A Glance at Lithium Players – AGY, AVZ, DEG, PLL

Due to an emergence of the global lithium-ion battery market, investors have been eying on the battery mineral stocks. Let’s take a quick look at the recent updates of a few lithium players trading on ASX. 

Argosy Minerals Limited (ASX: AGY)

A lithium explorer, Argosy Minerals Limited (ASX: AGY) has been making progress towards commercial development of its Rincon Lithium Project (77.5% interest), which is located in the “Lithium Triangle” in Salta Province, Argentina. Rincon Lithium Project is ideally located to nearby infrastructure, as depicted in the figure below.

Rincon Project: Location and Infrastructure (Source: Company Reports)

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The company recently announced the commencement of continuous industrial scale pilot plant lithium processing trial-run operations, which will ensure a smooth transition to regular pilot plant lithium carbonate production operations.

As per the update provided on 5th July 2019, the production operations are comprised of the continuous processing of concentrated lithium brine sourced from the operational evaporation ponds at the Project area, within the industrial scale pilot plant using the company’s proprietary and exclusive chemical process to produce 99.5% lithium carbonate product.

The industrial scale pilot plant was first commissioned in April 2018, with first battery grade 99.5% lithium carbonate product confirmed in August 2018, and the Sales Agreement executed in March 2019. The Sales Agreement executed with Mitsubishi RtM to sell up to 100tpa LCE Product, a great achievement for the company.

The company has informed that it will produce and store the Li2CO3 product until it is ready for shipment. Only after that, the company will transport product parcels for sale under the Sales Agreement executed in March 2019.

2018 was a year of great technical achievement for Argosy Minerals Limited. During the year, the company constructed and commissioned the industrial scale pilot plant and associated site work and alongside has also developed an exclusive and proprietary successful industrial scale chemical process solution to produce ?99.5% Li2CO3 product using the industrial scale pilot plant.

With its fast-track lithium development strategy, Argosy Minerals Limited is eying to become a leading lithium carbonate producer in South America.

In the March quarter, the company reported net cash used in operating activities of $459k, which includes exploration and evaluation expenses of $64k, administration and corporate costs of $345k and staff cost of $58k.

Stock Performance: In the past six months, Argosy Minerals Limited’s stock has provided a negative return of 49.50% as on 4th July 2019. At market close 5th July 2019, AGY’s stock was trading at a price of $0.074, up 1.37% during the day’s trade, with a market capitalisation of $74.06 billion. It 52 weeks high price stands at $0.339 and 52 weeks low price at $0.061, with an average volume of ~3,021,541.

AVZ Minerals Limited (ASX: AVZ)

A mineral exploration company, AVZ Minerals Limited (ASX: AVZ) recently executed a Share Sale Purchase Agreement with Dathomir Mining Resources SARL to increase AVZ’s equity in the Manono Lithium and Tin Project, adding significantly to the bottom line and Net Present Values and is critical for project financing as AVZ continues discussions with potential financiers and offtakers.

As per the release, Dathomir has agreed to sell a 5% equity share in Dathcom to AVZ for a total value of US$5,500,000, taking the total interest of AVZ in the Project licence to 65%.

In June 2019, the company entered into a strategic relationship with Zhejiang Huayou Cobalt Co. Ltd, under which, the two companies will strategically come closer to advance the Manono Project.

The Strategic Relationship has been designed to promote the following points between AVZ and Huayou Cobalt Group:

  • Discussions to advance Manono to production including, but not limited to, the definitive feasibility study; project financing; off-take and EPCM;
  • Consideration of any other ways, in which, a relationship between the two parties may be beneficial for all stakeholders.

In the March quarter, the company reported net cash used in the operating activities of $2,778k which includes exploration and evaluation expenses of $2,204k, administrative and corporate costs of $270k and staff costs of $211k. At the end of the March quarter, AVZ Minerals Limited had cash and cash equivalents of $12,066k.

March Quarterly Cash Flow Statement (Source: Company Reports)

 

Stock Performance: In the past six months, AVZ Minerals Limited’s stock has provided a negative return of 33.80% as on 4th July 2019. At market close 5th July 2019, AVZ’s stock was trading at a price of $0.047, with a market capitalisation of $107.5 million. It 52 weeks high price stands at $0.155 and 52 weeks low price at $0.037, with an average volume of ~ 20,439,631.

