Manufacturers of the increasingly popular electric cars rely primarily on lithium batteries. Tesla boss Elon Musk and his company are also building their own lithium production plant. But other stocks are also likely to benefit from the trend.
• Lithium particularly relevant for electric vehicles
• Tesla is building its own production facilities
• Other lithium stocks should also benefit
Lithium is increasingly in the focus of investors – the raw material is becoming increasingly popular and demand is constantly increasing. The lightweight, highly reactive element is an extremely relevant component of lithium-ion batteries. These are found in particular in smartphones, laptops and electrically powered vehicles (EVs). Due to its use in the rapidly growing electric vehicle industry, lithium has become one of the most sought-after raw materials in the world and has now even achieved the status of “white gold”. Tesla boss Elon Musk repeatedly emphasizes that lithium is “the new oil”. The electric car manufacturer sources lithium from several producers, but is also setting up its own lithium production facilities. For example, a lithium refinery in Texas is expected to be completed in 2024. The goal: The plant will produce enough lithium to support the production of about a million electric vehicles by 2025, according to Yahoo Finance’s plans from the Tesla boss.
Of course, there are also other companies that could benefit from the growing demand for lithium.
Experts recommend Atlas Lithium shares
One of the companies that could benefit from the lithium trend is Atlas Lithium Corporation, based in Belo Horizonte, Brazil. The Company focuses on mining lithium and other battery metals and has the largest portfolio of hard rock lithium minerals in Brazil. The company plans to produce 150,000 tons of lithium per year. To advance its plans, drilling activities and support future production, the Company has secured major investments.
“Atlas Lithium’s Minas Gerais project comprises 57 mineral rights covering 58,774 hectares. In our view, this massive land package offers great potential for lithium exploration in the short and longer term. In short, when analyzing Atlas’ land holdings, the company’s Das Neves project continues to stand out as an emerging high-grade lithium deposit with strong development potential,” Yahoo Finance quotes Heiko Ihle of HC Wainwright. “Although Das Neves does not currently have a published mineral resource estimate, we believe drilling to date has returned significant economic grades of lithium in strong intercepts. In turn, we see significant re-evaluation potential through the release of an initial resource estimate in 3Q23, with a further Risk reduction is expected through a preliminary economic assessment (PEA) after the resource estimate,” Ihle continued.
Atlas Lithium shares currently cost $25.65 on the NASDAQ (as of closing price on September 13, 2023). With a buy recommendation from Ihle and a price target of $56, the share has growth potential of more than 100 percent from its current level, according to dme analysts.
Sigma Lithium share with buy recommendation
The Canadian Sigma Lithium Corporation, which is also based in São Paulo, is also likely to benefit from the ongoing trend around “white gold”. The company is “committed to powering the next generation of electric vehicles.” At the beginning of the year, rumors emerged that Tesla was thinking about taking over Sigma Lithium. The company has also attracted the attention of other potential suitors. Experts expect that Sigma Lithium will soon comment on its M&A plans.
By the end of the year, the company plans to have produced 130,000 tons of triple zero green lithium in chemical grade, according to Yahoo Finance. The first delivery took place at the end of July, consisting of 15,000 tons of Triple Zero Green Lithium and 16,500 tons of green by-products, for which Sigma Lithium received an advance payment of $31.8 million in the second quarter. A second shipment of 15,000 tons is waiting to depart from the port of Vitória.
“Firstly, SGML expects 33,000 tonnes of Spod concentrate to be delivered by the end of September – 15,000 tonnes (in total the second shipment from the mine) will be dispatched shortly and the next 18,000 tonnes by the end of the month (plus further tailings will be delivered) . Second, a resource update including Phase 4 and Phase 5 areas is expected in the coming days. Third, the Phase 2/3 feasibility study is expected in the next two months. Fourth, potentially more commercial agreements and/or product trials/ Partnerships (we wouldn’t be surprised if there are some agreements with OEMs, perhaps in Europe). Fifth, we expect there could be an update on mergers and acquisitions sooner or later,” Yahoo Finance quotes Joel Jackson of BMO Capital Markets . “It continues to appear to us that management is willing to sell. We believe a process is underway, although potential buyers may need to see a little more to meet management’s pricing guidance, i.e. operating cost profile, quality the varieties, the possibility of dry storage, etc.
While the stock currently costs $36.54 on the NASDAQ, Jackson rates the stock “outperform” with a price target of $48. According to the expert, the Sigma Lithium share has an upside potential of around 31.3 percent (as of the closing price on September 13, 2023).
Experts confident
In general, experts are confident about the industry and share a positive outlook for lithium stocks. The demand for the “white gold” continues to grow. According to the experts, the companies have the potential to record significant growth in the coming years.
Editorial team finanzen.net
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