Currency in AUD
Last close As at 09/06/2023
AUD0.33
▲ −0.02 (−5.71%)
Market capitalisation
AUD208m
Lithium Power International (LPI) announced on 28 October that its shareholders, as well as the shareholders of Bearing Lithium, approved Maricunga’s ownership consolidation, paving the way for the completion of the transaction in November. On 25 October the company provided a Q123 update that showed further gradual progress in the project’s development. Following the recent oversubscribed equity offering, LPI remains well capitalised. We maintain our valuation.
Lithium Power International |
Shareholders approve ownership consolidation |
Project update |
Metals and mining |
31 October 2022 |
Share price performance Business description
Analyst
Lithium Power International is a research client of Edison Investment Research Limited |
Lithium Power International (LPI) announced on 28 October that its shareholders, as well as the shareholders of Bearing Lithium, approved Maricunga’s ownership consolidation, paving the way for the completion of the transaction in November. On 25 October the company provided a Q123 update that showed further gradual progress in the project’s development. Following the recent oversubscribed equity offering, LPI remains well capitalised. We maintain our valuation.
Year end |
Revenue |
PBT* (A$m) |
EPS* |
DPS |
P/E |
Yield |
06/20 |
0.0 |
(12.7) |
(4.9) |
0.0 |
N/A |
N/A |
06/21 |
0.0 |
(6.0) |
(2.2) |
0.0 |
N/A |
N/A |
06/22e |
0.0 |
(9.6) |
(2.5) |
0.0 |
N/A |
N/A |
06/23e |
0.0 |
(3.3) |
(0.7) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Shareholder approval was one of the key steps in the announced ownership consolidation of the Maricunga lithium project, as a result of which LPI will gain full control of the asset in an all-share transaction. This will simplify the ownership structure, further de-risking the project and assisting in securing a funding package. The deal is expected to close in the second half of November. As the company has been busy completing the consolidation transaction, it had to delay the demerger of its Western Australia exploration lithium assets, which is now anticipated in Q1 CY23. In the meantime, LPI continues to increase its lithium holdings in Western Australia and has acquired four additional tenements.
LPI continues to gradually advance the Maricunga project, having announced that Mitsui’s due diligence process and discussions on the final terms of the definitive agreement are ongoing. In other news, the results of additional testing of Maricunga’s brines by GEA and any potential process design modifications resulting from these tests are expected to be announced by LPI in Q4 CY22.
Following the oversubscribed equity placement that raised A$25m in gross proceeds, LPI is well capitalised with a cash balance of A$26.5m at end-September 2022. We maintain our cash flow based valuation of the company at A$1.24/share on a diluted basis. Overall, despite the near-term economic weakness, electric vehicle demand continues to grow (H122 global PHEV and BEV sales up 62%, source: ev-volumes.com) at the expense of ICE (diesel in particular), and the longer-term industry fundamentals remain intact, underpinned by ambitious global climate and decarbonisation targets. Supported by supply shortages, cost inflation and project delays, lithium prices are set to remain at the elevated levels in order to incentivise new supply. We believe the lithium market backdrop remains favourable for producers and advanced developers like LPI.
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SigmaRoc (SRC) continues to benefit from resilient demand in both the industrial mineral and construction markets, a continuing trend which, based on FY22 consensus, will see adjusted pro-forma EBITDA growth of 19% pa since the IPO in 2017, as calculated by the company. Q322 like-for-like revenue growth was 19%, to £394m, and despite rising input prices the EBITDA margin was 19.5%, ahead of management’s expectations. The group trades on an FY22e P/E of 7.0x, at a comfortable discount to its prospective average of c 11x over the past five years.
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