Grounded Lithium Corp. (GRD:TSX.V; GRDAF:OTCQB) expanded the land package at its flagship Kindersley lithium brine project in Saskatchewan by 8,498 hectares (8,498 ha) with the purchase, now closed, of 33 sections, reported Red Cloud Securities mining analyst Koby Kushner in a March 17 research note. Grounded now holds the mineral rights on 86,229 ha of property in the province.
"This new acquisition has turned out to be accretive as the company was quickly able to define a resource on the new ground by leveraging its knowledge of the surrounding project area," Kushner wrote. "It is also a testament to management's ability to move fast."
The Alberta-based lithium explorer offers investors an attractive potential return. The difference between its current share price, of CA$0.36, and Red Cloud's target price on it, CA$0.90 per share, represents a possible 150% gain. Grounded is a Buy.
Kushner presented the key information about Grounded Lithium's property transaction.
Boost to Project Resources
The acquisition added about 482,000 tons of lithium carbonate equivalent (LCE) to Kindersley's Inferred resources and took the project's total resources to about 4,200,000 tons (4.2 Mt) of LCE, noted Kushner. This represents a 13% resource growth.
Accordingly, Red Cloud increased its middle case resource estimate to 4.7 Mt of LCE, up from 4.2 Mt. (Its upper case, unchanged, is about 6.5 Mt LCE.)
Low Price Paid
Also of note, Kushner wrote, is that Grounded Lithium bought the land "on the cheap" for CA$425,000. This equates to about CA$50 per hectare, about half of what other land in the area has sold for. Also, the added LCE resources imply an acquisition price of about CA$0.88 per ton of LCE, which is much lower than the company's current valuation of CA$5.50 per ton of LCE.
Leader of the Pack
Kushner pointed out that Grounded now owns the largest lithium resource in Saskatchewan, having surpassed that of Prairie Lithium with its recent land acquisition.
Further, Prairie Lithium is being taken out for CA$70 million (CA$70M), nearly three times Grounded's current market cap of CA$25.1M.
What to Watch For
Grounded has several possible stock-moving events expected this year, Kushner noted, as it advances Kindersley toward commercialization. Currently, the company is seeking direct lithium extraction partners.
"The winning technology will form the basis of [Grounded's] maiden preliminary economic assessment in Q2/23 and also inform the pilot plant in Q4/23," wrote Kushner.
Ongoing catalysts include more land buys and more lithium well testing.
|Want to be the first to know about interesting Cobalt / Lithium / Manganese investment ideas? Sign up to receive the FREE Streetwise Reports' newsletter.||Subscribe|
1) Doresa Banning wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: Grounded Lithium Corp. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security. As of the date of this article, an affiliate of Streetwise Reports has a consulting relationship with: None. Please click here for more information.
4) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Grounded Lithium Corp., a company mentioned in this article.
Disclosures For Red Cloud Securities, Grounded Lithium Corp., March 17, 2023
Red Cloud Securities Inc. is registered as an Investment Dealer and is a member of the Investment Industry Organization of Canada (IIROC). Part of Red Cloud Securities Inc.'s business is to connect mining companies with suitable investors. Red Cloud Securities Inc., its affiliates and their respective officers, directors, representatives, researchers and members of their families may hold positions in the companies mentioned in this document and may buy and/or sell their securities. Additionally, Red Cloud Securities Inc. may have provided in the past, and may provide in the future, certain advisory or corporate finance services and receive financial and other incentives from issuers as consideration for the provision of such services.
Red Cloud Securities Inc. has prepared this document for general information purposes only. This document should not be considered a solicitation to purchase or sell securities or a recommendation to buy or sell securities. The information provided has been derived from sources believed to be accurate but cannot be guaranteed. This document does not take into account the particular investment objectives, financial situations, or needs of individual recipients and other issues (e.g. prohibitions to investments due to law, jurisdiction issues, etc.) which may exist for certain persons. Recipients should rely on their own investigations and take their own professional advice before investment. Red Cloud Securities Inc. will not treat recipients of this document as clients by virtue of having viewed this document. Red Cloud Securities Inc. takes no responsibility for any errors or omissions contained herein, and accepts no legal responsibility for any errors or omissions contained herein, and accepts no legal responsibility from any losses resulting from investment decisions based on the content of this report.
Company Specific Disclosure Details: In the last 12 months preceding the date of issuance of the research report or recommendation, Red Cloud Securities Inc. has performed investment banking services for the issuer.
Analysts are compensated through a combined base salary and bonus payout system. The bonus payout is determined by revenues generated from various departments including Investment Banking, based on a system that includes the following criteria: reports generated, timeliness, performance of recommendations, knowledge of industry, quality of research and client feedback. Analysts are not directly compensated for specific Investment Banking transactions.
Analyst Certification: Any Red Cloud Securities Inc. research analyst named on this report hereby certifies that the recommendations and/or opinions expressed herein accurately reflect such research analyst’s personal views about the companies and securities that are the subject of this report. In addition, no part of any research analyst’s compensation is, or will be, directly or indirectly, related to the specific recommendations or views expressed by such research analyst in this report.