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MacMurray D. Whale, PhD., P.Eng . , (416) 943-6708, [email protected]
Mark Chiang, Associate , (416) 943-6397, [email protected]
MORNING MEETING NOTES SEPTEMBER 26, 2018
During the past twenty-four months, Cormark Securities Inc., either on its own or as a syndicate member, participated in the underwriting of securities and/or provided financial
advice regarding the stock market insight and financial analysis regarding potential transactions for these companies.
Our disclosure statements are located at the end of this report
vs
Industrial Technology
Weekly Highlights In The Battery Value Chain
Weekly Highlights in the Battery Value Chain is published
each week to provide a snapshot of stock activity,
commodity markets, industry news and government policy
related to the adoption of lithium ion batteries as well as
the supply and manufacture of related materials and
components.
Unless otherwise denoted, all figures shown in US$
Highlights:
Cormark’s Quant/Technical analyst highlighted earlier this week that lithium stocks have started to “hook back up,” noting that the Global X Lithium & Battery ETF has given a weekly momentum buy signal after a 25.3% drop off the January high. The ETF is oddly skewed to FMC, but the shift in sentiment is quite broad. The negative news so far in 2018 appears to be losing its impact on investors and along with signs of more stable spot prices, we expect a strong performance from the stocks this fall. As we note in today’s Weekly, demand signs are still relatively good with OEMs making their EV plans more explicit. Interestingly, though the majors have rallied in September they are still at 10-year average multiples, the EV/ESS theme remains stronger than it has for most of that 10-year period, suggesting more upside ahead.
This Week’s Top Headlines:
Ganfeng Signs Supply Agreements With LG Chem And Tesla
Advantage Lithium Files PEA On SEDAR
Saudi Fund To Invest $1 BB In EV Startup
Portugal To Commence Tender Of Lithium Licenses
Volkswagen To Build EV Factory In North America
Porsche To Remove Diesel Engine Option On Vehicles
Recent Cormark Battery-Related Research:
Date Company Headline
6-Sept Sigma Lithium Resources Corp.
Emerging High Grade, Large Crystal Lithium Concentrate Producer
14-Aug Lithium Americas Strategic Investment With Ganfeng Lithium
24-Jul Nemaska Lithium Project Construction And Timeline Update
20-Jul Neo Lithium Significant Resource Increase For 3Q
6-Jul Cobalt 27 Acquires Cobalt Stream On Voisey’s Bay
22-Jun Lithium Americas Thacker Pass PFS Begins Unlocking Value
19-Jun Neo Lithium Drill Results Point To Larger Resource
30-May Olaroz-Cauchari Basin: Portfolio Approach
24-May Cobalt 27 Announces First Streaming Deal
18-May Implications Of Tianqi’s Stake In SQM
23-Apr Highlights From Battery Materials 2018
Lithium
Advantage Lithium Corp Buy 0.68 1.85 172%
♦ Lithium Americas Corp Buy 6.16 13.75 123%
♦ LSC Lithium Corp Buy(S) 0.40 1.95 388%
♦ Neo Lithium Corp Buy 1.12 3.35 199%
♦ Nemaska Lithium Inc Buy 0.82 2.00 144%
Orocobre Ltd Buy 4.04 6.25 55%
♦ Sigma Lithium Resources CorpBuy 2.29 4.00 75%
Cobalt
♦ Fortune Minerals Ltd Buy(S) 0.11 0.40 281%
♦ Cobalt 27 Capital Corp Buy 6.39 16.75 162%
Graphite
♦ Mason Graphite Inc Buy 1.10 2.75 150%
Company Rec.
Share
Price
(C$)
Target
Price
(C$)
12-
Mth
Rtrn
MacMurray D. Whale, Ph.D. , P.Eng. , (416) 943-6708, [email protected]
Mark Chiang, Associate , (416) 943-6397, [email protected]
MORNING MEETING NOTES SEPTEMBER 26, 2018
Our disclosure statements are located at the end of this report
Coverage News
Advantage Lithium Corp. AAL-TSXV (Buy, C$1.85) Event: PEA Released Impact: Positive
Files PEA On SEDAR – September 25: Following summary results announced on August 14, Advantage has filed their PEA on SEDAR which supports their development plans at the 20 ktpa capacity lithium carbonate plant at its Cauchari JV project in Argentina. Key highlights include: operating costs of US$3,667/t of lithium carbonate, US$830 MM after-tax NPV at 8% discount rate and IRR of 24%, and a mine life of 25 years including a 3-year ramp up for 20 ktpa production. The US$830 MM NPV is an updated number that was revised higher since the initial announcement in August to reflect the improving tax regime in Argentina.
