Grounded Lithium Corp. (GRD:TSX.V; GRDAF:OTCQB), an Alberta-based lithium brine explorer and developer, gained additional research coverage, by Stonegate Capital Partners, analyst Dave Storms reported in a March 16 research note.
"We expect Grounded to be on the cusp of an inflection point. It is our view that the company will rerate upwards prior to the completion of its preliminary economic assessment (PEA)," Storms wrote, noting Grounded's current share price is about CA$0.35.
Cornerstone lithium project
The upcoming PEA, expected in Q2/23, is on the company's flagship lithium brine project, Kindersley, in southwestern Saskatchewan, spanning 78,000 hectares (78,000 ha) of Grounded's sizable, 86,000 ha land package there. The recently updated NI 31-101 technical report estimated the resource at Kindersley at 4,200,000 tons of lithium carbonate equivalent and potential production at up to 19,000 barrels per day.
"Once Grounded completes its PEA, we will be able to apply those results to determine a reasonable valuation," wrote Storms.
Reasons Grounded is compelling
Along with its PEA-stage project, the exploration company boasts four additional key characteristics that make it an attractive investment. Storms presented those in his report.
1) Grounded is in a solid financial position, without any debt, property liens or royalty agreements.
"This strong balance sheet along with management's personal investment into the project shows the alignment between investors and management," Storms wrote.
2) The company has exhibited continued growth since its inception, with its various land acquisitions. Last year, it quadrupled the size of the land package it held in 2021, and already in 2023, it has increased its acreage by 12% with another property purchase.
3) Grounded has a strong management team comprising executives who together have more than 150 years of technical and managerial experience. They have access to capable and knowledgeable advisers.
"This combination uniquely positions Grounded to take advantage of the direct lithium extraction technologies without deploying to much of its own capital on research and development," Storms commented.
Insiders own 14% of Grounded.
4) The Canadian firm is advancing a project that will produce a metal for which demand greatly exceeds supply currently, more so in North America where Grounded operates.
The company is now working to determine and ultimately select the best method of direct lithium extraction for its resource, noted Storms. The related, impending report from Hatch Ltd. will inform Grounded's decision in this regard. Thus, the report's release, an expected catalyst, could move up the explorer's stock.
"[The decision on DLE method] will allow Grounded to get its operations to full economic production on a time scale that will benefit from the supply-demand imbalance that is expected to continue into the future," wrote Storms.
On the horizon
Storms reiterated Grounded's potential, near-term stock-moving events. The first is release of Hatch's direct lithium extraction report, expected soon. The Kindersley PEA will follow in Q2/23.
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Disclosures For Stonegate Capital Partners, Grounded Lithium Corp., March 16, 2023
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