Lithium Power International Ltd (ASX:LPI) is well capitalised for the electric car revolution after raising A$25 million in gross proceeds from a recent equity placement, according to a research report by Edison Investment Research Ltd.
The advanced lithium developer had a cash balance of A$26.5 million at the end of September, the research firm said, maintaining its cashflow-based valuation of the company at A$1.24 per share on a diluted basis.
Shares in LPI are currently trading at $$0.535 and the company's market cap is approximately A$207.32 million.
Despite the near-term economic weakness, Edison said demand for electric vehicles continued to grow at the expense of the internal combustion engine. The longer-term industry fundamentals remain intact, underpinned by ambitious global climate and decarbonisation targets.
Supported by supply shortages, cost inflation and project delays, lithium prices are set to remain elevated to incentivise new supply. “We believe the lithium market backdrop remains favourable for producers and advanced developers like LPI,” it added.
Following are excerpts from Edison’s research report:
As LPI announced in April, its technological partner GEA Messo has undertaken additional testing of Maricunga’s concentrated brines at the independent certified laboratory.
As a result of production process optimisations introduced as part of the project’s updated DFS (released in January 2022), LPI reported that samples of Maricunga’s concentrated brine consistently produced battery-grade lithium carbonate with 99.92% purity. This is significantly above the industry standard of 99.5% for battery-grade carbonate. In addition, the purity after loss of ignition was reported at 99.7%.
At the conference call held after the test results announcement, management reported that Mitsui has completed its due diligence process and the companies are discussing the terms that could lay the foundation for a definitive agreement.
At the same time, several unsolicited approaches that LPI has recently disclosed continue to progress and the company aims to update the market in the next 60–90 days.
It was also reported that LPI remains in contact with Codelco, which has recently been undertaking some exploration work at its part of the Maricunga salar (using LPI’s exploration camp).