Major Step for Lithium Production in Brazil as Approval Nears

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Lithium Ionic Corp. (LTH:TSX.V; LTHCF:OTCQX; H3N:FSE) has reached a significant permitting milestone for its Bandeira Lithium Project in Minas Gerais, Brazil. The Minas Gerais State Department of Environment and Sustainable Development (SEMAD) has issued a favorable technical report recommending the approval of the company's Concomitant Environmental, Installation, and Operational License (LAC).

This recommendation represents a key step in the regulatory process and moves the project closer to securing the final environmental license required to commence construction and operations. The LAC, once approved, would grant Lithium Ionic the ability to develop and operate the Bandeira site, which is positioned as Brazil's next major lithium projects to come online. 

Regulatory Progress and Next Steps:

Lithium Ionic submitted its LAC application in late 2023, initiating a comprehensive environmental review. SEMAD's evaluation included a site inspection, environmental impact studies, and risk assessments, which the company successfully addressed.

Following the review, SEMAD recommended the approval of the LAC license for the following project components:

• Underground lithium mining of pegmatites
• Mineral Treatment Unit (UTM)
• Reject/waste pile management
• Fuel storage and supply infrastructure for operations

The Installation License (LI) will be valid for four years, while the Operational License (LO) will be valid for ten years, contingent on regulatory compliance. A final decision on the LAC is expected on February 28, 2025, pending a meeting by the Câmara de Atividades Minerárias (CMI), SEMAD's key decision-making body.

Project Development Continues

As the permitting process advances, Lithium Ionic is preparing for the next phase of project development. Engineering and logistical planning are progressing, ensuring that initial construction activities can begin promptly upon receipt of the LAC.

Bandeira's Feasibility Study, announced on May 29, 2024, outlined strong economic potential, including a post-tax net present value (NPV8%) of US$1.31 billion and an internal rate of return (IRR) of 40%.

"This positive recommendation from SEMAD is a pivotal milestone for the Bandeira Project, bringing us significantly closer to receiving full environmental approval and commencing construction," said Blake Hylands, CEO of Lithium Ionic, in the announcement. "With Bandeira positioned as one of Brazil's most advanced lithium projects, we are eager to move forward with development and contribute to the global lithium supply chain."

The final approval of the LAC would mark a major step forward for Lithium Ionic as it continues to progress its operations in Brazil's rapidly growing lithium sector.

Analysts See Strong Growth Potential for Lithium Ionic Amid Permitting and Financing Progress

Analysts continued to highlight the potential upside for Lithium Ionic Corp. following the company's recent resource expansion and project development progress.

On January 15, Stifel underscored the resource expansion at the Baixa Grande project, noting that "the deposit remains open at depth and along strike, reinforcing our confidence in LTH's exploration upside." The firm underscored that the project is positioned in a globally competitive lithium district and could attract strategic interest. Stifel maintained a Speculative Buy rating, citing the company's potential to bridge the valuation gap with larger lithium developers.

On February 18, BMO Capital Markets pointed to the potential impact of securing debt financing for the Bandeira project. Analyst Greg Jones stated that "the company’s non-binding agreement for up to US$266 million in project financing could materially reduce anticipated dilution, improving the overall valuation." The report emphasized that if Lithium Ionic finalized the EXIM Bank financing package, it could significantly de-risk the project while enhancing shareholder value.

That same day, Clarus Securities provided a favorable assessment, highlighting the company's valuation relative to recent lithium acquisitions. Analyst Varun Arora observed that "LTH remains undervalued compared to peers," referencing Pilbara Minerals' acquisition of Latin Resources as a comparable benchmark. The report estimated that applying similar valuation metrics could imply a potential share price of CA$2.50 to CA$3.00, a significant premium over the company's current trading level. Clarus maintained a Speculative Buy rating with a target price of CA$3.00, citing the company's strategic positioning and resource expansion.

In their February 19 research, BMO Capital Markets reaffirmed its positive outlook on Lithium Ionic’s Baixa Grande project. The updated mineral resource estimate increased Measured and Indicated resources by 11% and Inferred resources by 45%. The firm remarked that "management noted significant potential remains to add additional lithium-bearing mineralization at Baixa Grande," while maintaining a Speculative Buy rating and a target price of CA$2.50 per share.