News From Other Producers/Developers
Ganfeng Lithium, 002460-Shenzen (Not Rated) Event: Supply Agreement Impact: Positive
Ganfeng To Almost Double Supply To LG Chem – September 20: Under a new contract, Ganfeng will extend their offtake agreement by three years with LG Chem to 2025. Ganfeng will supply an additional 45,000 tonnes of battery-grade lithium carbonate and hydroxide from 2019 to 2025. Recall that the initial deal on August 14 was for 47,600 tonnes of lithium hydroxide from 2019 to 2022. Both contracts have fixed volume specifications, but the pricing will be adjusted according to market conditions.
Ganfeng Signs Deal With Tesla – September 21: Last Friday, Ganfeng signed a three-year supply contract with Tesla just a day after announcing a new contract with LG Chem. Ganfeng will supply 20% of their lithium hydroxide production to Tesla over a three-year period which runs from January 2018 to December 2020 with an option to extend the contract for three years.
Since September 17, Ganfeng’s stock has risen ~18% which has sparked a rally in other lithium stocks as these deals provide a strong indication for lithium demand as EV battery manufacturing continues to ramp up. Lithium Americas, which is now a strategic partner with Ganfeng has also seen their stock rise significantly as they are up ~20% since last week.
Montero Mining & Exploration, MON-TSXV (Not Rated) Event: Lithium MOU Impact: Positive
Montero Signs Lithium MOU – September 25: Montero has signed a non-binding Memorandum of Understanding (MOU) with Jiang Xi Yun Lithium Materials of China for the joint cooperation and development of lithium production in Africa. Jiang Xi Yun processes and manufactures lithium carbonate and lithium iron phosphate products for the Chinese battery market and aims to be a major supplier of lithium. The MOU may involve a long-term offtake agreement with production coming from Namibia and the opportunity for Montero to invest in Jiang Xi Yun’s facilities in China. Montero currently has three exploration and development projects in Namibia and is currently targeting NI 43-101 compliant resources and the exploration of additional lithium targets.
MacMurray D. Whale, Ph.D. , P.Eng. , (416) 943-6708, [email protected]
Mark Chiang, Associate , (416) 943-6397, [email protected]
MORNING MEETING NOTES SEPTEMBER 26, 2018
Our disclosure statements are located at the end of this report
Industry News
Lucid Motors, Private (Not Rated) Event: EV Investments Impact: Positive
Saudi Fund Backs EV Startup Weeks After Talks With Tesla – September 17: Just weeks after Tesla dropped its consideration of taking the company public with the help of the Saudi Arabia sovereign fund, Lucid Motors, an EV startup announced an investment. The sovereign wealth fund will put $1 BB into Lucid to fund the development of their EV production facility for the 2020 commercial launch of its first EV. The investment comes two years after the unveiling of a prototype in 2016 and a number of failed attempts at securing financing. Lucid’s factory is to be built in Arizona.
Volkswagen AG, VOWG-Xetra (Not Rated) Event 1: EV Introductions Impact: Positive Event 2: EV Push Impact: Positive
To Build EV Factory In North America – September 20: VW announced last week as part of its EV roll out a new factory located in North America by 2022. No planning has yet begun, so a city was not disclosed. Interestingly, VW plans to have 16 EV production plants by 2022, requiring $40 BB in investment. Most of these plants are expected to be in China. The Zwikau plant in Germany is being retooled to produce only EVs with the goal of 330,000 EVs per year production capacity by 2020.
Porsche To Cease Production Of Diesels – September 20: As VW continues to rehabilitate its reputation post the diesel emissions scandals in Germany, Porsche announced that it will not offer diesel engines as an option on its vehicles. Porsche has planned a 6 BB euro investment in electrified technology by 2022. Porsche’s first all-electric vehicle, the Taycan, will be available in 2019 and is expected to be a major part of taking EVs to 50% of the brand’s sales annually.
Event: EV Competition Impact: Positive
German Auto OEMs Up The Competition With Tesla – September 23: Following up on the plans announced in the summer of 2017, the German automakers last week began to announce more specific details on their EV offerings. The focus is clearly beginning at the high end of the market, as expected, as the OEMs aim clearly at Tesla. Audi introduced its E-Tron, while BMW promotes its iNext and Mercedes has introduced the EQC. These carmakers are aiming to invest €40 BB in battery-powered vehicles over the next three years.
Note that with a market share of around 8% in Germany, but with 80% of the global premium car market, the move into EVs is a major development for EV demand outside of China. Audi has indicated that it expects EVs will account for a third of its sales by 2025.
