VSA Morning Miner, 18/09/20
American Lithium (CVE:LI)
American Lithium (CVE:LI) has announced a substantial improvement in its cash position through the exercise of warrants bolstering cash to C$6.7m from the last reported amount of C$0.8m at the last financial results. As highlighted, the company had a substantial number of in the money warrants expiring September 2020 along with other in the money warrants which have been exercised. With the additional cash the company will be well placed to achieve its near term milestones which are largely focused on metallurgical test work at the bench scale and in a pilot plant to be constructed over the next year. The company also plans to complete a PEA in 2020. This will, in our view, build on the early success which has demonstrated the potential to produce lithium carbonate following simple and fast acid leaching, ultimately indicating a low cost production process.
As well as recent progress on met testing, the company has also been shoring up its land position with a recent additional expansion of the license area. In this announcement the company reports the acquisition of over 300 acres of privately held land and the accompanying water rights which cover 1,176 acre-feet of water rights. The vendor will receive US$0.3m upfront with US$1m to be paid in equal annual instalments over the next four years. The land will be the site of the previously mentioned pilot plant while access to water derisks a crucial aspect of project development. That said, based on management’s comments we expect the company to minimise and recycle water wherever possible given the increasing importance of sustainable activity in the lithium industry.
We reiterate our Buy recommendation and target price of C$3.94/sh.
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