Cannaccord Latin Resources LtdEV Materials | Flash UpdateColina...

Cannaccord Latin Resources Ltd

EV Materials | Flash Update

Colina continues to deliver ahead of 1H'24 Resource update

LRS-ASX | Price A$0.17 | Market Cap A$489.9M SPECULATIVE BUY PRICE TARGET A$0.65

Canaccord Genuity, and its associates, holds an option position in LRS.AU.

Please refer to the important disclosure section of this report.

More high grade results at Colina ahead of updated Resource LRS has returned multiple wide, high grade infill results from ongoing Resource drilling at Colina (Resources 63.5Mt at 1.3%, excl. 6.8Mt at 0.9% Li2O at Fog's Block) reporting 29 significant key intercepts, including: ·32.92m at 1.62% Li2O from 325.19m ·24.81m at 1.53% Li2O from 355.19m ·20.79m at 1.49% Li2O from 299.03m ·14.2m at 1.38% Li2O from 188m Drilling returned amongst the largest intersections recorded to date at improved grades. We anticipate this drilling to support an upgraded Resource estimate including both additional tonnes as well as improving confidence (currently ~65% M+I). LRS has 16 rigs on site, with a Resource update expected in 1H'24, ahead of a DFS in Q3'24. DFS will assess an optimised project design beyond the PEA The DFS is planned to assess an enlarged, three-phase development which we think could see ultimate production capacity increased to ~700ktpa SC5.5 (based on assumed Resource:Reserve conversion of current Resources only), vs the 466ktpa run rate outlined in the PEA. We think Brazil’s low-cost operating environment (low labour costs, cheap renewable power) is a key advantage for Salinas, allowing for attractive project economics even under a lower pricing environment (see Lithium | 1H'24 Recharge). Our current timeline assumptions call for first concentrate production in mid-2026. We see any upside to our base case (largely aligned to the 2023 PEA) outlined in the upcoming DFS as offering a potential valuation catalyst. Fully funded to FID with a potentially catalyst-rich project schedule LRS is one of few well capitalised (DecQ Cash of A$52m) developers, being fully funded for exploration and studies activities ahead of FID in late 2024. The schedule calls for a resource upgrade, offtake partnership and delivery of a DFS in Q3'24 ahead of construction start in 1H'25 and first production in mid-2026. Valuation and recommendation Our $0.65 price target for LRS is underpinned by our heavily risked Salinas development scenario (NPV10%, LT SC6 US$1,500/t). With a well-capitalised balance sheet, a number of near-term potential catalysts and the possibility of flow-on effects from any regional M&A, we reiterate our Speculative Buy rating.

Reg Spencer | Analyst | Canaccord Genuity (Australia) Ltd. | [email protected] | +61.2.9263.2701 William Jones | Associate Analyst | Canaccord Genuity (Australia) Ltd. | [email protected] | 61.2.9263.2798

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