Surprising Lithium Find in Brazil's Eastern Pegmatite Province Redefines Resource Potential

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Lithium Ionic Corp. (LTH:TSX.V; LTHCF:OTCQX; H3N:FSE) announced a substantial update to its NI 43-101 Mineral Resource Estimate (MRE) for the Baixa Grande Project, located in Minas Gerais, Brazil. The updated estimate reflects a 32% increase in resources for the Baixa Grande project, underpinned by 35,734 meters of diamond drilling across 167 holes. As one of three NI 43-101 deposits in Lithium Ionic's portfolio, this update contributes to the company's global mineral resources of 64.7 million tonnes (Mt), further positioning Baixa Grande as a critical asset with 6.52 million tonnes (Mt) in the Measured and Indicated categories and 12.90Mt in the Inferred category, totaling approximately 460,000 tonnes of lithium carbonate equivalent (LCE).

The Baixa Grande deposit, part of the Salinas group of properties, lies within Brazil's Eastern Pegmatite Province, a region renowned for spodumene-bearing pegmatites. Notably, the project's resources extend to both surface and underground, with mineralization remaining open at depth and along strike. According to Blake Hylands, P.Geo., CEO of Lithium Ionic, "This updated mineral resource estimate for Baixa Grande is a testament to the remarkable work of our exploration team in successfully delineating and expanding the deposit with targeted and efficient drilling."

The announcement also follows regional consolidation trends, as seen in Pilbara Minerals' 2024 acquisition of Latin Resources and their neighboring Colina deposit for US$369.4 million. This deal highlights the strategic importance of lithium assets in this area and underscores the quality of Lithium Ionic's broader land package, which spans 17,000 hectares.

Industry Perspectives on Lithium Ionic

Battery Metals analyst Frederic Tremblay, CFA from Desjardins Capital Markets report, maintained a "Buy" rating for Lithium Ionic Corp. in his January 14 update, with a target price of CA$3.75, citing the strategic importance of the Baixa Grande project's updated mineral resource estimate (MRE) and reinforcing the project's appeal as a standalone asset or a potential acquisition target.

Analyst Frederic Tremblay, CFA from Desjardins Capital Markets report, maintained a "Buy" rating for Lithium Ionic Corp., with a target price of CA$3.75.

The Desjardins report also emphasized the significance of permitting progress at the Bandeira project, where Lithium Ionic was nearing approval for its Licença Ambiental Concomitante (LAC) license, a key step toward construction. Desjardins viewed this milestone as a near-term catalyst supporting the company's growth. The analysis highlighted Lithium Ionic's strong resource expansion capabilities and strategic positioning within Brazil's lithium sector, underscoring its value in the evolving market.

The Global Lithium Landscape: Trends and Insights

The lithium industry, a cornerstone of the global energy transition, continues to evolve amidst dynamic market conditions and technological advancements. At the GDMMC conference in late November, Lee Allen of Fastmarkets reported in a November 27 article on significant capacity expansions planned by lithium battery recyclers in Europe despite challenging market conditions. He noted that "the economic viability in running lithium-ion battery recycling operations has suffered this year, with prices for battery metals declining significantly." However, Allen also pointed out that the supply of end-of-life batteries is expected to grow significantly, from 96,000 tonnes in 2024 to 252,000 tonnes by 2029, providing long-term growth opportunities for the sector.

On November 30, Alex Koyfman of Energy Capital reflected on the remarkable growth trajectory of lithium demand. Despite a challenging period marked by market corrections, he emphasized that "world lithium demand continued to grow at a fairly predictable rate across a wide spectrum of product classes." Koyfman attributed previous volatility to speculative exuberance but noted that the market is poised for a recovery driven by enduring fundamentals. He cited lithium's essential role in powering diverse technologies, underscoring its strategic importance for the future.

In his December 28 analysis for Energy and Capital, Alex Koyfman revisited the lithium sector's trajectory, asserting that "the lithium market will certainly be back and will exceed previous highs in due course." He compared lithium's current market dynamics to historical recoveries seen in tech and housing, emphasizing the cyclical nature of growth industries. Koyfman concluded that lithium demand remains robust across multiple sectors, making it a vital resource for the energy transition.

Most recently, on January 14, USA News Group reported that analysts are forecasting 2025 to be a pivotal year for lithium, with the global market projected to reach approximately US$28.45 billion by 2033, supported by a CAGR of 12.50%. Benchmark analysts highlighted a narrowing surplus in lithium carbonate equivalent, dropping from 150,000 tonnes in 2024 to an estimated 80,000 tonnes in 2025. The report also underscored the need for substantial investments, with US$116 billion required by 2030 to meet growing EV production targets.

Unlocking Growth Potential at Baixa Grande

According to their investor presentation, Lithium Ionic is strategically advancing the Baixa Grande Project alongside its flagship Bandeira development project. The company is advancing multiple key initiatives that underscore its growth potential in the global lithium sector. The company is preparing to release the NI 43-101 technical report associated with the feasibility study (FS) for its flagship Bandeira Lithium Project. The FS, expected to be available on SEDAR+ and the company's website within 45 calendar days of the May 29, 2024, press release, highlights the project's technical and economic feasibility. It reflects input from industry-leading consultants, including AtkinsRéalis, GE21, Planminas, and L&M, who bring extensive expertise in mineral resource estimates, environmental studies, and financial modeling.

Upcoming milestones include the final approval of construction permits for the Bandeira project, anticipated by Q4 2024, with initial mine development slated to begin shortly thereafter. Commissioning and initial production at Bandeira are targeted for 2025, supported by comprehensive engineering and construction plans.

Additionally, Lithium Ionic is leveraging its extensive land package in the highly prospective Minas Gerais region of Brazil, with ongoing exploration and resource expansion expected to bolster its strategic positioning. These developments, combined with the company's robust permitting progress and supportive local government policies, solidify Lithium Ionic's trajectory as a key player in the lithium industry.

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 CAUS$135 million, and it trades in a 52-week range of CAUS$0.41 - 2.24 per share.