Target $1.50 Outperform rating

Macquarie initiated coverage on Clean TeQ Holdings (CLQ) with an Outperform rating and a $1.50 price target. CLQ offers a unique exposure to cobalt, with its Syerston project in NSW targeting first production in 2020. Securing cobalt sulphate offtake agreements is also likely to be a material catalyst for the stock. We expect some of the offtake agreements will come with some level of funding and note that our $1.50 price target assumes a 60/40 debt/equity funding split for the ~US$700m capex. A typical lithium-ion rechargeable battery with cobalt cathodes can hold twice the energy of a nickel-based battery and four times that of lead acid.