Key Milestone Reached For Advancing Lithium Projects in Brazil's Lithium Valley

1. Lithium Ionic is a billboard sponsor of Streetwise Reports and pays SWR a monthly sponsorship fee between US$4,000 and US$5,000. 
2. James Guttman wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee. 
3.  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. 

For additional disclosures, please click here.

Lithium Ionic Corp. (TSX-V: LTH; OTCQX: LTHCF; FSE: H3N) has achieved a milestone with the approval of its final exploration reports for the Bandeira and Outro Lado lithium properties by Brazil's National Mining Agency (Agencia Nacional de Mineracao, or ANM). This approval is a crucial step toward advancing the company's lithium projects within rich lithium deposits of Brazil's Lithium Valley.

The company has submitted both the mining concession application and the economic viability study (Plano de Aproveitamento Economico, or PAE) for the Bandeira property following the ANM's approval. These submissions mark a major move forward in the transition from exploration to production. The PAE outlines technical, economic, and environmental details of the mining project. This is seen as essential for securing the final approval needed for the project's operational phase.

Now, Lithium Ionic is awaiting approval for the Licenca Ambiental Concomitante (LAC), an environmental license that will permit construction at the Bandeira site, with approval expected in the coming months. The LAC is another important step before the mining concession can be fully granted.

Looking At Lithium

The lithium mining sector is experiencing rapid growth, driven by the increasing demand for electric vehicles (EVs) and energy storage systems, which rely heavily on lithium-ion batteries. A report by MarketsandMarkets, published on September 11, projected the lithium-ion battery materials market to grow from US$41.9 billion in 2024 to US$120.9 billion by 2029 at a compound annual growth rate (CAGR) of 23.6%.

This surge is largely fueled by the expanding electric vehicle market, which is expected to account for the largest share of the lithium-ion battery materials market. As governments worldwide implement stricter emissions regulations and promote electric mobility, the demand for high-performance lithium-ion batteries, and consequently lithium, is set to rise. This highlights the importance of companies like Lithium Ionic that are strategically positioned to contribute to the global lithium supply chain, ensuring the availability of this critical resource as the sector grows.

On September 10, Canaccord Genuity analyst Katie  Lachapelle maintained her Speculative Buy rating for Lithium Ionic Corp., with a price target of CA$2.50.

Seeing a significant expansion due to rising demand for electric vehicle (EV) batteries, the market for lithium has been generating attention.

On July 2, The New York Times reported that Western automakers had bypassed traditional suppliers and committed billions of US dollars to deals with lithium mining companies.

Auto executives emphasized the lithium's necessity.  Without it, they point out, companies in the United States and Europe would be unable to build the batteries required for their EVs. With electric vehicles seeing such an upsurge, the inability to produce batteries would jeopardize their ability to remain competitive.

On July 18, EnergyNews.US underscored how U.S. federal support, particularly through the Inflation Reduction Act (IRA), made lithium mines more profitable and less financially risky. The act's low-interest loans and EV sales tax credits provide essential financial backing to metal and mineral extraction projects. The report stated, “The energy transition is driving demand for batteries; funding from the Inflation Reduction Act and other federal programs is helping to fill it."

US News further reinforced the long-term growth potential of the lithium sector on August 30, noting that “experts are still predicting long-term growth in the EV market.” This sustained growth positions lithium companies as potential bargains for investors, especially those producing lithium and managing high-cost mines with flexibility.

Lithium Ionic's Catalysts

Lithium Ionic's recent approval of the final reports of exploration for the Bandeira and Outro Lado properties provides a strong signal of progress in advancing its lithium projects. The successful submission of both the mining application and the PAE for the Bandeira property demonstrates the company's commitment to moving the project forward. Blake Hylands, CEO of Lithium Ionic, emphasized that these approvals "validate the quality of our assets and accelerate our path towards becoming a near-term lithium producer."

The company's next major milestone is securing the LAC, which allows the company to begin construction at Bandeira. Achieving this will position the company to contribute to the global lithium supply chain. The strategic location of Bandeira and Outro Lado in Minas Gerais, within the mining-friendly environment of Lithium Valley, adds further potential for timely development.