Piedmont Lithium Ltd (ASX: PLL)

An emerging lithium chemicals company, Piedmont Lithium Ltd (ASX: PLL) recently announced a placement of 145 million shares at an issue price of $0.145 to raise $21 million. The issue price is representing 11% discount to the 20-day VWAP of $0.163.

The company intends to use the funds from this placement to complete a definitive feasibility study and to fund the development of its wholly-owned Piedmont Lithium Project, which is located in the world-class Carolina Tin-Spodumene Belt in the United States.

AustralianSuper, the company’s largest shareholder, decided to subscribe for 19 million shares to preserve its 13% pro-rata position in the company.

Recently, the company announced the completion of a mineralogical analysis on samples of mineralised pegmatites and composite samples from Piedmont’s Core, Central, and Sunnyside Properties, all of which demonstrated that lithium occurs almost exclusively within spodumene in Piedmont’s mineral resource, which is encouraging news for the company from an exploration perspective.

The company recently announced a 47% increase in Piedmont Project-wide Mineral Resource estimate to 27.9 Mt @ 1.11% Lithium oxide (Li2O), substantially increasing the value of the project.

In the March quarter, the company reported net cash used in operating activities of $2,225k which includes exploration & evaluation activities of $964k, administration and corporate costs of $333k and staff cost of $697k. Besides this the company also spent $283k on business development & investor relations activities.

Project Wide Mineral Resource Estimate for the Piedmont Lithium Project (Source: Company Reports)

The breakdown of Piedmont Lithium’s four phases of drilling is depicted in the below table.

Core Property – Drilling Program Detail (Source: Company Reports)

 

Stock Performance: In the past six months, Piedmont Lithium Ltd’s stock has provided a return of 66.67% as on 4th July 2019. At market close on 5th July 2019, PLL’s stock was trading at a price of $0.155 with a market capitalisation of $103.91 million and daily volume of ~786,070. It 52 weeks high price stands at $0.195 and 52 weeks low price at $0.091, with an average volume of ~958,159.

De Grey Mining Limited (ASX: DEG)

Australia’s gold producer, De Grey Mining Limited (ASX: DEG) recently announced the results of a systematic review of the company’s extensive exploration databases that has yielded a strong pipeline of near to long-term exploration targets at the Pilbara Gold Project, located within one hour drive of Port Hedland. Due to the evaluation, the company has taken several initiatives, which includes Application of new geophysical surveys for direct resource targeting purposes.

The company recently entered into a binding letter of intent with Novo Resources Corp expanding De Grey’s exploration to include gold-bearing lag gravel deposits across De Grey’s large land position.

As per the terms of the letter of intent, Novo has the right to explore De Grey’s project for gold-bearing lag gravel deposits for an initial three-year period by paying $1 million, of which $300,000 will be held in escrow by Novo until De Grey acquires Indee Gold Pty Ltd.

The company is focused on establishing further gold resources and future development from the extensive shear zone and intrusion related gold bedrock targets.

For the half year ended 31st December 2018, the company reported a loss of $1,561,823 as compared to the loss of $3,719,479 in pcp. The basic and diluted loss per share was $0.42 in the half year period. As at 31st December 2018, the company had total current assets of $5,683,067 and total current liabilities of $13,527,628.

In the March quarter, the company reported net cash used in operating activities of $2249k which includes exploration & evaluation activities of $1,695k, administration and corporate costs of $156k and staff cost of $408k. The company reported net cash used in investing activities of $11k. At the end of the March quarter, De Grey Mining Limited had Cash and cash equivalents of $3,224k.

March Quarterly Cash Flow Statement (Source: Company Reports)

 

Stock Performance: In the past six months, De Grey Mining Limited’s stock has provided a return of -38.46% as on 4th July 2019. At market close on 5th July 2019, DEG’s stock was trading at a price of $0.080, with a market capitalisation of $34.21 million. It 52 weeks high price stands at $0.225 and 52 weeks low price at $0.076, with an average volume of ~499,280. The company is trading at a PE ratio of 40.0x.


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