Lithium Tech. Co. Reports Significant Financial and Technological Advances

Source: Streetwise Reports 08/06/2024

Lithos Group Ltd. (LITS:CBOE.CA; LITSF:OTCMKTS; FSE:YU8; WKN:A3ES4Q) announced substantial financial and operational advancements, including key acquisitions and increased investments. Read more to learn about their strategic growth and future prospects.

Lithos Group Ltd. (LITS:CBOE.CA; LITSF:OTCMKTS; FSE:YU8; WKN:A3ES4Q), a company dedicated to lithium extraction technologies, has filed its Fiscal Year-End (FYE) audited financial statements, showing substantial advancements in its financial and operational metrics. On July 29, 2024, the company detailed significant investments in growth initiatives, highlighted by the acquisition of the AcQUA™ patent-pending electro-pressure membrane process for efficiently extracting lithium from brine sources. According to the company, this acquisition has significantly enhanced Lithos’ technical capabilities, securing multiple paid pilot brine processing projects with top-tier lithium producers.

The company’s CEO, Scott Taylor, emphasized the importance of these developments in the press release, stating, “We are thrilled with the progress we have made in reducing our debt, securing financing, and making strategic acquisitions. These steps are crucial as we advance our innovative lithium extraction technologies and position Lithos for long-term success.”

Lithium Mining and Extraction Today

On July 15, Fortune Business Insights reported significant growth in the lithium mining sector, driven by increasing demand for lithium batteries, particularly for electric vehicles (EVs). The remarkable development in lithium production has led to increased global demand. This growth is bolstered by the increasing demand for electric vehicles to limit carbon emissions, leading to a surge in lithium battery demand across the globe.

The industry has seen substantial technological advancements, which have positively impacted market dynamics. Growing technological investments in metallurgy and mining have accelerated lithium production. New techniques, such as direct extraction technologies, use organic sieves instead of vast evaporation ponds, making mining and extraction more efficient and sustainable.

In addition to EV batteries, the growing demand for lithium-based ceramics and glasses is anticipated to drive the market. This demand is further supported by advancements in lithium mining technology, which are making the extraction process more efficient and environmentally friendly.

On July 16, Technical Analyst Clive Maund shared an optimistic perspective on Lithos Group Ltd., designating it as an “Immediate Strong Buy.”

As Carboncredits.com noted in July, modern innovations and increased efficiency in lithium extraction have improved the social perception of lithium mining.

European Union officials have emphasized the importance of demonstrating that lithium mining is no longer a “dirty operation.” Companies in California’s ‘Lithium Valley’ are developing methods to extract lithium using clean energy, such as geothermal power, avoiding the environmental damage typically associated with hard rock mining. According to Michael McKibben, a geochemist and professor at the University of California, these new methods have minimal environmental impacts compared to conventional lithium mining.

Furthermore, McKinsey & Co. reported that direct lithium extraction (DLE) has several potential benefits, including increased lithium recoveries from around 40% to over 80%, reducing the need for fresh water, and lowering production times. This promising approach is expected to enhance lithium supplies and support the growing demand for lithium in various applications.

Investopedia highlighted the critical role of lithium in the production of alloys, glass, and rechargeable storage batteries on July 24. Lithium-ion (Li-ion) batteries, in particular, are used in portable electronics, military vehicles, aerospace applications, EVs, wind turbines, and electronic grids, all contributing to lower global CO2 emissions. Li-ion batteries are among the most energetic rechargeable batteries available, with high energy density and the ability to handle thousands of charge and discharge cycles. Significant cost reductions and enhanced performance of Li-ion batteries have resulted from increased production and investment, as noted by the International Energy Agency (IEA).

The global lithium mining market is also experiencing a geographic shift. As reported by Mining.com on July 27, large international energy companies are entering the lithium market, leveraging their expertise to efficiently extract lithium-bearing brines. Sabrin Chowdhury of BMI commodities analysis emphasized the need for global lithium production to nearly triple by 2030 to keep up with the required level of EV adoption and decarbonization targets.

The Catalysts For Lithos

Lithos has made strategic financial moves to bolster its growth and innovation potential. The company raised CA$3.5 million through financing activities, a substantial increase from the CA$965,825 raised in FY 2023. This capital has been prudently invested, including CA$857,068 in property, plant, and equipment at the AcQUA™ facility in Alabama.

Additionally, Lithos reported recognizing CA$783,568 in grant income from competitive Federal U.S. Department of Energy and State of Colorado grants, providing a non-dilutive cash source to further invest in their AcQUA™ lithium extraction technology. The company’s cash position has also improved, with a reported balance of CA$691,178 as of April 30, 2024, compared to CA$577,669 the previous year.

Financially, Lithos reported an increase in total assets to CA$26.2 million and shareholders’ equity to CA$23.3 million, reflecting a strong asset base and value creation for shareholders. Despite a net loss of CA$7.3 million for the fiscal year ended April 30, 2024, compared to a CA$2.0 million loss the previous year, the company underscores this as an investment in future growth through its strategic business, corporate, and technology development initiatives.

Expert Opinions on Lithos

On July 16, Technical Analyst Clive Maund shared an optimistic perspective on Lithos Group Ltd., designating it as an “Immediate Strong Buy.” Following a severe drop in the stock price at the time, Maund pointed out that the fundamental reasons for owning the stock remain strong. He noted that while the price has dropped, the Accumulation line has continued to rise, indicating ongoing interest from knowledgeable investors.

Maund attributed the recent decline in stock price to factors such as 15% of the stock coming out of escrow and being dumped, which the company noted has an outsize impact on closely-held and hence thinly-traded stock, as well as the departure of the analyst covering the stock at Beacon Securities. However, he emphasized that these negative events did not deter informed buyers, who continued to accumulate the stock in anticipation of several powerful catalysts expected to drive the stock higher.

One of the most significant upcoming catalysts is the potential award of an up to US$30 million grant from the U.S. Department of Energy, which the company applied for in December 2023. If granted, this would exceed the current capitalization of Lithos. Additionally, the company is negotiating three multimillion-dollar pilot projects with major lithium brine producers in Chile and Argentina.

Maund also noted that Lithos is in line for contracts worth between CA$5 and CA$6 million and expects to receive independent validation of its technology and recovery rates from a reputable engineering firm. Maund highlighted the technical setup of the stock, describing it as a “coiled spring” ready for a dramatic rebound, particularly if positive news emerges. [OWNERSHIP_CHART-10926]

Maund underscored the significance of Lithos’ proprietary Direct Lithium Extraction (DLE) technology, which eliminates the need for evaporation ponds and significantly improves production yield. This technology positions Lithos not only as a pioneer in sustainable lithium production but also as an enabling and supporting technology for other DLE technologies, which is expected to see over a nine-fold increase in demand by 2035.

Ownership and Share Structure

About 60% of Lithos is held by insiders and management, the company said. According to Reuters, this includes CEO Scott Taylor with 14.19%, Independent Director Michael Westlake with 0.71%, and Independent Director Kevin McKenna with 0.05%.

About 27% of the company is held by strategic entities. The rest is retail.

Lithos has a market cap of CA$20.7 million with about 84.62 million shares outstanding. It trades in a 52-week range of CA$0.98 and CA$0.24.

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Important Disclosures:

1. Lithos Group Ltd. has a consulting relationship with an affiliate of Streetwise Reports, and pays a monthly consulting fee between US$8,000 and US$20,000.
2. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Lithos Group Ltd.
3. James Guttman wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
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( Companies Mentioned: LITS:CBOE.CA;LITSF:OTCMKTS;FSE:YU8;WKN:A3ES4Q, )