What the Analysts Say
WHAT THE BROKERS SAY: Breakaway Research takes a look at the prospects of lithium-focused lepidic Ltd (ASX: LPD).
Analyst: Breakaway Research
Website: www.breakawayresearch.com
Company: Lepidico Ltd (ASX: LPD)
Lepidico is an ASX-listed company that owns the L-Max technology.
This technology enables the processing (leaching) of lithium chemicals from lepidolite-micas in contrast to traditional lithium producers which process spodumene or petalite mineralisation to produce a concentrate.
This provides Lepidico with a unique advantage as lepidolite-mica mineralisation has been ignored in lithium deposits in the past.
Lepidico or its partners have commenced or are preparing to drill on a number of projects to rapidly build a lithium inventory which can be processed by the company’s patented L-Max technology. These projects are:
– Defining a lepidolite-mica resource at the Alvarrões mine in Portugal.
– Defining lepidolite-mica mineralisation at the Separation Rapids project in Kenora, Ontario.
– Testing the PEG009 lepidolite-mica prospect at the Pioneer Dome prospect, WA.
The building of a resource inventory is now a priority following the company’s positive pre-feasibility study on the Phase 1 development of the L-Max technology.
This technology can extract Lithium (Li) from Li-rich mica minerals such as lepidolite while the industry itself has typically focused on hardrock spodumene deposits or brine deposits.
As noted in our earlier research, the pre-feasibility study findings focused on a Phase 1 commercial project as follows:
– Production of 3,000 tpa battery grade lithium (LCE) C1 costs at nil after by-product credits.
– Kenora, Ontaria has been selected as a likely site
– Total project value at commissioning is estimated to be around US$190 million using a 10 per cent discount rate and a US$10,000 per tonne lithium (LCE) price. This equates 3.9 cents per LPD share after a recent capital raising.
After potentially establishing a resource inventory by the end of 2017 and in alignment with a completed positive feasibility study, we expect Lepidico will be in a position to commence the Phase I Project development in Kenora, Canada.
Lepidico owns the L-Max technology – a technology which enables the extraction of lithium from lithium micas like lepidolite.
The L-Max technology leaches the lithium in a relatively straightforward process using commonly available reagents.
The process produces a number of valuable by-products and this value offsets the cost of producing lithium on a C1 cash cost basis (estimated by the company’s pre-feasibility study).
The company has released project parameters for its DFS and seeks to fast track development for first production in 2019.
The company has access to valuable technology which could create a leading position in the lithium market in the short to medium term.
The next step is developing a resource base to provide feed to its future L-Max plants and combining this with a positive feasibility study outcome towards the end of 2017 should significantly de-risk the project and translate into a higher share price.
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