Drill Bit Hits Thickest Intercept So Far at Lithium Asset
Research Report

Lithium Ionic Corp. (TSX-V: LTH; OTCQX: LTHCF; FSE: H3N) encountered its thickest intercept to date, via drilling, at its Bandeira project in Brazil, reported BMO Capital Markets analyst Greg Jones in an Oct. 8 research note.

"These [new drill] results continue to highlight the exploration potential at the property and could potentially provide for optimization opportunities," Jones wrote. "Lithium Ionic is one of our preferred lithium developers."

Undervalued stock, 40% return

Lithium Ionic, with a current share price of about CA$0.89, noted Jones, is trading below the peer median, at about US$40 per ton of lithium carbonate equivalent versus US$60.

BMO's target price on the Canadian company, is CA$1.25 per share and implies a possible return of 40%.

Lithium Ionic remains rated Outperform.

Drill results offer upside

The new drill results from Bandeira contained the following highlight intercepts, reported Jones, including the thickest intercept drilled to date via hole 24-276:

• 64.7 meters (64.7m) of 1.39% lithium oxide (Li2O) from 35m, including 22m of 1.67% Li2O and 20m of 1.62% Li2O, from hole 24-276
• 13m of 1.11% Li2O, including 5m of 1.51% Li2O, from hole 24-266

Lithium Ionic perhaps could capitalize on the upside these results offer to enhance the project even though the feasibility study (FS) already has been completed, the analyst wrote. The company has options for how to do it.

It might incorporate the resources defined after the FS cutoff date and thereby, extend the mine life. It might upgrade and incorporate near-surface Inferred resources "to smooth the production profile." It might move the processing of higher-grade material to earlier in the mine plan.

5 reasons to like LTH

Jones presented the following reasons why BMO considers Lithium Ionic a preferred lithium developer.

1) Its Bandeira project requires low capital, as outlined in the FS, about US$290 million as estimated by BMO.

2) The company could be the first to production among developers in BMO's coverage universe, given it has a well-understood permitting process and second-mover advantage, neighbor Sigma Lithium Resources being the first.

3) The Bandeira property encompasses a large, underexplored area, meaning potential to expand the current resource exists.

4) Lithium Ionic has a second project in development in Brazil, called Salinas, of which a preliminary economic assessment is expected by year-end 2024.

5) The company is undervalued.