Event: Lithium Licenses Impact: Positive
Portugal To Initiate Lithium Exploration Licenses Tender – September 25: By the end of the year, Portugal plans to launch a tender of lithium exploration licenses as they pursue a plan to become Europe’s top supplier of lithium for EV batteries. Portugal is Europe’s largest lithium producer (6th overall in the world), but their current miners sell mainly to the ceramics industry and have only now begun to transition to the lithium demand for EVs. Last year, a government study identified 2,500 square km of area that is likely to contain lithium-bearing minerals with 11 areas in central and northern Portugal. The potential investment in five of the most attractive areas is estimated to be $3.9 BB and so far, the government has received more than 40 prospecting applications with interest coming from Australia, Canada, and the US.
The majority of battery supply currently comes from Asia using concentrates sold by miners in countries such as Chile and Australia. Currently, Europe does not have any facilities for the purpose of refining lithium to a battery-grade level and there is no large-scale battery production in operation for EVs with some companies only having recently committed to such plans (Sweden’s Northvolt and Germany’s TerraE).
MacMurray D. Whale, Ph.D. , P.Eng. , (416) 943-6708, [email protected]
Mark Chiang, Associate , (416) 943-6397, [email protected]
MORNING MEETING NOTES SEPTEMBER 26, 2018
Our disclosure statements are located at the end of this report
Commodity Prices
Lithium Lithium carbonate spot prices dipped slightly coming in at a range of 78,000 – 83,000 RMB (US$11,365 – US$12,093) per tonne versus 79,000 – 85,000 RMB (US$11,518 – US$12,392) per tonne last week. Spot prices for lithium hydroxide in China has again remained flat coming in at 122,000 – 127,000 RMB (US$17,776 – US$18,504) per tonne with the difference in US dollar pricing coming from FX changes. According to Metal Bulletin, thin buying activity and sluggish demand for lithium carbonate and lithium hydroxide in China’s spot market continue to keep prices low. Referring to a quote from a consumer in the market, many downstream buyers are “unwilling to stock more material for fear of further price decreases but we plan to purchase again after the Mid-Autumn holiday or the National Day holiday”.
Refer to Figure 9 to see our lithium spot and contract price charts.
Cobalt Note that our cobalt price charts only show data from the LME, as Metal Bulletin instituted an extremely high subscription price for its quotes. LME cobalt prices continue to hover near $28/lb which is largely unchanged since last week. Prices seem to have stabilized at these levels since falling to $25/lb at the beginning of August. Refer to Figure 11 for our updated cobalt price charts.
MacMurray D. Whale, Ph.D. , P.Eng . , (416) 943-6708, [email protected]
Mark Chiang, Associate , (416) 943-6397, [email protected]
MORNING MEETING NOTES SEPTEMBER 26, 2018
During the past twenty-four months, Cormark Securities Inc., either on its own or as a syndicate member, participated in the underwriting of securities and/or provided financial advice regarding the stock market insight and financial analysis regarding potential transactions for these companies
Our disclosure statements are located at the end of this report
Figure 1: Stocks Under Coverage
Source: Company reports, Thomson Eikon, Cormark Securities
Figure 2: Aggregate Stock Performance
Source: Company reports, Thomson Eikon, Cormark Securities
Capitalization Current Valuation
High
($)
Low
($)Phase 1 Phase 2 Other(s) Cash
Opt. &
WrtsDebt
Lithium
Advantage Lithium Corp Buy C$0.68 C$1.85 172% C$107 C$1.42 C$0.40 387.7 30.7 26.4 - C$445 188 C$1.85 37%
♦ Lithium Americas Corp Buy C$6.16 C$13.75 123% C$546 C$14.06 C$4.58 575.7 345.7 408.9 73.5 20.1 - C$1,881 92 C$20.45 30%
♦ LSC Lithium Corp Buy(S) C$0.40 C$1.95 388% C$57 C$1.72 C$0.39 409.3 - 197.6 27.0 20.4 - C$839 354 C$2.37 17%
♦ Neo Lithium Corp Buy C$1.12 C$3.35 199% C$132 C$2.75 C$0.85 968.2 47.7 20.3 0.8 C$1,370 328 C$4.18 27%
♦ Nemaska Lithium Inc Buy C$0.82 C$2.00 144% C$694 C$2.44 C$0.60 C$1,847 C$480.2 C$1.8 C$(449) C$1,880 855 C$2.00 41%
Orocobre Ltd Buy C$4.04 C$6.25 55% C$1,053 C$7.42 C$3.58 449.1 331.2 139.3 336.9 (100.0) C$1,157 262 C$5.67 71%
♦ Sigma Lithium Resources CorpBuy C$2.29 C$4.00 75% C$153 C$2.40 C$0.95 321.2 72.0 53.1 0.1 (30.8) C$416 83 C$5.00 46%
Cobalt
♦ Fortune Minerals Ltd Buy(S) C$0.11 C$0.40 281% C$36 C$0.38 C$0.10 559.4 7.5 8.3 (6.6) C$569 1,052 C$0.54 19%
♦ Cobalt 27 Capital Corp Buy C$6.39 C$16.75 162% C$542 C$14.00 C$5.73 C$1,544 C$0.0 C$(90) C$1,451 84 C$17.30 37%
Graphite
♦ Mason Graphite Inc Buy C$1.10 C$2.75 150% C$150 C$3.15 C$0.91 285.8 92.7 5.7 (8.4) C$376 176 C$1.92 57%
Note: EV does not include cash from options and warrants. Cash may include amounts from projected equity raises on company specific basis
Mkt Cap
($ MM)Company
Share
Price
($)
Target
Price
($)
12-Mth
ReturnRec.
