Cypress Development Corp (TSX-V:CYP, OTCQX:CYDVF) has made further progress on a number of initiatives, including pilot plant testing of chloride leaching of claystone material and the commencement of the Clayton Valley feasibility study (FS), analysts at Couloir Capital said as they reiterated their ‘Buy’ rating on the company.
In a note, the analysts wrote that the company’s pilot plant has yielded positive results and it has proven in continuous operating runs at the pilot plant that its previously acquired direct lithium extraction (DLE) processing IP (intellectual property) leads to high lithium recoveries with minimal impurities.
Based on their analysis and valuation models, the Couloir analysts said they are also updating their fair value per share estimate to C$5.30 per share, from C$4.04 per share.
The analysts said the completion of FS work on the Clayton Valley lithium project in Nevada is likely to represent a major catalyst for the company and potentially its valuation.
Additionally, they said the company was able to complete the acquisition of water rights, despite third party interference that could have jeopardized the project’s water allocation.
Referring to the recent acquisition of Enertopia Corporation's Clayton Valley lithium claystone project, the analysts said Cypress has consolidated Clayton Valley into a larger property and increased its mineralized base, growing potential captive feedstock for future operations.
Financially, they noted that Cypress had cash and working capital of $38.23 million and $38.55 million, respectively, at the end of the second quarter of fiscal 2022. The major increase in cash comes as a result of an $18.1 million bought deal financing that was completed in the quarter, significantly shoring up the balance sheet for the near-term.
A current ratio of 132.46x implies the ability of current assets to sufficiently cover current liabilities, implying a sufficient liquidity position at the end of March 2022, they added.
“Moving forward, we expect that the key catalysts on the horizon include further progress with the FS, additional pilot plant developments around lithium recovery, and capital structure change events,” the analysts said. “We expect these catalysts to be material if they imply advancement of CYP’s project, with the most likely valuation triggers to be related to the completion of the Clayton Valley FS.”
By Monday's close, Cypress had jumped by 3.74% to hit C$1.11 per share.
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