LPI - Expectations 2022, page-26

Last week was busy for LPI! It will be even busier in the weeks to come. Let's see where we are at:

On Wednesday, we heard that LPI's WA assets would demerge in the following six months. This was excellent news because the WA assets are not reflected in the current SP. What does this mean for existing shareholders? LPI shareholders will receive shares on a pro-rata (e.g. for every 3 LPI shares you have, you get 1 free share in the new company) basis via in-specie distribution. Yes, that is right LPI holders; you will get FREE shares in the new company for just holding LPI. Finally, the WA assets will come out of the shadows. So where does LPI have the most potential for the WA assets? That is right, near the world famous Greenbushes mine, particularly LPI's holdings where Talison Lithium shares the same Shear Zone and Gravity feature.

So what is to come in the following weeks regarding our flagship project Maricunga and Chile's next lithium brine? This is what David Hannon (chairman of LPI) said a few months ago:

"We are working hard to add value to the company, and we believe that the outcome of the extensive work completed during the past 18 months will shortly emerge and will add significant shareholder value." - David Hannon

No juniors have done this amount of pre-development & de-risking work as LPI has done on the Maricunga over many years. One just has to see the quality and detail of the content of the 2017 PEA and the 2020 DFS; an approved 11,500 page EIA document said to be the most detailed in Chilean resources history; unprecedented social responsibility work with local and indigenous communities over several years. LPI never provides guesstimates, it only provides rigorously defined estimates. Over AUD$95 million has been spent on the Maricunga project to date, involving many world-leading consultant forms. LPI's ESG credentials are top shelf with the processing plant at Maricunga expected to be carbon-neutral. It makes it easy for finance or place a bid for takeover.



This truly is the pointy end for LPI, on the brink of finance or takeover. Remember the current Lithium market will demand a premium take over bid - $2+ at the very least. You might be thinking "Frank you are crazy to say $2.00", but let me explain:

You cannot name one brine project in the world with 5 mt of lithium at average grade of 1000 mg/l, that has all the licence, and permit & environmental approval in place and is shovel ready like LPI's Maricunga project. This is a billion dollar resource but let's discount it by 50% say $500 Million USD (694 AUD), I don't think anyone would disagree.

This values LPI's maricunga project at AU$1.249 billion AUD. The updated DFS will increase this by roughly 100% - so AUD$2.5 billion

LPI's 51.3% share is AU$$1.4B

Let's be conservative and give a 50% discount if it was taken over, this is a share price of $2.08.

I am expecting a binding finance and offtake agreement signed with one or both the CEOL winners involving Codelco. Then Maricunga will be a project with an annual production of 40,000 tpa.

If that is not enough for you LPI will rank as one of the lowest cost lithium carbonate producers globally, better than Albemalle's & SQM Chile operation operating costs estimated at US$3,772 per tonne of LCE.




Thanks to @TheGekko and @Hahaha I used some of their words