'Again, the EV thematic has not gone away during COVID-19' - RRS #liontown, page-2

The same goes for the bunch of ASX-listed lithium stocks looking to become second-generation producers in the middle of the decade, if not before.

It is by then that demand from the EV and renewables energy sector for lithium-ion batteries is expected to swamp existing production.

That will require incentive price for additional spodumene/lithium supplies, something the greener than green world that emerges from COVID-19 is set to deliver as the push away from ICE vehicles – and a reliance on China for batteries – accelerates in all of the major economies.

Again, the EV thematic has not gone away during COVID-19, nor has the recognition that second-generation mines will be needed come 2025.

That was why thematic followers couldn’t believe their luck when a stock like Liontown (ASX:LTR) got as low as 5.6c during the March sell off in equities markets. It is now back at 10c for a market cap of $180m.

The scale of the market cap reflects the scale of Liontown’s Kathleen Valley lithium project in WA which is now right up there with the Mt Holland deposit down south where the smarties at Wesfarmers (WES:ASX) paid $776m for a 50% share last year.

Despite Liontown’s price recovery from the March low, it continues to trade at under half the value of its ASX-peers, let alone the implied valuation in the Mt Holland deal.

No particular reason for that and something that could be rectified as the company rolls out a series of key updates and project revisions later in the year. That comes through in the 18c valuation on the stock by Chris Baker at Bridge Street Capital.