52-Week
NAV
($MM)
Val.
Shrs
(MM)
NAVPS
($) P/NAV
Mining Assets ($ MM) Financ'l Assets ($ MM)
-80.0%
-60.0%
-40.0%
-20.0%
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
9-17 10-17 11-17 12-17 1-18 2-18 3-18 4-18 5-18 6-18 7-18 8-18 9-18
Major Lithium Producers (ALB, FMC, SQM) Chinese Lithium Integrated (Ganfeng, Tianqi) Battery Value Chain Coverage Universe
MacMurray D. Whale, Ph.D. , P.Eng . , (416) 943-6708, [email protected]
Mark Chiang, Associate , (416) 943-6397, [email protected]
MORNING MEETING NOTES SEPTEMBER 26, 2018
During the past twenty-four months, Cormark Securities Inc., either on its own or as a syndicate member, participated in the underwriting of securities and/or provided financial advice regarding the stock market insight and financial analysis regarding potential transactions for these companies
Our disclosure statements are located at the end of this report
Figure 3: 1-Week Performance
Source: Company reports, Thomson Eikon, Cormark Securities
WM
L-1
1.8
%
CR
E-7
.0%
AA
L-2
.9%
AJ
M-2
.3%
M
L-1
.2%
AL
B-0
.5%
S
GM
A0
.0%
DL
I0
.0%
SQ
M0
.1%
NM
T4
.0%
FM
C4
.1%
GX
Y7
.1%
L
SC
8.1
%
Tia
nq
i9
.3%
PL
S1
0.8
%
KD
R1
1.0
%
N
LC
15
.5%
OR
L1
8.5
%
L
AC
19
.8%
N
MX
20
.6%
-60.00%
-40.00%
-20.00%
0.00%
20.00%
40.00%
60.00%
1 W
ee
k %
Ch
ange
Lithium Peers
LE
M-1
9% MN
S-7
%
NO
U-5
%
L
LG
-4%
NG
C-4
%
EG
Z,
0.0
%
FM
S,
0.0
%
SY
R,
5.9
%
-40.00%
-30.00%
-20.00%
-10.00%
0.00%
10.00%
20.00%
30.00%
40.00%
1 W
ee
k %
Ch
ange
Graphite Peers
FC
C-1
3.9
%
KB
G-1
2.5
%
CO
B-1
1.1
%
FT
-8.7
%
K
BL
T-1
.8%
SS
S0
.0%
CU
Z0
.0%
LIC
2.5
%
EC
S1
0.6
%
CL
Q1
2.9
%
BA
T2
0.8
%
-80.00%
-60.00%
-40.00%
-20.00%
0.00%
20.00%
40.00%
1 W
ee
k %
Ch
ange
Cobalt Peers
Co
-0.1
%
Cg
-4%
Co
ve
rag
e,
7.4
%
Li, 5
.7%
-25.00%
-20.00%
-15.00%
-10.00%
-5.00%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
1 W
ee
k %
Ch
ange
Group Averages
MacMurray D. Whale, Ph.D. , P.Eng . , (416) 943-6708, [email protected]
Mark Chiang, Associate , (416) 943-6397, [email protected]
MORNING MEETING NOTES SEPTEMBER 26, 2018
During the past twenty-four months, Cormark Securities Inc., either on its own or as a syndicate member, participated in the underwriting of securities and/or provided financial advice regarding the stock market insight and financial analysis regarding potential transactions for these companies
Our disclosure statements are located at the end of this report
Figure 4: 3-Month Performance
Source: Company reports, Thomson Eikon, Cormark Securities
DL
I-9
0%
L
SC
-46
%
WM
L-4
4%
KD
R-3
9%
AJ
M-3
1%
Tia
nq
i-2
2%
AA
L-2
0%
AA
L-2
0%
OR
L-2
0%
NM
T-1
7%
GX
Y-1
7%
M
L-1
6%
L
AC
-14
%
N
LC
-11
%
N
MX
-5%
SQ
M-3
%
PL
S-2
%
FM
C,
1.4
%
AL
B,
11
.5%
S
GM
A,
23
.8%
-150.00%
-125.00%
-100.00%
-75.00%
-50.00%
-25.00%
0.00%
25.00%
50.00%