What Analysts Are Saying

In an August 20 report, Desjardins analyst Frederic Tremblay also provided a strong endorsement of Lithium Ionic, rating it as a "Buy." Tremblay pointed out the company's "deeply depressed" valuation, with its shares trading at about CA$0.52 at the time, compared to his price target of CA$3.75, reflecting a potential upside of 621%.

He wrote that the recent acquisition of Latin Resources by Pilbara Minerals underscored the attractiveness of Brazil's lithium mining sector and highlighted Lithium Ionic's "cheap valuation" relative to its peers. Tremblay further noted that Lithium Ionic could be a potential acquisition target, reinforcing the company's value proposition in the growing lithium sector. He added that even without a takeout scenario, Lithium Ionic remained an attractive investment due to its strong asset base and strategic position in Brazil.

On September 10, 2024, BMO Capital Markets analyst Greg Jones rated Lithium Ionic Corp. as Outperform, with a price target of CA$2.00

On September 10, Canaccord Genuity analyst Katie  Lachapelle maintained her Speculative Buy rating for Lithium Ionic Corp., with a price target of CA$2.50. Lachapelle emphasized that Lithium Ionic's recent approval of the Final Exploration Reports for its Bandeira and Outro Lado lithium properties by Brazil's National Mining Agency marked an important permitting milestone. Lachapelle noted that the company had since submitted its mining concession application and Economic Viability Study for Bandeira, with the next key catalyst being the approval of the Licença Ambiental Concomitante (LAC), expected in the coming months. This approval would allow construction to commence at the Bandeira site.

Lachapelle also highlighted Lithium Ionic's stronger financial position following its oversubscribed private placement and royalty deal, raising CA$16 million and US$20 million, respectively. While this alleviated short-term funding concerns, Lachapelle pointed out that additional funding of approximately US$266 million would be necessary to fully finance the project. She also noted the potential for a strategic partnership or offtake agreement to serve as a catalyst for securing these funds. Lachapelle reaffirmed the CA$2.50 price target, which remained based on a 1.0x NAV valuation.

Additionally, on September 10, 2024, BMO Capital Markets analyst Greg Jones rated Lithium Ionic Corp. as Outperform, with a price target of CA$2.00 and a potential return of 223%. Analyst Greg Jones returned to highlight the company's progress with the approval of the final exploration reports for its Bandeira project by Brazil's National Mining Agency. This approval was seen as a critical step toward securing the mining concession, which would transition the project from exploration to production. Jones emphasized that the environmental license (Licença Ambiental Concomitante, or LAC), expected in late Q3 2024, would permit the commencement of construction activities at the Bandeira site. He noted that securing the necessary funding, projected at US$290 million, was also key to advancing the project toward its first production target in 2026.

In addition, Jones underscored that Lithium Ionic was well-positioned within the growing lithium sector, noting the company's strategic focus on advancing its 100%-owned projects in Brazil's Minas Gerais State, a favorable jurisdiction for lithium development. The analyst reaffirmed the company's strong growth potential, with significant catalysts ahead. 

Ownership and Share Structure

According to the company, management and insiders own 20% of the Lithium Ionic. 

One of the insiders, President & Director Helio Diniz, owns 5.52%, Director Michael Lawrence Guy owns 5.10%, Director David Patrick Gower owns 2.56%, and Andre Rezende Gumaraes owns 2.52%, according to Reuters.

30% is held by institutional investors. Reuters reports Waratah Captial Advisors owns 7.01%, JGP Gestao de Recursos Ltda owns 2.69%, RBC Global Asset Management Inc owns 1.94%, Sprott Asset Management LP owns 1.55%, BMO Asset Management owns 1.30%, and IXIOS Asset Management SA owns 1.20%

The rest is retail.

Lithium Ionic has 158.58 million shares outstanding and 131.15 million free-float traded shares.

The company's market cap is CA$101 million, and it trades in a 52-week range of CA0.41 - 2.24 per share.