With Edison client and integrated lithium producer/refiner Lepidico pressing ahead with plans for its Phase 1 Plant and, in sharp contrast to other metals, the price of lithium chemicals continuing to hover close to record highs, Lord Ashbourne has updated his analysis of the business.
Here are the main points every investor needs to know about his research. If you would like to learn more, read Lord Ashbourne’s full report ‘Coming in sight of the Rubicon’.
#1 At the forefront of the new wave
Despite obvious signs of increasing demand from EVs, almost no new lithium projects were announced during the COVID-19 pandemic. Now poised for a final investment decision to be taken, Lepidico’s Phase 1 project is, therefore, at the forefront of the current cycle.
#2 Developing a unique position
Lepidico has also been refining its development strategy for a full-scale Phase 2 Plant. Instead of being a fully integrated, owner-operated project, it is now being thought of as a centralised processing facility, taking and refining concentrate from third-party mines as well. According to Lord Ashbourne, this puts Lepidico, ‘in a unique position to develop a global market for lithium mica concentrate outside China.’
#3 Valuation continues to tick up
Despite expecting the Phase 1 project to take an extra six months than originally forecast, Edison Group has increased its valuation of Lepidico to 6.66 Australian cents per share. This increases up to 8.21 cents when including a risk-adjusted Phase 2 project.
#4 More value may yet be generated
Whilst not included in the valuation, Lord Ashbourne notes that Lepdico has growth ambitions which may be satisfied in a variety of ways. Significant exploration success at the current site in Namibia or the acquisition of another in-ground asset could result in a vertically integrated Phase 3 project. Alternatively – or in addition – Lepidico may decide to earn further revenue from the licensing of its patent-protected technologies.
For more on Lepidico, read Edison Group’s full collection of analysis, which can be found on the company’s profile page.
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