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Rating: Speculative Buy Rodinia Lithium Inc.
Target Price: C$2.25 (RM–TSXV)
All figures in C$, unless otherwise noted Salar de Diablillos Validated
Large Resource Validates Salar de Diablillos: Rodinia released a NI 43-101 resource estimate this morning for its flagship property, Salar de Diablillos in Argentina. The inferred resource indicates 4.95 million tonnes of lithium carbonate equivalent, 19.8 million tonnes of potassium chloride equivalent and 6.1M tonnes of boric acid equivalent. The resource estimate shows that Salar de Diablillos can support well over 30 years of production.
Brine Chemistry and Porosity; Check and Check: One reason for the large resource within the top 150 metres is the high porosity levels of the salar. The porosity, being the open spaces where brine can fill, indicates a good potential to sustain high pumping rates and ability to pump more brine with fewer production wells. This will lower capital costs and create the ability to scale the project in the future. The released chemistry results also indicate that the project has the potential to be a low cost brine producer. Two ratios we look at are the Mg:Li ratio, at 3.68, and the SO4:Mg ratio, at 3.93. These results were in line with our expectations.
Onto the Next Step: Rodinia’s equity partner is Shansan Enterprises (Shansan) which is China’s largest supplier of Li-ion batteries. Shansan and the Qinghai Institute of Salt Lakes are already working with Rodinia management on the next step, fine tuning the flow sheet. This next step is to show that the standard silver peak evaporation process will be applicable to their brine, which from early findings is possible.
Validation: The released results validate the merits of the Salar de Diablillos project and should clear doubt for investors. The significant news regarding the resource and the ability to move forward with a large existing battery manufacturer and an institute that has worked extensively on brines are two large steps forward for Rodinia. For a company that is trading at a market capitalization of approximately $52 million, we believe there is still significant upside for shareholders. We reiterate our Speculative Buy recommendation and maintain our target price of $2.25.
Recent Price: $0.56
52 Week Range: $0.25–$0.80
Shares O/S:basic 92.9 million
f.d. 129.0 million
Market Cap (basic): $52.0 million
Fiscal Year End: Dec. 31
Debt Nil
Cash (est): $12 million
Company Description: Rodinia Lithium Inc. is a junior exploration company seeking to develop lithium and potassium properties in North and South America. The company has three strong claims: Clayton Valley, Nevada, Salar de Salinas Grandes, Jujuy province, Argentina, and Salar de Diablillos, Salta province, Argentina.
Jonathan Lee, MBA
Battery Technologies and Materials Analyst