Also on February 19, Stifel released an updated note stating that Lithium Ionic’s positive permitting developments for its Bandeira project represented "a significant de-risking milestone." The report noted the company's undervaluation, trading at $53/t on an EV/LCE basis compared to the $136/t average M&A comps and $152/t from Pilbara Minerals' acquisition of Latin Resources. Stifel suggested this valuation gap could narrow as permitting and financing milestones are achieved, setting a target price of CA$3.50 per share.

Cormark, on the 20th, highlighted progress in the permitting process, noting the favorable technical report from SEMAD recommending approval of Lithium Ionic’s environmental license for Bandeira. Analyst Shannon Gill emphasized that the project’s strategic location near existing producers like Sigma Lithium positions it for future growth. The report assigned a Buy rating with a target price of CA$3.50 and projected significant potential returns based on the company's development timeline.

Overall, analysts remain optimistic about Lithium Ionic Corp., citing its strong resource expansion, undervaluation relative to peers, and pending project financing as key drivers for potential share price appreciation. Target prices ranged from CA$2.50 to CA$3.50, reflecting the company's steady advancement through permitting, financing, and development milestones in Brazil's lithium-rich Minas Gerais region.

Lithium Market Sees Shifting Supply Dynamics Amid Growing Demand

The lithium sector experienced significant shifts in early 2025, with analysts pointing to a rebalancing of supply and demand following years of oversupply. According to USA News Group, on January 14, projections suggested that the global lithium surplus would decline to 80,000 tonnes of lithium carbonate equivalent (LCE) in 2025, down from nearly 150,000 tonnes in 2024. Benchmark analysts estimated that $116 billion in investments would be required by 2030 to meet projected electric vehicle (EV) production targets. Precedence Research projected that the global lithium market could reach $28.45 billion by 2033, driven by a compound annual growth rate (CAGR) of 12.50%.

The tightening of supply was a key theme throughout industry reports. On February 5, Fastmarkets noted that global lithium production rose from 737,000 tonnes in 2022 to nearly 1.2 million tonnes in 2024, mirroring increased demand. However, a growing sense of producer restraint was observed in late 2024, particularly in China and Australia. Fastmarkets' research suggested that the lithium market's surplus could shrink to just 10,000 tonnes in 2025, with a potential deficit of 1,500 tonnes emerging in 2026. Analysts cited Australian production cuts and the suspension of planned expansions as contributing factors to this rebalancing. Fastmarkets Head of Battery Raw Material Analytics Paul Lusty stated, "Lithium market conditions — particularly during the latter part of 2024 — led to growing producer restraint, both in China and elsewhere."

Market participants held mixed views on the balance of supply and demand for 2025. Fastmarkets reported that some producers expected a rebound in demand, with annual global EV adoption forecasted to grow 29% in 2024 and the energy storage system (ESS) sector set to expand 37% in 2025. Others were more cautious, noting that latent production capacity could be quickly reactivated, preventing a prolonged supply shortage.

Ownership and Share Structure

According to the company, management and insiders own 20% of the Lithium Ionic. 

One of the insiders, President & Director Helio Diniz, owns 5.52%, Director Michael Lawrence Guy owns 5.10%, Director David Patrick Gower owns 2.56%, and Andre Rezende Gumaraes owns 2.52%, according to Reuters.

30% is held by institutional investors. Reuters reports Waratah Captial Advisors owns 7.01%, JGP Gestao de Recursos Ltda owns 2.69%, RBC Global Asset Management Inc owns 1.94%, Sprott Asset Management LP owns 1.55%, BMO Asset Management owns 1.30%, and IXIOS Asset Management SA owns 1.20%. The rest is retail.

Lithium Ionic has 158.58 million shares outstanding and 131.15 million free-float traded shares.

The company's market cap is CAUS$135 million, and it trades in a 52-week range of CAUS$0.41 - 2.24 per share.