Atlas Lithium Corp. (ATLX:NASDAQ) received a US$30 million ($30M) investment and an offtake agreement from Mitsui, reported Roth MKM analyst Joe Reagor in an April 1 research note. Consequently, Roth reduced its target price on the California-based mineral explorer to US$36 per share from US$39 to reflect dilution resulting from the deal.
Overall, however, Roth considers the investment "an incremental positive for Atlas as it demonstrates further confidence in the company's project from the lithium battery industry," Reagor wrote.
112% Return Implied
Atlas' price today is about US$17.02 per share, noted Reagor. As such, the return to target, albeit lower, is still compelling, at 112%.
Roth reiterated its Buy rating on the lithium-focused mining company.
Details of Each Component
Reagor summarized the specifics of Atlas' arrangement with Mitsui.
As for the US$30M investment, Mitsui agreed on March 28 to impart this via an equity transaction at a price equal to a 10% premium to Atlas' five-day volume-weighted average price.
Regarding the offtake, Mitsui agreed to purchase 15,000 tons per annum (15 Ktpa) of lithium spodumene concentrate in phase one of production and 60 Ktpa of it in phase two, from Atlas' Neves project, one of the properties in Brazil the Minas Gerais project encompasses.
Notable Catalyst on Horizon
The anticipated event that should really boost Atlas' share price, Reagor purported, is the completion of a resource estimate and a financial study. He noted there have been delays in the company delivering it, and investors may be losing faith in Atlas despite the interest in it by the likes of Mitsui.
That said, noted Reagor, the delays have not hindered the start of production targeted for later this year, and they are likely due to Atlas wanting "to provide more robust results as compared to Street expectations."
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Important Disclosures:
- Atlas Lithium Corp. is a billboard sponsor of Streetwise Reports and pays SWR a monthly sponsorship fee between US$4,000 and US$5,000.
- As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Atlas Lithium Corp.
- Doresa Banning wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor.
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Disclosures for Roth MKM, Atlas Lithium Corp., April 1, 2024
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Disclosures:
ROTH Capital Partners, LLC expects to receive or intends to seek compensation for investment banking or other business relationships with the covered companies mentioned in this report in the next three months. The material, information and facts discussed in this report other than the information regarding ROTH Capital Partners, LLC and its affiliates, are from sources believed to be reliable, but are in no way guaranteed to be complete or accurate. This report should not be used as a complete analysis of the company, industry or security discussed in the report. Additional information is available upon request. This is not, however, an offer or solicitation of the securities discussed. Any opinions or estimates in this report are subject to change without notice. An investment in the stock may involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Additionally, an investment in the stock may involve a high degree of risk and may not be suitable for all investors. No part of this report may be reproduced in any form without the express written permission of ROTH. Copyright 2024. Member: FINRA/SIPC.
