Lepidico provides exposure to a portfolio of lithium assets via its proprietary IP and upstream interests in Australia, Canada and Europe. Uniquely, it has produced lithium carbonate from non-traditional hard rock lithium bearing minerals using its registered L-Max process technology.
In May, Lepidico (LPD) announced a trio of transformational initiatives. The first of these was an all-share offer to acquire Desert Lion (TSXV: DLI), according to which LPD will pay 5.4 shares for every one Desert Lion share. The second was a one-for-nine renounceable rights issue to raise up to A$10.8m via the issue of 372.9m new shares (plus warrants) at a price of A$0.029/share. The third was a supply and marketing alliance with Gulf Fluor for the supply of sulphuric acid, including the provision of land for the construction and operation of Lepidico’s Phase 1 Plant project in Abu Dhabi. Our last note considered the strategic rationale for the three initiatives; this report looks at the valuation implications.
In February, LPD announced that it had acquired the rights to LOH-Max technology to produce lithium hydroxide rather than lithium carbonate for reduced capital and operating costs, which caused us to increase our value for Lepidico to A$0.0684/share, based on a 7tph Phase 1 plant (but excluding any other development options). Since then, LPD has announced the acquisition of Desert Lion, an alliance with Gulf Fluor and a 1 for 9 rights offer (that closed over-subscribed) to raise A$11.0m.