Drill Bit Hits Thickest Intercept So Far at Lithium Asset
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Disclosures for BMO Capital Markets, Lithium Ionic Corp., October 8, 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.

Methodology and Risks to Target Price/Valuation for Lithium Ionic Corp. (LTH-TSXV) Methodology: We use a NAV-based methodology to value Lithium Ionic shares consistent with other developers in the mining sector. We apply a 0.60x multiple to our calculated NAV, appropriate in our view for an early-stage development company with a low-capital project in an attractive jurisdiction and balanced by the current market environment. Risks: 1) Permitting Risk. Delays in advancing the Bandeira project through permitting in a timely manner could impact our assumed production start date and negatively impact our NAV per share estimate. 2) Financing Risk. Inability for the company to secure the financing required to advance its development plans along its anticipated timeline could impact our modelled start date, and if significant equity capital is raised it could introduce dilution to shareholders. 3) Stage of development. The Salinas project is early-stage and its ability to continue growing and improving the confidence of the resource base and defining the project economics is a key aspect to the company's growth story, in our view. 4) Geological risk. The presence of a river over portion of the Outro Lado deposit requires further study. A river passes over a portion of the Outro Lado deposit and will not allow for open pit mining of this area. Underground mining is contemplated, and additional mine design study is required, which could adversely affect the current mineral resource estimate for this area (3.4 Mt at 1.47% Li2O). 5) Commodity price risk. Weakness in lithium and spodumene demand and commodity prices could negatively impact share price performance.

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Lithium Ionic Corp. (TSX-V: LTH; OTCQX: LTHCF; FSE: H3N) encountered its thickest intercept to date via drilling at its Bandeira project in Brazil, reported BMO Capital Markets analyst Greg Jones in an Oct. 8 research note.

"These [new drill] results continue to highlight the exploration potential at the property and could potentially provide for optimization opportunities," Jones wrote. "Lithium Ionic is one of our preferred lithium developers."

Undervalued Stock, 40% Return

Lithium Ionic, with a share price at the time of the report of about CA$0.89, noted Jones, is trading below the peer median, at about US$40 per ton of lithium carbonate equivalent versus US$60.

BMO's target price on the Canadian company, is CA$1.25 per share and implies a possible return of 40%.

Lithium Ionic remains rated as Outperform.

Drill Results Offer Upside

The new drill results from Bandeira contained the following highlight intercepts, reported Jones, including the thickest intercept drilled to date via hole 24-276:

• 64.7 meters (64.7m) of 1.39% lithium oxide (Li2O) from 35m, including 22m of 1.67% Li2O and 20m of 1.62% Li2O, from hole 24-276
• 13m of 1.11% Li2O, including 5m of 1.51% Li2O, from hole 24-266

Lithium Ionic perhaps could capitalize on the upside these results offer to enhance the project even though the feasibility study (FS) already has been completed, the analyst wrote. The company has options for how to do it.

It might incorporate the resources defined after the FS cutoff date and, thereby, extend the mine life. It might upgrade and incorporate near-surface Inferred resources "to smooth the production profile." It might move the processing of higher-grade material to earlier in the mine plan.

5 Reasons to Like LTH

Jones presented the following reasons why BMO considers Lithium Ionic a preferred lithium developer.

1) Its Bandeira project requires low capital, as outlined in the FS, about US$290 million, as estimated by BMO.

2) The company could be the first to production among developers in BMO's coverage universe, given it has a well-understood permitting process and second-mover advantage, neighbor Sigma Lithium Resources being the first.

3) The Bandeira property encompasses a large, underexplored area, meaning the potential to expand the current resource exists.

4) Lithium Ionic has a second project in development in Brazil, called Salinas, of which a preliminary economic assessment is expected by year-end 2024.

5) The company is undervalued.