Summary page below - Analyst is Sehaj Anand who wrote the report. The entire report is over 20 pages...
Developing the Next-Generation Large-Scale, High-
Purity Spodumene Asset in Quebec
Event
We are initiating coverage on Critical Elements Lithium, a Quebec-focused lithium
spodumene developer currently advancing its flagship Rose Lithium-Tantalum
project, located in Quebec’s James Bay region. We estimate a 16.5-year mine life
(Phase 1, producing an average of 204Kt of spodumene concentrate (SC) per year at
a robust AISC of US$662/t). Overall, the stock provides an attractive entry point into
a construction-ready, permitted, high-quality, large-scale, lithium project in North
America.
Highlights
• Construction-Ready Lithium Project Located in a Tier 1 Jurisdiction. Rose is fully
permitted for construction, which is expected to begin in H2/C23. The property can
be accessed year-round via the Route du Nord via Chibougamau, with the Nemiscau
airport located 50km from the property, a skilled workforce, and solid infrastructure,
for example, rail, port, hydroelectricity, etc. readily available in the region.
• High-Purity Deposit Allows for Premium Pricing. While the grades at Rose are
lower compared to other hard rock lithium projects, the deposit has low iron
oxide and mica content, allowing for the production of technical-grade SC (used
in glass/ceramics), which garners premium pricing (~120% premium: iA est.)
compared to battery-grade SC.
• Led by Strong Management with Solid Track Record of Project Execution. Critical
is led by a solid team with both technical and capital markets experience. CEO,
Mr. Lavalle has several decades of exploration experience; President, Dr. Haber
ran Li producer Rockwood before its acquisition by Albemarle (ALB-N, Not Rated);
and VP Construction, Mr. Perron successfully led the execution of the Renard
diamond mine, among many other construction projects.
• Strategic Location Makes CRE an Attractive Takeout Target. The James Bay
region has become a hot spot for lithium exploration and extraction with several
major lithium players operating in the region including Livent (LTHM-N, Not
Rated), Allkem (AKE-AX, Not Rated), and Sayona (SYA-AX, Not Rated). Rose’s
location, next door to several large lithium companies, makes it an attractive
acquisition target.
• With this initiation we have also published our lithium outlook. Link Here
Valuation & Recommendation
We are initiating coverage on Critical Elements with a Speculative Buy rating and
$5.00 price target. Our price target is based on a blended 0.9x multiple on the
Company’s net asset value (NAV) at iA’s SC price of US$1,500/t. Potential upcoming
catalysts include 1) Strategic partnership and offtake agreement expected in the near
term; 2) Project financing package expected in H2/C23; 3) Construction
commencement expected in H2/C23; and 4) Assay results from the exploration program and Lemare maiden mineral resource.