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Lithium Power - End of legal proceedings signals big step

Jul 2018


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Summary - End of legal proceedings signals big step

Lithium Power (ASX:LPI) has a 51% share in Minera Salar Blanco S.A. (‘MSB’), part-owner of the Maricunga lithium brine project in Chile. After three months of negotiations with Chile’s Ministry of Mines, the company has announced that legal proceedings against the Chilean government, relating to the issuing of a special lithium operation contract (‘CEOL’) covering its new mining coded concessions to an unrelated third-party, have ended. Highlights of the announcement include the following. 

  • Application for a CEOL over MSB’s new code mining concessions will now be submitted in early August. Once approved, and subject to acceptance of the environmental impact assessment (‘EIA’), this permit will be the final documentation required for the production of lithium under current Chilean legislation.
  • MSB has expressed its full confidence in, and agreement with, the new government’s vision for the future of the Maricunga salar and confirmed its intention of working closely with the government to develop the Maricunga salar in the Atacama region of Chile.

TSI’s view: the threat of Decree No. 64, which has been hanging over Lithium Power for the past six months, is the main reason the company’s share price retreated during this time. With that risk now essentially eliminated, the granting of a CEOL appears a formality, meaning the company will have the rights to mine both old and new coded mining concessions.    

In addition to the CEOL, Lithium Power has reached a number of important milestones, details of which will be released in the second half of this year. They include submission of the EIA, as well as the definitive feasibility study. Both not only further de-risk development of the Maricunga Project but should act as catalysts for the company to regain lost ground and move towards TSI’s long-term valuation target ($1.13/share). 

We maintain our belief that Maricunga is the standout lithium brine development project globally, due to its exceptionally high grade, which is the main driver for the forecast low operating costs.

The information in this email should not be the only trigger for your investment decision. We strongly recommend you seek professional financial advice whenever making financial investment decisions. 

Valuation: we maintain our valuation for Lithium Power of $1.13/share (share price $0.32).