Orocobre Ltd (ASX: ORE)

On-track to achieve full year production guidance: Orocobre stock rallied over 4.7% on October 31, 2017 with the continued positive sentiments. While the latest quarterly results of the group were mixed with US$46.6m of available cash after providing funding for a working capital build at Borax Argentina and production of 2,135t, with slow evaporation rates related to winter weather conditions and the finalisation of the pond rebalancing process impacting the operations. The group’s Olaroz operationsrecorded the production of a cumulative 20,000t of lithium carbonate since operations commencement in 2015. ORE has reiteratedits guidance for the full year of 14,000 tonnes of lithium carbonate with production split approximately 45/55 between the first and second halves with record production expected in the December quarter at a production cost of <US$4,000/tonne.
 

Quarterly Production (Source: Company Reports)
 
ORE stock surged up 49% in last six months (as at October 30, 2017) and is moving at high levels. Further, the trailing price to earnings ratio for the stock is above the industry average. Given the lithium industry trends that still have the room to move up, we maintain a “Hold” at the current price of $4.84

Magnis Resources Ltd (ASX: MNS)

Engaging in lithium-ion battery gigafactories: Magnis stock slipped by 1% on October 31, 2017 after rising about 5.4% in last five days (as at October 30, 2017) with the release of its quarterly update. The group is a provider of anode materials and associated technologies to other big players and has recently become a part of global consortiums to engage in lithium-ion battery gigafactories. The group has signed MoU with lithium battery consortium TerraE-Holding GmbH for supplying requisite materials. The group has earlier announced about signing of a MoU for a 30GWh Lithium-ion battery with integrated Lithium-ion battery recycling plant in North Rhine Westphalia, Germany, with the industrialised Emscher-Lippe region. While some challenges do prevail with regards to Tanzania legislative changes to mining industry and might impact graphite products produced by MNS, the group is assessing the impacts on a continuous basis. On the other hand, the opportunities in automotive industry and lithium sector as a whole are expected to provide some leverage to the group. While the company’s cash position of $5.7 million has been below previous quarter’s cash position of $7.5 million, there seems to be sufficient funding for focussing on strategies with respect to the Nachu graphite and Lithium gigafactories. We give a “Buy” on the stock at the current price of $0.48  

Lithium Australia NL (ASX: LIT)

Positive developments: Lithium Australia has been known for its SiLeach lithium extraction processes. The group has lately received a lot of attention with its efforts on enhancing footprint tenure in Queensland and progress on its exploration move in Germany. The group had completed stage 1 of its due diligence for the acquisition of additional technologies through the purchase of the Very Small Particle Company Pty Ltd (VSPC), for the production of lithium cathode materials. Thisis expected to proffer a competitive edge to the group in the market given the capability to remove lithium micas from mine waste and refining them to produce cathode nano-powders, being used in the lithium-ion battery. Together with SiLeach technology, the group aims to benefit from the VSPC technologies, with a value adding step in the production of batteries. The group’s acquisition of a controlling stake of 54% in the Electra Lithium project in North Western Mexico is also expected to provide boost. The group has cash and cash reserves of $10.3 million, while LIT is yet to give positive return on invested capital.

LIT stock has risen 50% this year to date, as at October 30, 2017 and is trading at high levels. We maintain a “Hold” at the current price of $0.21

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