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Analyst Increases Target Price on 'Top Lithium Exploration Pick'

Streetwise Reports, Streetwise Reports
0 Comments| April 29, 2019

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The rationale for the upgrade to the name and its elevated status are laid out in a Canaccord Genuity report.

Click to enlarge
Source: Neo Lithium Corp.

In an April 22 research note, analyst Eric Zaunscherb reported that Canaccord Genuity raised its target price to CA$2.75 per share from CA$2.25 on Neo Lithium Corp. (NLC:TSX.V), its "top lithium exploration pick." The company's stock is currently trading at around CA$0.73 per share.

Zaunscherb explained that "the increased target price reflects conservatively applied parameters gleaned from the Tres Quebradas lithium brine project prefeasibility study, including the impact of higher grades and flow rates in early years."

The higher target also takes into account Canaccord having lowered its assigned discount rate on the project to 11% from 12%. "The reduced discount rate mirrors the project stage, management's ongoing success in derisking the project and our increased confidence following a successful site visit," Zaunscherb indicated.

The analyst then presented the main reasons why Canaccord highly favors Neo Lithium as an investment.

One, its Tres Quebradas is "the highest-grade lithium brine project with the most attractive chemistry globally in the hands of a junior company," Zaunscherb commented. Canaccord expects that over the next two to three years, the company will take the project through ramp-up of lithium carbonate equivalent production, toward 20,000 tons per annum, and require low capex and opex to do so.

Also, the project offers "excellent" exploration upside, with the high likelihood the mine can produce at a greater rate and for longer than the terms outlined in the prefeasibility study.

Two, the company's management team has "done a superb job advancing" Tres Quebradas, and maintains a "strong and positive relationship with the government of Catamarca," Zaunscherb noted. Given those two factors, Neo Lithium should easily move through the feasibility and permitting stages.

Three, Neo Lithium's is currently trading at "a considerable discount to non-precious exploration and development companies we cover," and to "peer averages based on enterprise values per in situ resources and reserves," indicated Zaunscherb.

Four, if the lithium price remains static over the next 12 months, Zaunscherb wrote, Neo Lithium should lean toward offering reward versus risk.

Canaccord Genuity has a Speculative Buy rating on Neo Lithium.

1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for 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. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article until three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.

Disclosures from Canaccord Genuity, Neo Lithium Corp., Raising Target Price, April 22, 2019

Analyst Certification: Each authoring analyst of Canaccord Genuity whose name appears on the front page of this research hereby certifies that (i) the recommendations and opinions expressed in this research accurately reflect the authoring analyst’s personal, independent and objective views about any and all of the designated investments or relevant issuers discussed herein that are within such authoring analyst’s coverage universe and (ii) no part of the authoring analyst’s compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by the authoring analyst in the research.

Analysts employed outside the US are not registered as research analysts with FINRA. These analysts may not be associated persons of Canaccord Genuity Inc. and therefore may not be subject to the FINRA Rule 2241 and NYSE Rule 472 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.

Required Company-Specific Disclosures (as of date of this publication):

Canaccord Genuity or one or more of its affiliated companies intend to seek or expect to receive compensation for Investment Banking services from Neo Lithium Corp. in the next three months.

An analyst has visited the material operations of Neo Lithium Corp.. Partial payment was received for the related travel costs.

The authoring analysts who are responsible for the preparation of this research have received (or will receive) compensation based upon (among other factors) the Investment Banking revenues and general profits of Canaccord Genuity. However, such authoring analysts have not received, and will not receive, compensation that is directly based upon or linked to one or more specific Investment Banking activities, or to recommendations contained in the research.

Disclosures are available here.

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