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Lepidico - Initiation of coverage by Shaw and Partners


Highlights

• Lepidico has developed proprietary technology (L-Max® & LOH MaxTM) to produce lithium hydroxide from mica minerals. The company is intending to start with a relatively small scale mine in Namibia and chemical plant in Abu Dhabi, however if successful, Lepidico will be pioneering a new, low-cost source of lithium.
• Lepidico has released a Definitive Feasibility Study (DFS) showing attractive economics for a Phase 1 5,000tpa lithium hydroxide project, with pre-production capex of US$139m, an NPV8 of US$221m and an IRR of 31%. The project is fully permitted and Lepidico is aiming for a Final Investment Decision in 2H21, with first production in 2023.
• The L-Max® process involves leaching of lithium mica in a concentrated sulphuric acid at atmospheric pressure and relatively low temperatures. It differs from the processing of spodumene, which requires high temperature decrepitation and sulphate roasting prior to lithium recovery. The L-Max® process is expected to have lower energy requirements than existing lithium recovery processes.
• The processing of lithium micas also allows the production of valuable potassium, caesium and rubidium by-products, which will significantly offset the operating costs and make Lepidico one of the world’s lowest cost producers of lithium hydroxide.
• There are very few sources of caesium and rubidium, which have been identified as critical minerals by the US government. Existing sources of caesium are depleting and Lepidico’s production will be of strategic value to offtake partners, particularly in the US.
• The Phase 1 plant will produce average output of 4,900tpa lithium hydroxide at a C1 cost of US$1,656/t lithium carbonate equivalent (LCE) and an All in Sustaining Cost (AISC) of US$3,221/t after credits from other products.
• LOH-MaxTM produces lithium hydroxide from lithium sulphate, using conventional industrial equipment and without the production of sodium sulphate. The process provides significant capex and opex advantages over conventional processes and so Lepidico sees opportunity for licensing this process technology to the growing number of llithium chemical producers. Cornish Lithium paid C$4m to Lepidico in Dec-2020 to licence its technology for the Trelavour hard rock lithium project.
• Lepidico has already begun scoping work for a Phase 2 Plant which is planned to have capacity of 20,000tpa lithium carbonate equivalent (LCE).

Recommendation

We initiate coverage on Lepidico (LPD) with a BUY recommendation and $0.031 target price.

For more information, download the attached PDF.

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