Atlantic Lithium Limited (AIM:ALL, OTCQX:ALLIF, ASX:A11) has garnered a repeat 'buy' rating with a 46p price target from analysts at Liberum Capital who noted that the company's "best-in-class Ewoyaa spodumene lithium project in Ghana continues to deliver".
The 'house' broker's analysts pointed out that the latest assay results, reported by the company last Thursday, provided further confidence both in resource conversion and in extending mineralisation.
The analysts pointed out that Atlantic Lithium has completed this year’s drilling programme, which was expanded by a further 10,000metres (m), for a total of 47,000m drilled. The additional 10,000m was due to further extensions beyond the initial plan, additional planned mine infrastructure and to achieve sample volumes of various material types for metallurgical testwork. Thus assay results have been reported for around 15,000m so far.
The latest results were from 1,879m of infill diamond holes and 3,488m of infill and reverse circulation (RC) holes. In Atlantic’s view, the results to date provide further confidence in resource-to-reserve conversion, and resource expansion potential.
An updated resource estimate is targeted for the end of 2022 or early 2023, depending on lab turn-around time. This will inform the Definitive Feasibility Study (DFS), which is targeted for completion in mid-2023. Assuming receipt of a Mining Licence (ML) in Q3 2023, Atlantic said it believes that production could potentially commence in Q3 2024.
Atlantic noted that project metrics “substantially improve” with increased mine life beyond 12.5 years, and the Liberum analysts believe there to be very good potential for mine life in the DFS to be more than 15 years, assuming the process throughput rate remains 2 mln tonnes per annum.
They concluded that their valuation for Atlantic Lithium would be 66p per share at a flat spodumene concentrate (6% Li2O, ‘SC6’) price of US$1,500 per tonne FOB, let alone at the current spot price of US$5,800 per tonne, or the around US$8,000 per tonne SC6-Equivalent price recently achieved by Pilbara Minerals.
In afternoon trading on Tuesday, Atlantic Lithium shares were changing hands for 32p.