Compass Minerals stock jumps 12% after Lithium deposit discovery

Compass Minerals International Inc. (NYSE: CMP) stock jumped more than 12% in intraday trade on July 14 after the company announced that it found 2.4 million metric tons of lithium deposit in Utah.

The company was founded in Overland Park, Kansas, in 2001. 

The stock surged 12.01% to US$67.72 from the previous close at 12:08 pm ET on Wednesday.

On Tuesday, Compass Minerals announced a lithium deposit at its solar evaporation site in Utah that may contain up to 2.4 million metric tons of the element.

Compass is a supplier of minerals like magnesium chloride, salt, and plant fertilizers. The stock declined around 2% year-to-date but rose 23% over the past year. It climbed around 3% in the last five days.

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The company holds a market capitalization of US$2.3 billion. Its dividend yield is 4.71%, and the annualized dividend is US$2.88.

CMP booked total revenue of US$426 million for the quarter ended March 31, 2021, compared to US$346.9 in the year-ago period, reflecting a 23% growth year-over-year. Seventy percent of its revenue came from the US, and the rest from Canada, the UK, and other places.

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Even with the increased revenue year-over-year, Compass Minerals incurred a net loss of US$223.6 million in the March quarter of 2021 against a net income of US$ 27.6 million in the corresponding quarter of 2020. The primary reason for this loss could be attributed to a net loss of US$256.5 million from discontinued operations, primarily from the impairment of its South America chemicals and specialty plant nutrition businesses. 

Lithium is currently in demand as it is a crucial material in making electric vehicle batteries. In addition, lithium is also used in various other products like mold flux powders, polymer, ceramics & glass, lubricating greases, air treatment, etc.

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Electric vehicles use lithium carbonate or lithium hydroxide in batteries. With an increasing demand for portable electronic devices, lithium-ion batteries' consumption has also increased many folds in the last few years.

Please note: The above constitutes a preliminary view and any interest in stocks/cryptocurrencies should be evaluated further from an investment point of view.