Lithium Consolidated Mineral Exploration Ltd is a proprietary company involved in the exploration of lithium, a vital component used in the production of medicines, ceramics, cement and batteries. The company is led by Founder - Damien Reynolds, CEO - Shanthar Pathmanathan, and Vice President of Exploration - Gordon Addie, and was incorporated on 22 April 2016. LCME has large assets in Nevada, South and Western Australia and Botswana with the company’s mine in Nevada being the only one in the whole of North America to produce lithium brine, a key component of lithium carbonate. LCME is one of the very few Lithium carbonate producers in the world; and with its multiple uses, Lithium carbonate is set to sell for upwards of $9,000 per tonne.
 
Market for Lithium based products: Lithium carbonate is used in a number of industries and for a variety of reasons. As an industrial chemical, lithium carbonate is used as an ingredient in cement, glass, ceramics and adhesives while in the automobile industry, it is extensively used to produce Lithium Ion batteries that powers electric automobiles. It is also used in the pharmaceutical industry to treat various ailments.
 
About the IPO: To realise its objectives in an undersupplied lithium carbonate market, the company is looking to raise anywhere between $8 million to $9 million through the IPO, taking its market cap to about $23 million. The objectives of the company include providing sufficient working capital to develop the Company’s core projects in Nevada, USA, explore the sustainability of existing projects and ?nalise the mining tenement applications in Western Australia, South Australia and Botswana. In addition, the company looks to realize shareholder value through exploration, acquisitions and joint ventures. According to the founder, Damien Reynolds, a substantial amount of the funds raised will be utilized for drilling, which is expected to begin in the first quarter of 2017 and extend until the mid of 2018. The rest of the funds will be used for administrative purposes and a part of it set aside for future investments based on the objectives set of the company.
 

Existing cash reserves and Use of funds (Source: Company Prospectus)
 
Through the IPO, the company has invited investors to acquire 40 million fully paid ordinary shares at a subscription price of $0.20 each in Lithium Consolidated Mineral Exploration Proprietary Limited, which will be renamed Lithium Consolidated Mineral Exploration Limited after being converted into a public company in accordance with the Corporations Act in Australia. According to the offer, the company can raise an additional $1,000,000 in the event of the shares being over-subscribed. 

Use of Lithium Carbonate Equivalent (Source: Company Prospectus)
 
Key aspects: The group’s experienced management, exploration and development team are expected to help the company leverage the potential of LCME’s mineral assets. Also, on the completion of the Offer, LCME through its wholly owned US subsidiary will have 80% ownership of the Nevada Projects while its wholly owned Australian subsidiary has applied for 10 Exploration Licences in Western Australian, and five exploration permits in South Australia. The group has also secured six prospecting licences and two applications pending for tenements in Botswana. The company is betting big on the Chinese and the US automobile markets. With the renewable energy policy in China expected to kick start in 2020 and electric vehicle sales accelerating in the US, the prospects of substantial demand for lithium based products looks promising.
 
There are of course risks related to exploration, environmental regulation, sutainability of growth and margins, and so forth, but the key thing to keep in mind is that the lithium supply and demand are balanced. Some volatility has been seen in the sector in the past few months owing to varied opinions. As per latest comments from Albemarle, one of the biggest Lithium producers, the global market for lithium is expected to be “fairly balanced” for the next four to five years. Keeping this in mind, the prospects for the IPO look fair. 

Offer Dates (Source: Company Prospectus)

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