An upgrade to the mineral resource estimate (MRE) at the Colina deposit within the Salinas Lithium Project of Latin Resources Ltd (ASX:LRS, OTC:LRSRF) in Brazil has prompted Bell Potter to release a research note on the company.
Having considered the upgrade MRE and the outlook for the company, Bell Potter maintains its ‘speculative Buy’ recommendation and $0.40 per share valuation.
LRS is on track to make a final investment decision at Salinas by the year’s end, ahead of anticipated first production in 2026.
Bell Potter outlined what the key value catalysts were now for LRS this year - the initial reserves and definitive feasibility study (DFS), offtake contracts, financing outcomes and final investment decision.
“Colina has the potential to deliver new lithium supply into what we expect to be structurally short markets. Uncommitted offtake and an open share register provide further strategic appeal. Our valuation is $0.40/share (unchanged)."
In the report, Bell Potter outlined what to look out for from LRS:
Initial reserves and DFS due Q3 2024 -
LRS completed the Colina Lithium Project Preliminary Economic Assessment in September 2023 and the final pre-DFS MRE update in May 2024.
LRS is expected to release an initial reserve and the results from a DFS that is underway in the upcoming September 2024 quarter.
Offtake and financing discussions underway -
LRS has entered formal discussions relating to spodumene concentrate offtake and project financing. It recently established a team and opened an office in Singapore to facilitate the offtake and financing discussions and it has received offtake and funding proposals which are under review.
Binding offtake agreements are expected to be concluded by the end of the year in preparation for the Salinas project’s final investment decision.
Long-lead equipment procurement in 2H 2024 -
LRS has begun the procurement process for long-lead equipment for the Salinas Project.
To meet its guided first production in mid-2026, Bell Potter expects that orders for key processing plant equipment will be made over the course of 2H 2024.
Planalto initial MRE later in 2024 -
LRS announced the Planalto discovery in January 2024, around 1.8 kilometres to the southwest of the existing Colina deposit MRE.
Follow-up drilling has identified similar pegmatite zones; assays are pending. Around five drill rigs are currently on site at Planalto and LRS expects to be in a position to define an initial MRE for this prospect by the end of 2024.
The Bell Potter note follows a similar update from Pac Partners, Latin Resources 'top-tier hard rock lithium asset'; remains a Buy says Pac Partners, while more LRS broker research is available on the company’s website.