SUCCESSFUL PRODUCTION OF BATTERY-GRADE LITHIUM CARBONATE
Century Lithium announced that it has successfully produced battery-grade lithium carbonate (Li2Co3) at its Angel Island pilot plant. The produced lithium carbonate indicated purity as high as 99.5%, which is typ¬ically considered as battery grade. Importantly, LCE has now achieved an end-to-end capability to convert lithium claystone to battery-grade lithium carbonate at its pilot plant. Management is presently concen¬trating on the optimization of processes to decrease the projected capital and operating expenditures of the project while also facilitating advancements in environmental studies, securing necessary permits, and obtaining project financing.
Regarding environmental permitting, Century Lithium seems to be making good progress. The Company has created a preliminary hydrologic model and an operational plan while also pursuing agreements for water sources closer to the project site to mitigate logistical difficulties. The company is diligently searching for strategic partners and end-users for their lithium carbonate, in addition to potential customers for the sodium hydroxide by-product, which may help offset production expenses. Applications for government funding are currently being processed to facilitate further development.
We believe the Angel Island project positions LCE as a key player in the security domestic supply of bat¬tery-grade lithium carbonate, a key commodity for the growing electric vehicle and battery storage mar¬ket. However, the low lithium prices remain a substantial challenge in achieving profitability at its Angel Island Mine project. At the current level of lithium prices, we believe the project economics is unviable, and as such, we recommend that investors avoid the stock unless there is an improvement in lithium carbonate pricing.
Investment Highlights
Century Lithium Corp. (TSXV: ICE, OTCQX: CYDVF, FRA: C1Z) (“ICE,” or “Company,” formerly called Cypress Development Corp) has further progressed on initiatives previously covered, including production of battery-grade lithium carbonate (Li2CO3) at its pilot plant and advancing to permitting at its Angel Island Mine Project.
Successful production of battery-grade lithium carbonate: Century Lithium has announced the successful production of battery-grade lithium carbonate (Li2CO3) at its Angel Island pilot plant. The lithium carbonate produced achieved a high purity level of 99.5%, meeting battery-grade standards. Notably, Century Lithium has now demonstrated complete end-to-end processing capability, converting lithium claystone into battery-grade lithium carbonate within its pilot plant.
Next steps – environmental studies and permitting: Century Lithium is making steady progress with its environmental permitting efforts. The com¬pany has developed an initial hydrologic model and an operational plan and is working on securing water, sources nearer to the project site to reduce logistical challenges.
Project economics unviable at current lithium prices: Based on our analysis (on Pg 3), we believe Century Lithium faces heightened challenges in achiev¬ing profitability at the current lithium carbonate prices. Our DCF suggests a negative NAV at a price of US$15,000 per tonne and a discount rate of 12%.
Based on our analysis, we downgrade the stock to SELL driven by concerns around project’s unviability at the current lithium prices. We will revisit our thesis should there be an improvement in lithium carbonate prices.