75.00%
100.00%
125.00%
150.00%
3 M
on
th %
Ch
ange
Lithium Peers
LE
M-4
6%
FM
S-3
7%
NG
C-3
5%
EG
Z-2
1%
L
LG
-19
%
MN
S-1
4%
SY
R-1
4%
NO
U-5
%
-80.00%
-60.00%
-40.00%
-20.00%
0.00%
20.00%
40.00%
60.00%
80.00%
3 M
on
th %
Ch
ange
Graphite Peers
CO
B-6
8%
LIC
-59
%
CL
Q-4
9%
SS
S-3
7%
FC
C-3
7%
KB
G-3
6%
CU
Z-3
3%
K
BL
T-3
2%
FT
-19
%
EC
S-1
3%
BA
T,
3.5
7%
-100.00%
-80.00%
-60.00%
-40.00%
-20.00%
0.00%
20.00%
40.00%
3 M
on
th %
Ch
ange
Cobalt Peers
Co
ve
rag
e-2
1%
Li
-17
%
Co
-35
%
Cg
-24
%
-100.00%
-75.00%
-50.00%
-25.00%
0.00%
25.00%
50.00%
75.00%
100.00%
3 M
on
th %
Ch
ange
Group Averages
MacMurray D. Whale, Ph.D. , P.Eng . , (416) 943-6708, [email protected]
Mark Chiang, Associate , (416) 943-6397, [email protected]
MORNING MEETING NOTES SEPTEMBER 26, 2018
During the past twenty-four months, Cormark Securities Inc., either on its own or as a syndicate member, participated in the underwriting of securities and/or provided financial advice regarding the stock market insight and financial analysis regarding potential transactions for these companies
Our disclosure statements are located at the end of this report
Figure 5: 1-Year Performance
Source: Company reports, Thomson Eikon, Cormark Securities
DL
I-9
3%
WM
L-6
7%
L
SC
-65
%
CR
E-5
0%
N
MX
-40
%
Tia
nq
i-3
7%
AL
B-2
0%
L
AC
-14
%
NM
T-1
2%
SQ
M-1
1%
N
LC
-10
%
OR
L0
.5%
AJ
M2
%
FM
C4
%
GX
Y7
%
M
L1
5%
AA
L2
8%
KD
R3
1%
PL
S6
1%
-200.00%
-150.00%
-100.00%
-50.00%
0.00%
50.00%
100.00%
150.00%
200.00%
250.00%
300.00%
1 Y
ear
% C
han
ge
Lithium Peers
FM
S-6
2%
LE
M-4
9%
L
LG
-47
%
SY
R-3
2%
MN
S-2
4%
NO
U-2
1%
EG
Z-6
%
NG
C-4
%
-100.00%
-75.00%
-50.00%
-25.00%
0.00%
25.00%
50.00%
75.00%
100.00%
1 Y
ear
% C
han
ge
Graphite Peers
LIC
-81
%
KB
G-6
3%
BA
T-5
7%
CU
Z-5
7%
SS
S-5
2%
FT
-51
%
CL
Q-4
9%
FC
C-4
5%
K
BL
T-3
3%
EC
S-3
0%
CO
B7
3%
-200.00%
-150.00%
-100.00%
-50.00%
0.00%
50.00%
100.00%
150.00%
200.00%
250.00%
300.00%
350.00%
400.00%
1 Y
ear
% C
han
ge
Cobalt Peers
Co
ve
rag
e-2
6%
Li
-10
%
Co
-41
%
Cg
-30
%
-100.00%
-75.00%
-50.00%
-25.00%
0.00%
25.00%
50.00%
1 Y
ear
% C
han
ge
Group Averages
MacMurray D. Whale, Ph.D. , P.Eng . , (416) 943-6708, [email protected]
Mark Chiang, Associate , (416) 943-6397, [email protected]
MORNING MEETING NOTES SEPTEMBER 26, 2018
During the past twenty-four months, Cormark Securities Inc., either on its own or as a syndicate member, participated in the underwriting of securities and/or provided financial advice regarding the stock market insight and financial analysis regarding potential transactions for these companies
Our disclosure statements are located at the end of this report
Figure 6: Lithium Comparables
Source: Company reports, Thomson Eikon, Cormark Securities
Share
Price
Market
Cap EV
