Analysts Enthusiastic About Lithium Company

Frontier Lithium Inc. (FL:TSX.V; LITOF:OTCQX; HL2:FRA) has maintained its Outperform status according to analysts with RBC Capital Markets, Eye on Equities, and Desjardins Securities.

The company's share value has increased since analysts last evaluated it, and its hard rock resource remains one of the best in the North American region, making Frontier Lithium an attractive prospect for investors, according to analyst Frederic Tremblay.

Frontier Lithium Outperforms Peers

Markets analyst Wayne Lam with RBC Capital Markets has restated Frontier Lithium's Outperform status. According to David Leeder of The Globe and his Eye on Equities column, Lam gave his share target a CA$0.50 reduction to CA$3.25. Other analysts, on average, give the shares a CA$3.95 target.

Markets analyst Wayne Lam with RBC Capital Markets has restated Frontier Lithium's Outperform status. 

According to Lam, "We update our Frontier model post-PFS, incorporating higher cost and capex assumptions along with the proposed dual design chemical plant. In our view, Frontier remains well positioned, advancing a Tier I project in Canada with PAK standing out on grades and scale. We view additional derisking milestones, including updates on infrastructure, permitting, and partnerships, as supporting a potential rerating given the current discounted valuation."

Lam had, as of February 16, previously rated Frontier Lithium as Outperform, and said that the company had an "attractive valuation." The company's shares at the time were priced at CA$2.85.

In April, a separate analyst, Frederic Tremblay of Desjardins Securities, said Frontier Lithium's hard rock resource was "one of the best grades in North America," and at that time shares were worth CA$2.03.

Lithium in Demand

Lithium is set to see incredible demand pressure: according to Stockhead, current lithium supplies need to increase by 42 times in the next 17 years. Much of this demand is coming from the need for electric vehicles (EVs), although other clean energy sources are also a factor.

In April, a separate analyst, Frederic Tremblay of Desjardins Securities, said Frontier Lithium's hard rock resource was "one of the best grades in North America," and at that time shares were worth CA$2.03.

According to the International Energy Agency, spending on green energy is expected to remain robust: US$1.7 trillion is expected to be allocated to clean technology. This amounts to about 60% of the global energy spending.

Fatih Birol, the IEA executive director, commented, "For every dollar invested in fossil fuels, about US$1.7 are now going into clean energy. Five years ago, this ratio was one-to-one."

Prices rose at the beginning of the month as well, particularly in China. Prices for lithium carbonate rose by 5.5%, while lithium hydroxide rose by 4.4%. Australia has made moves to increase its refinement capabilities, which would create more jobs in the sector.

According to McKinsey analysts, "Our modeling suggests that Australia could produce lithium hydroxide at approximately US6,600 per ton of LCE, assuming integration with lithium mining, compared with US$10,400 per ton of LCE for China."

In The Top Ten

In 2021, Chris Temple of The National Investor listed Frontier Lithium among his list of 10 out-of-the-box investment ideas.

In 2021, Chris Temple of The National Investor listed Frontier Lithium among his list of 10 out-of-the-box investment ideas.

As Chris Temple makes a note of, Frontier Lithium's property in Northwest Ontario hosts one of the most noteworthy spodumene-hosted lithium deposits in the world.

The company also received an investment from the province of Ontario for its work in producing a lithium hydroxide concentrate for batteries.

 Temple said, "It is simply a matter of time before Frontier announces one (or more) deals such as Piedmont's with Tesla. That management and insiders control the amount of Frontier they do may be the only thing left that has fended off a lowball offer to this point. And as long and well as I have known Walker, he is in NO hurry but will continue building this MONSTER story until someone is forced to pay up or lose any access to such a premier deposit."

Ownership and Share Structure

Reginald F. Walker owns 12.99% of the company, with 29.56 million shares. Garth Lloyd Drever owns 0.98% with 2.22 million shares. Trevor Walker owns 0.52% with 1.19 million shares. John Ralph Didone owns 0.47% with 1.07 million shares. Marian Koziol owns 0.40% with 0.92 million shares, and Caldwell David Ewing owns 0.14% with 0.32 million shares.

Amati Global Investors Limited owns 0.69% with 1.58 million shares. CI Global Asset Management owns 0.36% with 0.82 million shares. Picton Mahoney Asset Management owns 0.32% with 0.73 million shares, and StoneCastle Investment Management owns 0.13% with 0.29 million shares.

There are 227.63 million shares outstanding, with 191.84 free float traded shares and a market cap of CA$320.16 million.

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1. Amanda Duvall wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee. 
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