With the positive sentiments gearing up again on the lithium demand in relation to the Electric vehicle industry, the ASX listed lithium stocks are gaining potential once again post a significant downfall witnessed in last few months. Below are 4 such lithium sector stocks -

Pilbara Minerals Ltd

New Funding would ramp up growth: Pilbara Minerals Ltd.’s (ASX: PLS) stock climbed up 9.22% on September 07, 2018 at the back of recent positive developments happening around the company with little revival in the lithium sector. Recently, PLS talked about the strong financial support the company is getting for its Pilgangoora project from BNP Paribas and the Australian Government’s Northern Australia Infrastructure facility. As per the arrangement, the company has secured US$15 Mn working capital and foreign exchange hedge facilities from BNP Paribas and a $19.5 Mn concessional loan facility by the Northern Australia Infrastructure facility. Earlier, PLS also announced its progress on the Pilgangoora project wherein progress from Stage 1 has been made the production ramp-up has started. The company is expecting the first shipment forecast to start between 14 September 2018 and 21 September 2018. For the full year ended 30 June 2018, the company recorded decline in loss of $19.1 Mn compared to $25.9 Mn in FY17.


Resources and Reserves (Source: Company Reports)

Meanwhile, the stock has generated a positive annual return of 80.77% and seems to have snubbed its short-term falling streak. The company is expected to keep delivering on its target and enough funds would drive the growth ahead. We recommend the investors to “Hold” at the current market price of $0.770.
 

Galaxy Resources Ltd

Strong Financials: Galaxy Resources Limited’s (ASX: GXY) stock climbed up 9.959% on September 07, 2018 with decent intraday traded volume of around 4.7 million. Lithium stocks have had a great run last year as the demand from the EV battery makers cranked up but 2018 has not been good so far otherwise. Meanwhile, GXY posted good half-year financial performance with Profit after tax almost growing multi-fold from the previous comparable period. Profit after tax for 1H FY18 came in at $11.49 Mn against $5.0 Mn posted in 1H FY17. Gross Profit was recorded at US$23.2 Mn against US$1.5 Mn in 1H FY17. The group has enough cash resources to take care of the funding requirements for the ongoing projects and optimization initiatives. As at 30 June 2018, the group had cash and cash equivalent of $ 45.12 Mn with nil debt.


1HFY18 Financial Highlights (Source: Company Reports)

Moreover, one of its substantial holders, Ausbil Investment Management Limited, changed its holding from 7.871% of interest to 8.991% of voting power. The recent binding agreement with POSCO to sell a package of tenements on the Northern Basin of Salar del Hombre Muerto would earn Galaxy US$280 Mn. The proceeds from the transaction can be siphoned into the development of the Sal de Vida Project. Meanwhile, the stock has generated the positive annual return of 10.55% and looks good at the current levels. Despite recent breakdown, the price did not fall below its support level of $2.363. The recent bounce has come on decent volume indicating some upside in the stock. We recommend a “Hold” on the stock at the current market price of $2.650.
 

Orocobre Limited

Minor Headwinds but fundamentals stay strong: Orocobre Ltd.’s (ASX: ORE) stock surged up 4.971% on September 07, 2018 at the back of positive market sentiments in relation to the growing Lithium demand across the globe. The rebound in share has come just few trading sessions after getting impacted by the export duty increase announcement by Argentina. The company has posted strong FY18 results with statutory Net Profit coming in at US$1.9 Mn and Underlying NPAT from continuing operations at US$25.7 Mn compared to US$ 13.8 Mn. As at 30 June 2018, the group had cash reserve of US$ 316.7 Mn, and new cash of US$ 229 Mn. The company is looking at promising growth options at Olaroz Stage 2 and Naraha Lithium Hydroxide with both the projects advancing towards final investment decision. ORE has ramped up its total production of 12,470 tonnes of Lithium carbonate, an increase of 5% from FY17. Moreover, rise in the price of contract Lithium and efficient cost management has benefitted the company. As the spot market prices of Lithium dropped in China, the stock did come under pressure with investors fearing that demand is fading. However, the global scenario for Lithium demand may regain momentum, getting support from the regulators, governments, and consumers.


Financial Highlights (Source: Company Reports)

Although, the stock has generated a negative annual return of -11.72% and has dropped below its support level of $3.98 in the recent trading session. The gap down was mainly because of an unfavorable announcement by Argentina government but the fundamentals remain strong with the company posting a profit and ramping up its capacity. Minor headwinds would be outweighed by the solid fundamentals of the company in the upcoming period. We, therefore, recommend a ‘Buy’ in the stock at the current market price of $3.590.
 

Lepidico Ltd

L-Max Technology to drive growth: Lepidico Ltd (ASX: LPD) informed the market that Strategic Metallurgy has been instructed to build and operate its L-Max pilot plant, subject to securing funding. With this news, the share price shot up 10.526% on September 07, 2018. As per the release, the company would produce Lithium Carbonate samples by deploying its homegrown L-Max technology. The operation would be carried out from the recently established pilot plant in Western Australia. The plant is laced with enough capacity to operate 15 Kilogram per hour and the equipment would be like that used in phase one L-Max plant design. LPD believes that the quantities generated would improve the quality and value of each. Also, the Lithium Carbonate produced in the pilot plant would be offered to the prospective client. Besides this, the company has also informed the market that the rights issue announced on 3 September 2018 has also started trading under the ASX ticker LPDRA.

Meanwhile, LPD has generated an annual return of 65.07% on the back of strong growth and positive developments within the company. The activity in the share has started only over the past two years as before that the volume was very low. This indicates that the investors have taken interest in the stock identifying it potential and future growth prospects. After falling from the high of $0.079, the stock has rested on its support level of $0.020. Given the positive recent developments such as the intersection of Lithium Mica mineralization at Youanmi and Lithium Pilot Plant in WA among others would underscore the growth in the company going ahead. We recommend a “Hold” on the stock at the current market price of $0.021 expecting more upside from the current levels.

Disclaimer
 
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.