Orior Capital suggested a valuation of 29 cents per share, or about 9 times the current share price.
Lake Resources NL (ASX: LKE) (OTC: LLKKF) is incredibly undervalued according to a new research report from Simon Francis of Orior Capital, a former Asia leading metals and mining analyst at Macquarie, Credit Suisse and HSBC.
This research highlights the potential value of the Kachi Lake Lithium Brine project in Argentina as a result of the recently published Pre-Feasibility Study (PFS) of its sustainable and scalable direct mining process.
The Hong Kong-based analyst highlighted Kachi’s “significant and sustainable competitive advantages”, including its ability to produce a 99.9% lithium carbonate battery grade product with low impurities, based on a sustainable process, as sought after by electric vehicle (EV) manufacturers.
Francis’ research refers to the production of pilot plant module samples as a critical value catalyst for Lake.
The report also highlights growing global demand for lithium as electric vehicle penetration increases, but supply issues are expected to lead to growing supply shortfalls by the mid-2020s, especially for products. battery quality.
Valuation of 29 cents per share
Noting that “Lake looks incredibly undervalued,” Francis said, “Despite strong financial measures, the benefits of direct mining and the excellent long-term outlook for lithium, Lake Resources is trading below 2%. the NPV.
“The Canadian company Standard Lithium, which is also developing a direct mining project, is trading at around 20% of attributable NPV.
“In February 2020, Orocobre paid approximately 16% of the NPV to acquire Advantage Lithium.
“Valuing Kachi at 15% of NPV and other Lake projects at, say, A $ 25 million, suggests a valuation of $ 0.29 per share. That’s about 9 times the current share price. “
Shares today were up 14% to 4 cents and are up from 2.5 cents at the close on March 24.
Progress of the pilot plant
Following Lake’s recent publication of the Kachi PFS, the company has stepped up discussions with downstream participants and funders.
Lake also processes Kachi lithium brine samples at its technology partner, Lilac Solutions’ direct mining pilot plant module in Oakland, California.
Lilac has been restricted to basic services while ‘shelter-in-place’ restrictions are in place, but these are currently expected to be lifted next week, allowing Lilac to resume all operations and other providers. services to reopen, which is critical to Lilac’s operations.
Significant investment in renewable energies
The importance of new projects capable of producing a battery quality product has been highlighted by the recent investments announced by Europe in battery minerals, notably France (8 billion US dollars), Germany (more US $ 1 billion) and the European Union (US $ 88 billion).
China, the world’s largest electric vehicle market, has also extended state subsidies and tax breaks to “new energy vehicles” while Korea’s $ 110 billion “New Green Deal” South includes substantial investments in renewable energies.
Electric vehicles have been prioritized when automakers reopen, according to discussions in the sector.