Up-and-coming lithium miner, Lithium Power International Ltd [ASX:LPI] is in the red today.
The LPI share price is down 13.33% at time of writing. A dramatic move for a stock that has released what should be a positive update today.
So, what is behind this counter-intuitive move?
Let’s find out…
Low-cost lithium supplier in the making
Despite what the share price might suggest, LPI released a pretty great update today with the results of their updated DFS (definitive feasibility study).
In their own words: ‘Outstanding Results Delivered by the Maricunga Lithium Brine Project’.
Now, in our view, management is correct in suggesting the DFS is outstanding. With an estimated annual EBITDA of US$324 million on an OPEX rate of US$3,718 per tonne of lithium carbonate, this is a very attractive project.
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As management notes, this could their project ‘one of the world’s lowest-cost producers of lithium carbonate’ — the kind of competitive advantage that should make this a standout supplier for years to come.
Which again begs the question, why the sell-off in shares?
Well, in all likelihood, it’s probably just a case of profit-taking, because with the stock up over 222% in past six months alone, this small-cap is delivering some great returns, closing at an all-time high of 83 cents yesterday.
So while the fall today obviously isn’t ideal, it probably isn’t an indication of any weakness in the stocks operations either. As CEO Cristobal Garcia-Huidobro comments:
‘We are extremely pleased with the results of the updated DFS for the Maricunga Stage One lithium brine project. The strong economics, as well as the exceptional sustainability profile, confirms the high standard and attractiveness of the project.
‘The priority for 2022 is to finalise project finance for the Stage One project. We are actively working with both international and Chilean financial institutions on different structures for debt financing, as well as with potential strategic partners for equity investments. Update of the EPC proposals will soon commence, with the expectation of a Final Investment Decision (FID) by the end of the year. Construction should start immediately after the FID.’
What’s next for the LPI Share Price?
Looking ahead, the focus (as Garcia-Huidobro notes) is drumming up the capital to get this project up and running. Something that will ultimately determine whether LPI becomes a major lithium player in the near future or not.
However, it seems management is clearly working hard to make it happen — something that should give investors some confidence.
Having said that, there is plenty of competition for investment dollars in lithium at the moment. Not just on the ASX, but all around the world.
So who knows what may or may not be in LPI’s future.
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