European Lithium Ltd is gaining traction in the lithium and rare earth sectors in its namesake target market, says Martin Place Securities, with a series of strategic initiatives placing it on a growth trajectory.
The key drivers of this growth include the company’s Wolfsberg Lithium Project, a diverse portfolio that spans across Europe, and a listing on the Nasdaq.
The company’s market capitalisation, as of January 30, stands at A$117 million.
In its appraisal, Martin Place Securities suggests that the company’s stock is currently trading below its see-through asset backing of around A$0.80, indicating room for a substantial market revaluation.
The report sets a value target of A$0.58 per share for European Lithium Ltd by the end of 2025.
Martin Place Securities sees European Lithium as uniquely positioned to play a significant role in the European Union’s clean energy transition, especially with the EU’s target to phase in electric vehicles by 2035.
The company’s diversified portfolio, strategic partnerships and involvement in critical mineral projects such as the Wolfsberg Lithium Project and the Tanbreez REE deposit, place it at the forefront of an industry poised for growth.
European Lithium’s flagship asset, the Wolfsberg lithium spodumene mining project, is slated for a Nasdaq listing, which is expected to impart a fully diluted value of A$0.61 per share, considerably enhancing the company’s market presence.
The project, situated in Austria with a production capacity of 8.8ktpa LHM, is poised to become the first European Union producer of battery-grade lithium.
A March 2023 definitive feasibility study (DFS) pointed to a net present value (NPV) of US$1,504 million, bolstered by high lithium hydroxide (LiOH) prices.
“Wolfsberg would be one of the first operating lithium mines in Europe where EU regulations for the energy transition call for growing a major lithium industry to assist in the phasing in of electric vehicles there by 2035,” the report said.
“BMW, recognising the need for security of supply, has entered into an offtake agreement with a US$15 million prepayment for all of the Wolfsberg Zone 1 output for its own battery manufacturing centre in Germany.”
The company also has plans to access the largest lithium resource in Ukraine, which is also potentially one of Europe’s largest hard rock lithium resources.
The report suggests that, following a resolution to the conflict in that country, an EU-Ukraine strategic partnership on critical raw materials could sponsor this development of the Shevchenkivske and Dobra deposits.
Growth prospects in Austria and Ukraine
The company is actively exploring additional lithium resource projects in Austria and is advancing towards acquiring significant lithium deposits in Ukraine.
These ventures represent a strategic expansion and diversification of the company’s lithium asset portfolio.
The lithium sector is showing signs of bottoming out, indicating a potential upswing that could benefit European Lithium’s strategic investments and market position.
World’s largest REE deposit
Along with its lithium exposure, European Lithium Ltd (ASX:EUR, OTCQB:EULIF) holds a 7.5% stake in the Tanbreez deposit in Greenland, touted as the world’s largest rare earth element (REE) deposit.
The involvement in the Tanbreez REE deposit underscores European Lithium’s commitment to diversifying its portfolio in the critical minerals sector, aligning well with global trends and demands.
This investment could yield a pass-through value potential of more than A$0.20 per European Lithium share, further enhancing the company’s asset base.
The company is likely to target a Nasdaq listing for Tanbreez in 2025 to fund its development.