Rest of 2024 To Be Catalyst Rich for Battery Metals Co.
Research Report

Atlas Lithium Corp. (ATLX:NASDAQ) announced a strategic investment and offtake agreement from Mitsui, "which we expect to aid in fast-tracking the development of Atlas' Minas Gerais lithium project in Brazil," reported Alliance Global Partners analyst Jake Sekelsky in an April 2 company update.

"The agreement with Mitsui serves as an additional form of validation for Minas Gerais," Sekelsky wrote.

223% Return Implied

Upon the news, Alliance revised its target price on Atlas to US$55 per share, down from US$75. It did this to reflect dilution incurred from the Mitsui investment, to reflect Alliance's newly decreased discount rate on Atlas given Minas Gervais' lower risk profile, and to reflect Alliance's new, reduced short-term lithium price forecasts.

As for the latter, Sekelsky explained, "While we remain constructive on the longer-term outlook for lithium, we expect near-term volatility to continue due to a combination of oversupply and weaker demand fears."

Despite Alliance's reduced target price on Atlas, the stock still offers investors a significant potential gain of 223%. This is based on the battery metals company's share price at the time of the report of about US$17.02.

Atlas remains a Buy.

"We continue to believe Atlas trades at a discount and believe the company is primed for a rerating in the coming quarters," wrote Sekelsky.

Terms of Mitsui Agreement

With respect to Mitsui's equity investment in Atlas, the US$30M is equal to a 10% premium to Atlas' five-day volume-weighted average price. This amount, purported Sekelsky, should cover the initial capex for phase one at Minas Gervais and cover the advancement of the project to the start of production.

Per the offtake agreement, Mitsui will purchase 15,000 tons per annum (15 Ktpa) of lithium concentrate during phase one of production and 60 Ktpa during phase two at the Neves project, part of the Minas Gervais set of mineral claims, Sekelsky noted. These amounts are only a portion of the production capacity estimated for both phases, about 150,000 tons (150 Kt) in phase one and about 300 Kt in phase two.

"We view leaving uncommitted capacity as a strategic step by management in order to allow for additional flexibility with respect to future strategic agreements," Sekelsky commented.

The analyst highlighted that Atlas is amassing strategic partners while obtaining funding for initial capex needs at Minas Gervais ahead of the initiation of production. Prior to the Mitsui agreement, in Q4/23, Atlas landed a US$50M offtake agreement, including an equity investment, with Chengxin Lithium and Yahua Lithium.

Rest of 2024 Catalyst Rich

Atlas plans to begin production at Minas Gervais sometime later this year.

In the meantime, by the end of April, the processing facility, now 80% done, is expected to be shipped to Brazil.

Also, in Q2/24, the maiden resource estimate and preliminary economic assessment of the project should be completed, with the final permits and construction to start in H2/24.

"We view Atlas as an emerging lithium producer with the ability to scale up production in a staged approach," wrote Sekelsky.

Important Disclosures:

1. 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. 
2. 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.
3. Doresa Banning wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor.
4.  This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company. 

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Disclosures for Alliance Global Partners, Atlas Lithium Corp., April 2, 2024

Disclosures "Firm" used in the this section of the report entitled "Disclosures" refers to A.G.P. / Alliance Global Partners or Euro Pacific Capital, a division of A.G.P. / Alliance Global Partners. The Firm expects to receive or intends to seek compensation for investment banking services from all companies under research coverage within the next three months. The Firm or its officers, employees or affiliates, other than the research analyst authoring this report and his/her supervisor, may execute transactions in securities mentioned in this report that may not be consistent with the report’s conclusions. Sources referenced in this report: The information and statistics in this report have been obtained from sources we believe are reliable but we do not warrant their accurance or completeness.

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