Company Ticker ($) (US$MM) (US$MM) Stage Lithium Project(s) Location
Producers 2018 2019
Tianqi Lithium Corp SZ:002466 ¥38.74 ¥44,243 ¥44,183 Producer Talison (51%) Australia 9.7x 7.5x
Soc. Qui. y Min. de Chile NYSE:SQM $46.76 $12,307 $12,997 Producer Atacama / Cauchari (50%) Chile / Argentina 13.4x 11.1x
Albemarle Corp NYSE:ALB $102.52 $11,118 $11,968 Producer Atacama / Talison (49%) Chile / Australia / US 12.0x 10.9x
FMC Corp NYSE:FMC $89.62 $12,066 $15,013 Producer Hombre Muerto Argentina 11.3x 10.5x
Galaxy Resources Ltd ASX:GXY A$2.58 A$1,051 A$1,005 Producer Mt Cattlin / Sal de Vida Australia / Argentina 8.5x 7.7x
Orocobre Ltd ASX:ORE A$4.24 A$1,105 A$1,098 Producer Olaroz (66.5%) Argentina 16.6x 13.8x
Average (Excluding Orocobre) excl. Orocobre 11.0x 9.6x
Attributable LCE EV
Hard Rock Developers / Explorers (000t) /t LCE
Pilbara Minerals Ltd ASX:PLS A$0.88 $1,107 $1,115 FS Pilgangoora Australia 3,887 $287
Galaxy Resources Ltd ASX:GXY A$2.58 $762 $715 Construction Mt Cattlin / Sal de Vida Australia / Argentina 9,669 $74
Altura Mining Ltd ASX:AJM A$0.21 $277 $364 FS Pilgangoora Australia 989 $368
Kidman Resources Ltd ASX:KDR A$1.17 $296 $300 Exploration Earl Grey Australia 7,009 $43
♦ Nemaska Lithium Inc TSX:NMX C$0.82 $535 $642 FS Whabouchi Canada 3,367 $191
Desert Lion Energy Inc TSXV:DLI C$0.09 $4 $4 Producer Namibia Africa 371 $11
♦ Sigma Lithium Resources Corp TSXV:SGMA C$2.29 $118 $153 FS Xuxa Brazil 521 $294
Neometals Ltd ASX:NMT A$0.26 $102 $70 Construction Mt Marion (13.8%) Australia 281 $250
Critical Elements Corp TSXV:CRE C$0.80 $98 $99 PEA Rose Canada 447 $222
Average $193
Attrib. LCE Res. EV
Brine Developers / Explorers (000t) /t LCE
Orocobre Ltd ASX:ORE A$4.24 $801 $794 Producer Olaroz (66.5%) Argentina 4,879 $163
♦ Lithium Americas Corp TSX:LAC C$6.16 $430 $376 FS Cauchari (50%) / LNC Argentina / US 5,876 $64 +
♦ Millennial Lithium Corp TSXV:ML C$1.71 $109 $80 Exploration Multiple Assets Argentina 3,009 $27
Wealth Minerals Ltd TSXV:WML C$0.60 $55 $54 Exploration Multiple Assets Chile - -
♦ LSC Lithium Corp TSXV:LSC C$0.40 $47 $38 FS/PFS Multiple Assets Argentina 1,609 $24
♦ Neo Lithium Corp TSXV:NLC C$1.12 $77 $76 Exploration Tres Quebradas Argentina 2,014 $38
Advantage Lithium Corp TSXV:AAL C$0.68 $83 $70 Exploration Cauchari Argentina 2,268 $31 *
Average $59 + Cauchari-Olaroz only; * only inferred resource
Trading Metrics
EV / EBITDA
MacMurray D. Whale, Ph.D. , P.Eng . , (416) 943-6708, [email protected]
Mark Chiang, Associate , (416) 943-6397, [email protected]
MORNING MEETING NOTES SEPTEMBER 26, 2018
Our disclosure statements are located at the end of this report
Figure 7: Global Monthly Plug-In Electric Car Sales
Source: GreenCarReports.com
Figure 8: YoY Global Electric Car Sales Growth
Source: Cormark Securities Inc.
-
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
200,000
Jan Feb Mar Apr May Jun July Aug Sep Oct Nov Dec
# of
Ele
ctri
c Ca
r Sa
les
2013 2014 2015 2016 2017 2018
0%
20%
40%
60%
80%
100%
120%
140%
160%
Nov-13 Jun-14 Dec-14 Jul-15 Jan-16 Aug-16 Mar-17 Sep-17 Apr-18 Oct-18
MacMurray D. Whale, Ph.D. , P.Eng . , (416) 943-6708, [email protected]
Mark Chiang, Associate , (416) 943-6397, [email protected]
MORNING MEETING NOTES SEPTEMBER 26, 2018
Our disclosure statements are located at the end of this report
Figure 9: Lithium Prices
Source: Asian Metals
Source: Administration Federal de Ingresos Publicos, Argentina (Reporting Stopped Feb. 23, 2018), Orocobre, Cormark Securities Inc.
$8,000
$9,000
$10,000
$11,000
$12,000
$13,000
$14,000
$15,000
Pri
ce
, $
/t
Cormark Lithium Price Forecast
Source: Asian Metals Source: Cormark Securities Inc.
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
2015-09-24 2016-04-30 2016-12-05 2017-07-12 2018-02-16 2018-09-23
Pri
ce
, U
S$
/t
Lithium Spot Prices In China (Lows & Highs): Last 3 Years
Lithium Carbonate (US$/t, 99.5%) Lithium Hydroxide (US$/t, 96%)
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
2016-05-05 2016-09-06 2017-01-08 2017-05-12 2017-09-13 2018-01-15 2018-05-19 2018-09-20
Pri
ce (U
S$/t
)
Lithium Carbonate Contract Prices (Salar de Jujuy & Orocobre Reported Prices)
Orocobre Avg. Quarterly Sale Price Cormark Forecast Salar de Jujuy 10-Day Rolling Contract Prices
$10,000
$12,000
$14,000
$16,000
$18,000
$20,000
$22,000
$24,000
2018-06-28 2018-07-27 2018-08-25 2018-09-23
Pri
ce
, U
S$
/t
Lithium Spot Prices in China (Lows & Highs): Last 3 Months
MacMurray D. Whale, Ph.D. , P.Eng . , (416) 943-6708, [email protected]
Mark Chiang, Associate, (416) 943-6397, [email protected]
MORNING MEETING NOTES SEPTEMBER 26, 2018
During the past twenty-four months, Cormark Securities Inc., either on its own or as a syndicate member, participated in the underwriting of securities for these companies
Our disclosure statements are located at the end of this report
Figure 10: Cobalt Comparables
Source: Company reports, Thomson Eikon, Cormark Securities
Figure 11: Cobalt Prices
Source: London Metals Exchange Source: London Metals Exchange
Company Ticker
Share
Price
($)
Mkt Cap
($MM)
EV
($ MM) Project(s) Location Minerals Grade, % Stage
Attr. Co
MM lb
EV / lb
Co
C$/lb
Clean TeQ CLQ.AX A$0.48 A$277 C$172.7 Syerston Australia Ni, Co, Sc 0.10% Pre-feas 286.0 0.6
♦ Cobalt 27 KBLT.V C$6.39 C$542 C$288.5
First Cobalt FCC.V C$0.31 C$105 C$77.9 Keeley-Frontier Ontario Co, Ag Explor.
Ecobalt ECS.TO C$0.94 C$150 C$113.8 Idaho Cobalt Idaho Cu, Co, Au 0.59% FS 62.4 1.8
♦ Fortune Mnrl. FT.TO C$0.11 C$39 C$37.8 NICO NWT, SK C$0.0 .09-0.27% DFS 82.3 0.5
Cobalt Blue COB.AX A$0.32 A$28 C$17.2 Thackaringa Australia Cobalt-pyrite 0.08% Drilling 135.3 0.1
Cruz Cobalt CUZ.V C$0.10 C$7 C$3.7
Bucke, Coleman,
Johnson, War Eagle,
Idaho Star
Ontario,
IdahoC$0.0 Explor.
LiCo Energy LIC.V C$0.21 C$4 C$2.2 Teledyne Cobalt Ontario Co, Ni, Ag 0.45% Drilling
King's Bay KBG.V C$0.04 C$2 C$1.6Lynx Lake, Quebec
Cobalt
NFLD &
Que.Co, Cu, Ni, Ag Explor.
