Lithium Australia NL (ASX:LIT) has been rated a Speculative Buy from Perth-broker RM Research, following the completion of due diligence for the acquisition of an advanced lithium-ion cathode production technology.
The following is an extract from the report.
Due Diligence Completed
- Lithium Australia developer of disruptive lithium processing technology has completed its due diligence for the acquisition of advanced cathode material producer, the Very Small Particle Company (VSCP).
- Completion of due diligence represents a positive outcome for Lithium Australia as it moves forward to seeking shareholder approval to complete the acquisition.
- VSPC’s research and development work has resulted in supplying high-quality cathode material including Lithium Iron Phosphate (LFP) cathode material, widely used in hybrid electric vehicles, power tools and domestic storage batteries - into global test markets.
Key Acquisition benefits
- Innovative, patent-protected chemical process for the production of lithium ion battery cathode material.
- Ability to produce the world’s most advanced cathode materials.
- Acquisition value at deep discount to the $30million previously invested in VSCP.
- Acquisition includes VSPC’s Brisbane based pilot plant and Australia’s most advanced Liion battery-laboratory and testing facility, the laboratory includes cathode coating equipment and cell production capacity.
- Leverage and expansion of VSPC’s global strategic partnerships.
An integrated lithium technology portfolio
- Lithium Australia is focused on developing the seamless production of cathode materials from hard-rock minerals using hydrometallurgical front-end processes including its 100% owned SiLeach ® process and the LMax ® process (owned by Lepidico LtdASX:LPD) for which Lithium Australia has exclusive rights in Western Australia.
- The acquisition of VSPC provides Lithium Australia with access to the technologies required to participate in all sectors of the energy metal cycle.
- The integration of Sileach ® or LMax ® with VSPC’s technology has the potential to remove two process steps involved in the manufacture of cathode materials, resulting in a revolutionary process with significant economic benefits over legacy processes.
Action and Recommendation
- RMR initiates a Speculative Buy for Lithium Australia.