This buy-rated stock is a lithium exploration and development company with a goal of becoming a low-cost supplier for the burgeoning lithium battery industry, asserts small cap specialist Tom Bishop, editor BI Research.
Lithium X Energy NPV (LIXXF) owns 50% of the Sal de los Angeles lithium brine project in the prolific “Lithium Triangle” in mining friendly Salta province, Argentina.
This area is a well known for positive historical economics, grade and size. It has 2 million tonnes of indicated and inferred reserves here. Lithium X also also has the option to acquire up to 80% of this project.
Sal de los Angeles is currently in the permitting process for a 2,500 tonne (of lithium carbonate equivalent or LCE) per annum pilot ponding facility.
Meanwhile a feasibility study is well underway for which the pilot facility will provide data. They hope to table this in 2017, and this will give the economics of the project-capital cost, operating costs, production, payback, etc.
This will enable a decision to proceed and raise the necessary financing ... or more likely with this management team, the sale of the company to a bigger industry player.
I should note that a preliminary feasibility study was done back in 2011 indicating a net present value of over $500 million. Can we take this to the bank? No, which is why the company is doing its own assessment.
But just to get a rough idea, that study suggests the company might be worth in the ballpark of $4 a share. We’ll get a much better idea next year when they table the updated feasibility study.
Meanwhile, Lithium X is also exploring a large land package in Nevada’s Clayton Valley, contiguous to the only producing lithium operation in North America. We should hear something on that pretty soon.
While the Nevada operations are not the main event in this recommendation, maybe we’ll get some gravy there. The shares remain a Buy.
