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*See important disclosures at the bottom of this report rating and risk definitions. All figures in C$ unless otherwise specified.
Four early-stage lithium projects, covering over 67,000 hectares in Argentina
Argentina is the fourth largest lithium producer in the world, with the third largest reserve-base
Rincon West is adjacent to lithium projects owned by Rio Tinto (NYSE: RIO) and Argosy Minerals (ASX: AGY
A nine-hole maiden drill program at the first target, Villanoveno II, returned attractive lithium values, including 258 m of 287-402 mg/L. Additionally, preliminary results from an ongoing six-hole drill program at the second target, Rinconcita II, returned promising values from the first three holes.
Drilling has delineated a 5 km long x 3.3 km wide x 0.20 km thick mineralized aquifer
All 12 holes of the maiden drill program intersected lithium brine over long intervals, with values ranging from 152 to 402 mg/L; we note that these grades are on the lower end of the typical 200 to 700 mg/L range for lithium juniors
We should be able to calculate a preliminary speculative resource estimate after the current drill program
Management is planning a six-hole drill program at the third target (Paso de Sico) before completing a maiden resource estimate. We note that delineating a lithium resource is typically faster and more cost-effective than for mainstream metals like gold and copper.
Drilling at Rincon West, followed by a maiden resource estimate. Electromagnetic surveys at other projects, followed by drill programs
Strong balance sheet with $52M in working capital, including $49M pre-paid for up to 15,500 m of drilling
As LIT’s projects are in pre-resource stages, we are continuing to value LIT based on the average EV/hectare of lithium juniors.
LIT’s negative enterprise value implies that the market is assigning zero value to its assets
Early-stage lithium juniors are trading at $358/ha (previously $524/ha). Applying $358/ha, we arrived at a fair value estimate of $0.40/share on LIT (previously $0.52/share)
We are reiterating our BUY rating, and adjusting our fair value estimate from $0.52 to $0.40/share. With Stellantis’s backing and a negative enterprise value, we believe LIT stands out as one of the most undervalued lithium juniors. We anticipate that as additional drilling results are released, the market will start to recognize the stock’s significant undervaluation.
The following risks, though not exhaustive, will cause our estimates to differ from actual results:
