FYI | May 19 2020
Lithium demand is shifting from lithium carbonate to lithium hydroxide. Pitt Street Research reports Piedmont Lithium should be among the beneficiaries
By Pitt Street Research
An integrated and low-cost lithium processing play
Piedmont Lithium ((PPL)) is developing a hard-rock lithium mine and associated processing operation in North Carolina.
Like Kidman (acquired in 2019 for $776m) PLL intends to be an integrated player from spodumene mining to hydroxide processing.
PLL’s mine has a higher-than-average lithium grade, is already ESG-compliant and is in the advanced stage of development.
A US-based integrated alternative
Currently a great deal of lithium carbonate and hydroxide has to be sourced from China.
Given the ongoing US-China trade war and the expected backlash against China related to the Coronavirus, a US-based lithium supplier with reduced supply chain risk is likely to be welcomed by potential customers.
Lithium hydroxide demand on the rise
Given its technological superiority, lithium-ion battery makers for Electric Vehicles are gradually shifting from lithium carbonate to lithium hydroxide, with demand for the latter material expected to rise 25% p.a. for the next five years.
PLL expects to benefit from this shift with its hydroxide plant.
Valuation range of $0.34–0.62 per share
We value PLL at $0.34 per share base case and $0.62 per share optimistic case using a DCF approach.
We expect a steady growth in lithium prices, further progress on the project development plan and clarity on project funding will help re-rate the stock to our valuation range.
Download the full report
Last week the report above was released by Pitt Street Research for which FNArena is a partner in distribution. The full report can be accessed here:
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