VSA Capital Market Movers – American Lithium


VSA Morning Miner, 20/08/21

American Lithium (CVE:LI)

American Lithium (CVE:LI) has provided an update on its Plan of Operations submission (PO) highlighting the progress on the environmental assessment (EA). The Bureau of Land Management is reviewing the administrative draft of the EA currently which reflects an amended PO with 110 potential drill sites (up from 95) and five test pits for bulk sampling. With the submission of the EA complete this now firms up the time frame for the full approval of the PO by the end of Autumn.

The EA and PO incorporate the work necessary to take American Lithium through pre feasibility and by front loading the administration the company is aiming to streamline the development process. The EA is itself a fast-track process, compared to the Environmental Impact Statement due to the significant baseline work which the company had previously submitted on flora and fauna. We note though that by gaining all of the approvals up front the environmental bond will also be combined rather than staged.

This does not mean no newsflow until approval and American Lithium is continuing to progress its metallurgical testwork, including front end beneficiation, across multiple flowsheets which are being optimised for economics and environmental impact. The company will also twin two previous holes under its existing permits providing both samples for this testwork and they will also be extended to depth to accurately gauge the water table as part of the EA. Resource drilling which capped the resource depth at 152m (starting at surface) did not encounter the water table, which is a major positive in our view as far as the future environmental risks. However, it is vital to know where it does start for future mine planning and completing a rigorous EA.

Lithium prices have resumed their uptrend with reports of Chinese carbonate prices in excess of US$14,000/t, having consolidated between US$12-13,000/t for much of the previous quarter. Hydroxide has been trading above US$16,500/t meanwhile. SQM is now forecasting a 40% YoY increase in demand for lithium, whilst the next most significant project at Cauchari Olaroz is not due online until 2022.

We reiterate our Buy recommendation and C$6.95/sh.

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]

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