Standard Lithium wins price target raise at Roth

Roth Capital Markets analyst Joe Reagor raised his price target for Standard Lithium (Standard Lithium Stock Quote, Chart, News, Analysts, Financials NYSE:SLI) to US$6 from US$4.50 on Sept. 25, citing stronger-than-expected results from its maiden resource estimate at the Franklin Project in East Texas.

He reiterated a “Buy” rating.

“The initial resource exceeded our expectations and clearly outlined the potential for robust project economics in future financial studies,” Reagor said in a company update. He added that the company appears poised to advance its Southwest Arkansas project and may benefit from increased U.S. government support for domestic lithium supply.

Standard Lithium, headquartered in Vancouver, is focused on testing and proving the commercial viability of lithium extraction. Its portfolio includes the Arkansas Lithium project, Lithium Brine Processing, and California Lithium.

The initial resource for Franklin, released Sept. 24 as part of Standard Lithium’s joint venture with Equinor, included 2.2 million tonnes of lithium carbonate equivalent, 15.4 million tonnes of potash and 2.6 million tonnes of bromide.

Reagor said the scale and grade were more favourable than expected and warrant a higher valuation for the project.

In particular, he noted the Franklin lithium grade of 668 grams per litre is roughly 90% higher than the 348 g/l grade outlined in the Southwest Arkansas definitive feasibility study. The size of the resource, 2.2 million tonnes of lithium carbonate equivalent, is more than three times the Southwest Arkansas reserves.

“We believe it is likely that future financial studies for the Franklin Project should show better project economics than Southwest Arkansas, even before factoring in potential additional revenue or cost credits from bromide and potash,” he said.

Reflecting the stronger outlook, Roth increased its valuation for East Texas to US$550-million from US$220-million, based on Standard Lithium’s 55% stake.

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