Grounded Lithium Corp. (GRD:TSX.V; GRDAF:OTCQB) has announced the filing of its preliminary economic assessment, "NI43-101 Technical Report: Preliminary Economic Assessment Kindersley Lithium Project- Phase 1." The report is dated August 9, 2023, and effective as of June 30, 2023. The PEA addresses only the first phase of 11,000 tons per year of battery-grade lithium hydroxide monohydrate (LHM) production from the Kindersley Lithium Project (KLP). The PEA and a corporate presentation detailing the PEA results are available on the company's website.
The highlights of the PEA include that the company has an after-tax net present value (NPV) of US$1.0 billion using an 8% discount rate and a capital investment of US$335 million, implying an after-tax profitability index (PI) of nearly 4X. A PI of nearly 4X suggests a highly accretive project with torque to the upside if current spot prices for battery-grade lithium material were modeled.
The project also has an after-tax internal rate of return (IRR) of 48.5%. The PEA makes a note of economic resiliency under a range of key project variables such as price, capital intensity, and operating costs. The PEA shows a payout of only 3.7 years, including a 1.5-year design and construction phase. This is very fast, given a project of this magnitude and scope.
The PEA takes into account the implementation of Koch Technologies Solutions' (KTS) proprietary lithium extraction technology called Li-ProTM. The company is working with KTS and others to develop a field pilot plan with associated commercial terms.
Demand for Lithium on the Rise
Demand for Lithium has been driven up continuously by the need for batteries to power electric vehicles (EVs).
A recent report from Red Cloud Securities rated the company as a "Buy" and increased its target to CA$1.75 from CA$0.90 per share.
According to Luke Laretive of Seneca Financial Solutions, "Over the last few years, most brokers and analysts forecast have underestimated actual lithium prices. This was epitomized in January of this year when lithium 'perma-bear' UBS upgraded its lithium price forecasts by up to 50%, admitting that they had previously underestimated demand from North Asian battery makers and electric vehicle buyers."
Lithium prices started trending up in China in June, driven by purchasing activity from cathode manufacturers. Cameron Drummond with Stockhead notes that lithium carbonate prices were up 5.5% and lithium hydroxide up by 4.4%.
An Opportunity to Look Out For
A recent report from Red Cloud Securities rated the company as a "Buy" and increased its target to CA$1.75 from CA$0.90 per share. It listed the completion of a field pilot plant in 2024, land acquisition, and continued well tests and commercial production as exciting catalysts that have the potential to raise the company's value.
Grounded Lithium was cited by Mark Zaret of Spartan Fund Management as an opportunity for investors.
According to the report, Zaret is interested in the company's Canadian projects "because most companies operating in this sector are based in South America and rely on evaporation ponds to extract lithium, whereas Grounded Lithium plans on utilizing an emerging technology called Direct Lithium Extraction."
Streetwise Ownership Overview*
Ownership and Share Structure
Management and insiders own 14% of the company.
Richard Gregg Smith owns 3.06% with 2.13 million shares, Greg G. Phaneuf owns 1.76% with 1.23 million shares, Lawrence Patrick Joseph Fisher owns 1.27% with 0.88 million shares, Wayne Gaskin owns 0.77% with 0.53 million shares, Ronald Schmitz owns 0.53% with 0.37 million shares, Mark Grant McMurray owns 0.34% with 0.24 million shares, John David Wright owns 0.28% with 0.19 million shares, Rose Zanic owns 0.14% with 0.10 million shares, and Dale Shipman owns 0.10% with 0.07 million shares.
17% of the company is held by institutional investors. Carret Asset Management LLC owns 0.04% with 0.03 million shares.
The rest is with retail.
There are 69.66 million shares outstanding and 63.91 million free-float traded shares. The company has a market cap of CA$7.78 million. It trades in the 52-week period between CA$0.14 and CA$0.50.
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- Grounded Lithium Corp. is a billboard sponsor of Streetwise Reports and pays SWR a monthly sponsorship fee between US$4,000 and US$5,000.
- Amanda Duvall wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
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