A newly updated mineral resource estimate (MRE) for the Baixa Grande project in Minas Gerais, Brazil, is a "slight positive" for the company that "supports our constructive view" on Lithium Ionic Corp. (LTH:TSX.V; LTHCF:OTCQX; H3N:FSE), noted Desjardins Analyst Frederic Tremblay in a January 14 research update.
The update shows about 32% growth compared with the maiden MRE released in April 2024 on the back of more tons at similar grades, mostly in the inferred category. According to the analyst, measured + indicated now stands at 6.52 mt (metric tons) grading 1.11% Li2O (vs 5.86 mt at 1.09% previously) inferred is now at 12.90 mt grading 0.96% Li2O (vs 8.90 mt at 0.97% previously).
"According to management, the potential for significant additional lithium-bearing spodumene mineralization at Baixa Grande remains very high with the completion of additional drilling in the area," wrote the analyst, who rated the stock a Speculative Buy with a price target of CA$3.75.
Logical Acquisition Target?
The update incorporated expanded data from 167 diamond drill holes comprising more than 35,000 meters of drilling completed between May 2023 and September 2024, Tremblay noted.
"While its MRE is currently smaller than Bandeira’s (23.68 mt at 1.34% Li2O measured + indicated and 18.25 mt at 1.37% Li2O inferred), we view Baixa Grande as strategically important," the analyst wrote. "Recall that in August 2024, Pilbara Minerals put an important seal of approval on the Brazilian lithium sector with the announcement of an agreement to acquire Latin Resources and its Colina deposit, which is located directly west of LTH’s Baixa Grande deposit."
The company's updated resource "reinforces our view that Baixa Grande is an attractive deposit on its own, or it could also represent a logical acquisition target for its neighbor (PLS/LRS)," the analyst said.
A key near-term milestone for LTH is permitting at its Bandeira project, Tremblay wrote. The company recently indicated that it was on the verge of obtaining approval to begin construction there.
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