VSA Capital Market Movers – American Lithium

0
26
18237500 - businessman hand pointing to investment as concept

American Lithium#: Secure, Scalable and Sustainable


Acquisition Completed


American Lithium (CVE:LI) has completed the acquisition of Plateau Energy Metals to create a diversified lithium development company with one of the largest contained lithium resources of c12mnt LCE, in an industry where scalability will be increasingly important. The Falchani project in Peru is a volcanic tuff, amenable to acid leaching and the management team, whose technical specialists join American Lithium’s, are already applying their extensive knowledge to the flagship asset in Nevada, Tonopah, as the company seeks to capitalise on the impressive strong recoveries and rapid leaching times which are central to the investment case. The combined entity has a cash position of C$19m following a recent fundraise while, with the US Bureau of Land Management (BLM) accepting the Plan of Operations as complete with particular recognition for the early detailed environmental studies undertaken so far, the company is therefore well placed to advance workstreams across both projects to deliver a number of milestones in 2021/2, including a PFS, with a holistic environmental focus.


US Lithium Upside Risk Being Realised


Lithium prices have been amongst the strongest performing in the metals & mining space YTD, up some 120%. However, the immature nature of the market has created a significant opportunity with lithium equities down 6% YTD based on the Global X Lithium ETF despite a recent rally. With President Biden committing US$1.9trn in response to COVID-19, of which a significant proportion is dedicated to the energy transition and building a domestic supply chain within the USA, the medium-term outlook for lithium has been strengthened. This has been underpinned by the 100-day White House review which has highlighted the imperative need to invest in the full-scale lithium battery supply chain including the sourcing and processing of critical minerals. However, despite the advance of domestic projects the USA is likely to remain a net importer and projects which can be controlled by the US either by their location, ownership or management teams will have strategic value as this domestic supply chain is developed.


Recommendation and Target Price


American Lithium, up 28% YTD, now has two complimentary development assets which can be developed to be cornerstones of the new US battery supply chains. The knowledge and data acquired in this transaction are likely to play a key role in derisking Tonopah and unlocking project value supported by a strong macro backdrop. Our valuation is now based on a combination of EV/t resource valuations and risked NAVs.

We reiterate our Buy recommendation and increase our target price 76% to C$6.95/sh.


Oliver O’Donnell, CFA, Natural Resources Analyst | T: +44 (0)20 3617 5180 | 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

LEAVE A REPLY

Please enter your comment!
Please enter your name here