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.
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