Analyst Says Co. Has the Potential for Future Resource Growth
Research Report

BMO Capital Markets analyst Greg Jones, in a research report published on August 12, 2024, resumed coverage of Lithium Ionic Corp. (TSX-V: LTH; OTCQX: LTHCF; FSE: H3N). The analyst maintained an Outperform rating and gave the company a target price of CA$2.00.

Lithium Ionic recently announced several transactions:

1. Sale of a 2.25% life-of-mine gross revenue royalty on Bandeira to Appian Capital Advisory for US$20 million in cash.
2. Acquisition of the remaining 15% stake in Salinas.
3. A CA$15 million private placement.

Jones views these transactions positively, stating, "The royalty sale proceeds provide funds to further advance Bandeira development."

He added, "Consolidating Salinas ownership was a logical move, and doing so prior to the forthcoming PEA (expected H2/24) likely means LTH was able to consolidate the project at an attractive valuation."

The analyst noted that the private placement was completed at a premium to the prior closing price, with shares issued at CA$0.90, approximately 100% higher than the share price at the time of the report of CA$0.45

The report noted that Lithium Ionic's strategic focus includes advancing its Bandeira project towards production in 2026 and developing the Salinas project, with a PEA expected in H2 2024. The company's position as the second-largest landholder in Brazil's Lithium Valley provides the potential for further resource growth.

BMO Capital Markets' valuation methodology for Lithium Ionic is based on a combination of NAV multiple and an in-situ value for resources. "Our target price is set based on a 0.45x multiple of our fully financed 8% NAVPS. We apply an in-situ value for the current Salinas resource and exploration credit for the Noe target at US$25/t LCE, in line with the hard rock developer peer median," Jones stated.

 Jones concluded, "With LTH trading at US$10/t LCE vs. developer peers at ~US$24/t, we believe there is near-term opportunity for LTH to re-rate towards the peer multiple, which would imply a ~50% share price uplift."

Important Disclosures:

1. Lithium Ionic Corp. is a billboard sponsor of Streetwise Reports and pays SWR a monthly sponsorship fee between US$4,000 and US$5,000.
2.  This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company. 

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Disclosures for BMO Capital Markets, Lithium Ionic Corp., August 12, 2024

Analyst's Certification I, Greg Jones, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report. Analysts who prepared this report are compensated based upon (among other factors) the overall profitability of BMO Capital Markets and their affiliates, which includes the overall profitability of investment banking services. Compensation for research is based on effectiveness in generating new ideas and in communication of ideas to clients, performance of recommendations, accuracy of earnings estimates, and service to clients. Analysts employed by BMO Nesbitt Burns Inc. and/or BMO Capital Markets Limited are not registered as research analysts with FINRA. These analysts may not be associated persons of BMO Capital Markets Corp. and therefore may not be subject to the FINRA Rule 2241 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account. Company Specific Disclosures Disclosure 2: BMO Capital Markets has provided investment banking services for remuneration with respect to Lithium Ionic Corp. within the past 12 months. Disclosure 4: BMO Capital Markets or an affiliate has received compensation for investment banking services from Lithium Ionic Corp. within the past 12 months. Disclosure 6A: Lithium Ionic Corp. is a client (or was a client) of BMO Nesbitt Burns Inc., BMO Capital Markets Corp., BMO Capital Markets Limited or an affiliate within the past 12 months: A) Investment Banking Services Disclosure 8A: BMO Capital Markets or affiliates have beneficial ownership of 1% or more of any class of the equity securities of Lithium Ionic Corp. (a) as of the end of the month prior to the issuance date of the research report, or (b) as of the end of the second most recent month if the report issuance date is less than 10 days after the end of the prior month.

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