This research is from Orior Capital, which picked a 10x uplift to a $0.29 AUD valuation when LKE was trading at $0.03 AUD a year ago, and can now see the next value uplift for investors.
Their researches have been by far the most informative and useful ones on LKE that I have found. Please find the research on the below link:
https://lakeresources.com.au/wp-content/uploads/2021/06/lake_resources_lke_ready2charge_2021_06_16.pdf
A short summary about the report from LKE:
16 June 2021
Lake Resources - 'Ready to charge'
Orior Capital research report
Clean lithium developerLake Resources NL (ASX:LKE; OTC:LLKKF) released today new research by Orior Capital on the company, highlighting the upside potential for Lake as its Kachi and other projects get developed. Orior Capital has assigned a valuation ofA$1.89 per share, seven times the current share price.
The report's highlights include:
* Lake looks incredibly cheap: the market is valuing Kachi at just 10% of its post-tax NPV8 of US$1.6bn. Lake’s most obvious peer, Standard Lithium, also using direct lithium extraction, is currently trading at 107% of its adjusted attributable post-tax NPV8.
*Valuing Kachi at 100% of NPV and other projects at US$100m, suggests a valuation of A$1.89/share. This is 7x the current share price.
Over the next year, Lake is expected to significantly advance the Kachi project. Given Kachi’s compelling ESG credentials and financial robustness, Lake could trade at a similar valuation as Standard Lithium.
* With Kachi production in 2H24, and assuming 70/30 debt/equity finance, and an EV/EBITDA multiple range of 15x to 25x, Lake could be valued at A$3.63/share to A$6.24/share. This represents 13x to 23x the current share price.
*Expanding Kachi could make it best in class globally: In 2028, with production capacity increasing to 51,200 tpa LCE, an expanded Kachi could boast a post-tax NPV8 of US$3.8bn, an IRR of 53% and annual EBITDA of US$571m.
*The supply-side will struggle to keep pace: Meeting this demand will require some 2.6m tpa in new lithium capacity over the next decade. This equates to 37x SQM’s production of lithium products in 2020, or 52 expanded Kachi projects.
*Direct lithium extraction is the future: As project financing becomes increasingly tied to ESG credentials, DLE offers substantial benefits in terms of environmental footprint, water use and carbon emissions.
This research is from Orior Capital, which picked a 10x uplift to a $0.29 valuation when LKE was trading at $0.03, and can now see the next value uplift for investors.
Analyst Simon Francis comments: "Lake Resources provides investors with one of the very few ways to gain exposure to direct extraction, the technology that represents the future for lithium. There is huge upside potential as Kachi and other projects get developed. The company looks incredibly cheap. That presents an opportunity."
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