Lithium Power International (LPI): Initiation - Riding the lithium wave
Edison Investment Research Limited
London, UK, 22 March 2022
Lithium Power International (LPI): Initiation - Riding the lithium wave Lithium Power International (LPI) owns 51.6% of the advanced lithium brine project in the Maricunga Salar in Chile. Based on the 2022 updated feasibility study, the project has relatively attractive economics supported by the strong lithium market fundamentals and low opex. Lithium demand is expected to grow exponentially, driven by e-mobility, with prices likely to remain at elevated levels that will encourage new supply. We value LPI at A$1.02/share based on the 15.2ktpa carbonate operation and additional lithium resources that are currently outside of the project's scope.
Our valuation of LPI is based on the 15.2ktpa project, and key operating and cost assumptions from the 2022 DFS. We use a discounted cash flow to equity approach that assumes equity dilution. At a 10% discount rate, our NPV yields a valuation of A$0.85/share for LPI. To this we add a value for the remaining lithium resources, which we estimate at A$0.18/share. A 10% increase in our long-term carbonate price moves our base case NPV up by c 20%. We see the key risks as an uncertain political situation and general opposition to lithium projects in Chile.
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1308093 22-March-2022