The Race for Lithium
Anson Resources Ltd may play a crucial part in the sustainable supply chain
Welcome to the Sustainable Money Mail
This week, we’ve found a small-cap lithium mining company with “outstanding economics”, poised to potentially deliver big-time results in a critical industry.
Read on to find out more about this opportunity.
Anson Resources is heading into phase 1 development of its Paradox Lithium Project in Utah. This week, it received strong positive ESG and financial metrics in the recent Definitive Feasibility Study (DFS).
Anson shares soared 47.26% intraday.
This demonstrates the huge potential of the company to play a key role in leading sustainability for the US lithium carbonate industry at a time of desperate need. With their share price reaching a record high, the positive news of the DFS has not gone unnoticed.
Key metrics:
Output of high purity lithium carbonates up to 13,074 tons annually.
Pre-tax net present value (NPV7) of US$1.3 billion.
Low-cost operation with expected revenues of US$5 billion over forecast 23 years of operation.
Payback period (post commissioning) of 2 years, with a pre-tax internal rate of return (IRR) of 47%.
Not only does this make an attractive investment for investors looking to get in on the energy market’s volatility, but the confirmation of its technical and financial viability provides hopeful news for the improvement and independence of the US energy sector.
Anson shares are up over 170% YTD, as ambitious projects pay off with a lot of future upside. Assets far exceed debt, with a healthy Quick Ratio of 1.7 and a debt to equity ratio of 12.6%. Profitability is the biggest risk here, with the company reporting increasingly negative net earnings year on year.
Bruce Richardson, executive chair, reported:
“The project delivers industry-leading ESG credentials … using lower energy and water consumption. … Significantly, there remains material upside beyond the DFS announced today based on future mineral resource upgrades associated with the recently completed drilling campaign at Cane Creek and the future Western Expansion drilling campaign, as well as incorporating bromine production into stage 2.”
Our take:
The completion of phase 1 leads to the exciting expansion of production increases in phase 2, planned for 2025. Increased cash flow generation will facilitate further construction and expansion.
Lithium mining is vital to the sustainable economy.
It’s an interesting play on a high-risk endeavor with a lot of upside. As demand for lithium continues to expand, we’ll be keeping an eye on this one.
Note:
All opinions are the author’s own. THIS IS NOT INVESTMENT ADVICE. Please consult your financial advisor before making investment decisions.
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