In an Aug. 8 research note, ROTH Capital Partners analyst Joe Reagor reported that Piedmont Lithium Ltd.'s (PLL:NASDAQ; PLL:ASX) updated scoping study for its North Carolina lithium project is "supportive of our positive outlook for the project as it confirmed robust project economics." Accordingly, ROTH reiterated its Buy rating on Piedmont.
At the same time, though, ROTH lowered its target price on the energy firm to $36 per share from $38. In comparison, Piedmont is currently trading at around $9.56 per share. The reasons for the cut were a higher estimated initial capex for the lithium project and the continued weakening of the Australian dollar against the U.S. dollar.
Reagor reviewed the highlights of the scoping study released Aug. 7. The positives, he pointed out, are the increased mine life, the operation's low cost (below ROTH's expectation), the estimated 34% after-tax internal rate of return and $1.45 billion net present value. "We continue to believe Piedmont's lithium project is a world-class asset on the fast track to development," commented the analyst.
As for the study's negatives, noted Reagor, one is the now $168 million upfront capex required, up from $130 million, even though most of that is due to the larger project size, and the lower-than-expected operational costs do offset some of it.
The Australian dollar's weakening trend is another dampening factor. As such, ROTH raised its estimate of Piedmont's future development equity financing need to AU$95 million from AU$75 million. This resulted in a higher share count estimate and a reduced price target.
Reagor concluded the report, "We remain positive on Piedmont Lithium."
[NLINSERT]Disclosure:
1) Doresa Banning compiled 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: None. Click here for important disclosures about sponsor fees.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) 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 interview or the decision to write an article until three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.
Disclosures from ROTH Capital Partners, Piedmont Lithium Ltd., Flash Note, August 8, 2019
Regulation Analyst Certification ("Reg AC"): The research analyst primarily responsible for the content of this report certifies the following under Reg AC: I hereby certify that all views expressed in this report accurately reflect my personal views about the subject company or companies and its or their securities. I also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.
ROTH makes a market in shares of Piedmont Lithium Limited and as such, buys and sells from customers on a principal basis.
ROTH Capital Partners, LLC expects to receive or intends to seek compensation for investment banking or other business relationships with the covered companies mentioned in this report in the next three months.