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
Fe
b-1
2
Nov-1
2
Au
g-1
3
Ma
y-1
4
Fe
b-1
5
Nov-1
5
Au
g-1
6
Ma
y-1
7
Fe
b-1
8
Pri
ce
, U
S$
/ lb
$20
$22
$24
$26
$28
$30
$32
$34
Ju
l-1
8
Au
g-1
8
Se
p-1
8
Pri
ce
, U
S$
/ lb
MacMurray D. Whale, Ph.D. , P.Eng . , (416) 943-6708, [email protected]
Mark Chiang, Associate, (416) 943-6397, [email protected]
MORNING MEETING NOTES SEPTEMBER 26, 2018
During the past twenty-four months, Cormark Securities Inc., either on its own or as a syndicate member, participated in the underwriting of securities for these companies
Our disclosure statements are located at the end of this report
Graphite Comparables Figure 12: Resource Metrics
Source: Company reports, Thomson Eikon, Cormark Securities
Figure 13: Feasibility Study Metrics
Source: Company reports, Thomson Eikon, Cormark Securities
We, MacMurray D. Whale and Mark Chiang, hereby certify that the views expressed in this research report accurately reflect our personal views about the subject company(ies) and its (their) securities. We also certify that we have not been, and will not be receiving direct or indirect compensation in exchange for expressing the specific recommendation(s) in this report.
Company Project(s) Location Meas. Ind. Inf. Notes
Syrah Resources Ltd A$2.35 A$641 A$431 Balama Mozambique 11.0% 11.0% 11.0% 128,500 15.11 3% Cg cutoff
Magnis Resources Ltd A$0.33 A$196 A$191 Nachu Tanzania 4.7% 5.7% 5.8% 9,344 20.41 3% Cg cutoff
♦ Mason Graphite Inc C$1.10 C$136 C$97 Lac Gueret Quebec 17.0% 16.0% 0.0% 9,477 10.24 27.8%, 6% cutoff
Leading Edge Materials Corp C$0.31 C$27.9 C$24.8 Woxna Sweden 10.7% 9.3% 8.5% 9,600 3.23
NextSource Materials Inc C$0.08 C$42.2 C$41.3 Molo Madagascar 6.3% 6.3% 5.8% 8,654 6.56 2% Cg cutoff
Nouveau Monde Graphite Inc C$0.29 C$33.6 C$27.7 Matawinie Quebec 4.0% 4.1% 3,345 14.37 2.5% Cg cutoff
Northern Graphite Corp C$0.27 C$18.6 C$14.8 Bissett Creek Ontario 1.8% 1.6% 1,334 31.36 1% Cg cutoff
Focus Graphite Inc C$0.03 C$5.4 C$4.5 Lac Knife Quebec 21.5% 14.4% 16.2% 2,143 2.52 3% Cg cutoff
* Excludes Inferred Resources
*EV / t
Cg
C$/t
Attr. Cg
'000 t
Share
Price
($)
Mkt Cap
($ MM)
EV
($ MM)
Grade
Company Project(s) Large Med. Small IRR Stage
Syrah Resources Ltd A$2.35 A$641 A$431 Balama 32.0% 22.5% 45.5% 313,000 193 1,000 286 71% DFS
Magnis Resources Ltd A$0.33 A$196 A$191 Nachu 41.0% 240,000 269 2,350 559 98% DFS
♦ Mason Graphite Inc C$1.10 A$136 A$97 Lac Gueret 27.0% 15.0% 58.0% 51,900 200 1,465 282 34% DFS
Leading Edge Materials Corp C$0.31 C$27.9 C$24.8 Woxna 10,000 - Care/Maint
NextSource Materials Inc C$0.08 C$42.2 C$41.3 Molo 46.0% 32.5% 21.0% 17,000 15 1,014 433 25% DFS
Nouveau Monde Graphite Inc C$0.29 C$33.6 C$27.7 Matawinie 46.0% 11.0% 43.0% 50,000 109 1,492 495 25% PEA
Northern Graphite Corp C$0.27 C$18.6 C$14.8 Bissett Creek 76.5% 4.8% 18.6% 20,800 83 1,500 600 20% DFS
Focus Graphite Inc C$0.03 C$5.4 C$4.5 Lac Knife 33.5% 29.8% 16.6% 44,300 125 1,713 331 24% DFS
* Excludes Inferred Resources
Capex
(US$
MM)
Price/t
(US$)
Opex / t
(US$)
Capacity
(tpa)
59.0%
Product DistributionShare
Price
($)
Mkt Cap
($ MM)
EV
($ MM)
MORNING MEETING NOTES SEPTEMBER 26, 2018
RECOMMENDATION TERMINOLOGY
Cormark’s recommendation terminology is as follows: Top Pick our best investment ideas, the greatest potential value appreciation Buy expected to outperform its peer group Market Perform expected to perform with its peer group Reduce expected to underperform its peer group Our ratings may be followed by "(S)" which denotes that the investment is speculative and has a higher degree of risk associated with it.
Additionally, our target prices are set based on a 12-month investment horizon.
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