in less than ten minutes and subsequent testing confirmed production of lithium carbonate. The announcement also highlights that American Lithium is also working on other potential flowsheets including a thermal process. Whilst the initial work is encouraging and forms a robust base case, in our view, success on this latter thermal flowsheet would certainly result in investor interest given the comments at Tesla’s Battery day although we caveat that this process would likely be some way from commercialisation.

The larger resource and results of the met testing will inform the economic studies due in early 2021 which present a further potential catalyst for the stock.

The result of the US election provides a significant potential industry catalyst with Joe Biden expected to be a strong supporter of EVs and renewables. EV subsidies kickstarted sales growth in the EU and China and a restoration of the US EV subsidy could result in a US catch up. State spending on charging infrastructure would debottleneck EV sales further. Although the development of a domestic US battery manufacturing industry now appears more likely, the lack of domestic lithium supply remains unchanged and support for critical minerals such as lithium and projects such as American Lithium’s means the backdrop for the company continues to strengthen.

We reiterate our Buy recommendation and C$3.94/sh. target price.

Oliver O’Donnell, CFA, Head of Research & Natural Resources Analyst | T: +44 (0)20 3617 5180 | E: [email protected]

Paul Renken, Senior Geologist | T: +44 (0)20 3005 5011 | E: [email protected]

VSA Capital Research | T: +44 (0)20 3005 5000 | E: [email protected]

VSA Capital Limited, New Liverpool House, 15-17 Eldon Street, London EC2M 7LD | www.vsacapital.com

This email is intended solely for the named recipient. It may contain privileged and/or confidential information. If you are not one of the intended recipients, please notify the sender immediately, and destroy this email: any disclosure, copying to any person or any action taken or omitted to be taken in reliance on this e-mail, is prohibited and may be unlawful. Any views expressed in this message are those of the individual sender, except where specifically stated to be the view of VSA Capital Limited, its subsidiaries or associates. Whilst all efforts are made to safeguard inbound and outbound emails, VSA Capital Limited and its subsidiaries or associates cannot guarantee that attachments are virus-free or compatible with your systems and do not accept any liability in respect of viruses or computer problems experienced.

VSA Capital Limited will use your personal information to administer your account in order to provide any products and services you have requested from us. Your personal information will be kept secure and will not be shared with any other party unless you provide consent to that effect.

VSA Capital Limited is Authorised and Regulated by the Financial Conduct Authority and is a member of the London Stock Exchange.

The Company is registered in England with company number 2405923 at New Liverpool House, 15-17 Eldon Street, London EC2M 7LD.

Please consider the environment before printing this e-mail

unsubscribe from this list update subscription preferences


Please enter your comment!
Please enter your name here