The company recently completed an 18 hole-drill program to expand the current resource (574kt LCE). The results were impressive, as the average grade exceeded 1,000mg/l, whilst mineralisation extended from surface to 360m. The resource upgrade is due in 2Q17. This will be followed by pilot plant testing, a Preliminary Economic Study by the end of 2017 and a Definitive Feasibility Study during 2018.
Analyst Comment: With a string of excellent exploration results earlier this year that should result in a significant resource upgrade to be released in the coming weeks, Lithium Power could be on the verge of a substantial re-rating given the potential that is beginning to be uncovered at the Maricunga Project.
The exploration program exceeded our expectations, as the high grade nature of the deposit was maintained, whilst extending the mineralised zone both along strike and at depth. We believe this should see the resource at least triple in size (1.5Mt LCE - TSI assumption) in the coming months (2Q17).
This updated resource will not include the deep drill hole, which nearly doubled the depth of the known mineralisation (200m to 360m). This result highlights the long term potential for Maricunga's mine life to possibly double in size or alternatively increase the long term production target (TSI assumption - 20ktpa LCE).
Other results have also been promising. The flow test work (25L - 38L / sec) was some of the best publicly released results for a lithium brine project in South America, whilst the evaporation rate was also impressive (brine concentration increased 5 times in 3 months). The evaporation rate is important as this could potentially reduced processing time (industry average +12 months), which would either lower costs and/or increase production.
Valuation: We initiated coverage on Lithium Power with a valuation of $1.10 / share (SP $0.30 / share). We determined this valuation by completing a DCF valuation on the Maricunga Project. Full details of our valuation analysis including our key assumptions can be viewed at, http://thesophisticatedinvestor.com.au.
To view the video, please visit:
About Lithium Power International Ltd
Lithium Power International Limited (ASX:LPI) (FRA:24L) is a pure-play lithium explorer and developer, focusing on developing and fast-tracking to production the high-grade Maricunga lithium brine project in Chile.
LPI has a well known performing technical team with the experience to take the Maricunga project all the way through the development stages to production.
The regions that LPI is currently focussed on are:
1. Maricunga JV (Chile) – On 13th September 2016, Lithium Power announced the creation of a new JV to develop the world-class Maricunga lithium brine deposit in northern Chile.
2. Pilbara (Western Australia) – LPI has one granted exploration tenement and two pending exploration applications covering 203km2 in the Pilbara region of northern Western Australia. The largest granted exploration tenement is at Pilgangoora-Houston Creek is 2-3km west of the Pilbara Minerals (ASX:PLS) and Altura Mining (ASX:AJM) lithium deposits.
3. Greenbushes (Western Australia) – LPI has two granted exploration tenements covering 400km2 in the Greenbushes area of southern Western Australia. The tenements are adjacent to the world’s largest hard rock lithium mine owned & operated by Tianqi/Talison.
4. Centenario (Argentina) –Through its Argentinian subsidiary, Lithium Power holds a total of 6 granted tenements in the Centenario lithium brine salar within the Salta province of the Puna Plateau. In total, the 6 granted tenements cover an area of 61.52km2. In addition, there is 1 further tenement in the grant review stage.
With the exception of the Maricunga JV, all tenements are 100% owned by LPI or LPSA (including rights to the Centenario tenement which is the subject of review by the Argentinian mining authorities).
About The Sophisticated Investor
The Sophisticated Investor is a new equity investment tool which seeks to assist investors in becoming more informed in their investment decision making. We show and tell investors about a company in a series of short, informative videos. We possess specialist equity analyst skills and are complemented by video professionals. We conduct site visits and interview management, in a way most investors simply aren’t able to access. We promote long term value creation for investors by employing detailed financial analysis and intrinsic value calculations.
The Sophisticated Investor
Lithium Power International Ltd