Lithium Co.'s Modular Plant Nearly Ready for Brazil Project

Source: Streetwise Reports 05/08/2024

Atlas Lithium Corp. announced that its modular dense media separation (DMS) lithium processing plant is in the final stages of fabrication and trial assembly before its shipment to the Neves project site in Brazil's Lithium Valley. One analyst says the company is "not messing around."

Atlas Lithium Corp. ATLX announced that its modular dense media separation (DMS) lithium processing plant is in the final stages of fabrication and trial assembly before its shipment to the Neves project site in Brazil's Lithium Valley.

The company said the modular processing plant is a key part of its strategy to rapidly advance production at its Minas Gerais lithium project to start in Q4 2024.

The plant was designed as a series of compact, preassembled modules, an approach that has never before been used for lithium processing in Brazil. This configuration reduces the plant's physical footprint compared to traditional designs and will enable more efficient transportation, installation, and commissioning of the plant, the company said in a release.

"The first few paragraphs of this news release make clear that the company is making rapid and substantial progress with this — in layman's terms, 'They are not messing around'" wrote Technical Analyst Clive Maund on Tuesday.

Maund said on the company's stock chart a pattern has formed since mid-February that "approximates a Head-and-Shoulders bottom."

"With the price having reacted back to a support level and volume easing back to a relatively low level, the Accumulation line holding up well on the reaction, and momentum (MACD) now trending higher, everything is in place for the stock to advance a new" Maund wrote. "It is now starting higher again and it is thought this morning's news out of the company could give it a boost."

Maund said he was staying long on the stock and rated it a Strong Buy for all timeframes.

Atlas Chief Operating Officer Brian Talbot said the company is "fully committed to becoming a producer of high-quality, environmentally sustainable lithium concentrate" and the modular design will help streamline its path to production and cash flow.

"Our experienced technical team has enabled us to pursue an accelerated development timeline" he said. "Seeing our modular processing plant entering the final fabrication and trial assembly stages is a major milestone."

The Catalyst: Executed Binding Offtake Agreements

Atlas is the only company that has executed binding offtake agreements to advance its lithium project toward production in Brazil's Lithium Valley. The small-cap explorer and developer announced in March that it had signed definitive investment and offtake agreements with Mitsui & Co. ("Mitsui"), a company that has a market cap in excess of US$70 billion and boasts Warren Buffett as a major shareholder through Berkshire Hathaway

Mitsui, one of the largest trading companies in Japan, purchased US$30 million in common shares of Atlas at a 10% premium and also entered into an offtake agreement for the future purchase of lithium concentrate from Atlas over several years.

This comes after the company announced a commitment of US$50 million from two of the world's largest lithium chemical producers last December.

"The first few paragraphs of this news release make clear that the company is making rapid and substantial progress with this — in layman's terms, 'They are not messing around,'" wrote Technical Analyst Clive Maund.

"The agreement with Mitsui serves as an additional form of validation for Minas Gerais" wrote analyst Jake Sekelsky of Alliance Global Partners in a research note.

Several of Atlas' lithium properties are neighboring those of Sigma Lithium Corp. SGML, a producer with a market capitalization of approximately US$1.9 billion. Atlas boasts hard-rock lithium of similar quality, as demonstrated by multiple metallurgical studies. The company's lithium deposits are also close to the surface, allowing for relatively inexpensive and expeditious open-pit mining techniques to be employed.

Atlas' stock jumped from US$14.92 to US$17.02 on high volume after the Mitsui news.

Maund wrote at the time that the agreement was "REALLY BIG NEWS, which, in addition to being a massive vote of confidence in the company, means that Atlas can aggressively and rapidly advance its lithium projects through to substantial production, and due to this, it will have an additional and substantial assured market for its product."

Silvery Metal Key to Energy Transition

A soft and silvery metal, lithium is an important part of the energy transition for electric vehicle (EV) batteries and energy storage systems. It also strengthens alloys, serves as a high-temperature lubricant, and treats bipolar patients.

Its market is projected to grow from US$2.5 billion in 2023 to US$6.4 billion by 2028 at a compound annual growth rate (CAGR) of 20.4% from 2023 to 2028, according to a report by Markets and Markets.

The lithium Atlas plans to mine in Brazil is contained within spodumene, a lithium-bearing mineral found in pegmatites or hard rock deposits. The extraction method employed by Atlas to retrieve lithium concentrate from its mined spodumene consumes considerably less water and offers superior ESG outcomes compared to the extraction of lithium from brines, the company said.

Spodumene-based lithium extraction offers "lower capital costs and a shorter time from discovery to production in comparison to brine operations" noted Feeco International.

Atlas "has been steadily progressing its site to production" wrote H.C. Wainwright & Co. analyst Heiko F. Ihle in a recent research note. He rated the stock Buy with a US$40 per share target price. 

Ihle said Mitsui's backing provides Atlas with the "immediate liquidity necessary for rapid development toward revenue generation following the production and sale of high-quality, low-cost, environmentally sustainable lithium concentrate."

Analyst Joe Reagor of Roth MKM rated the stock a Buy with a US$36 per share target price.

"We continue to believe the key catalyst for ATLX is likely to be the release of an initial resource estimate and subsequent financial study" Reagor noted.

Ownership and Share Structure

About 36% of Atlas Lithium is owned by management and insiders. About 13.5% of the shareholders are institutional. The rest, about 50.5%, is retail.

Other top shareholders include Waratah Capital Advisors Ltd. with 4.52%, Invesco Capital Management LLC with 2.48%, and Candace Shira Associates LLC with 1.47%, according to Reuters.

Its market cap is about US$202.53 million. It trades in a 52-week range of US$34 and US$11.80.

Important Disclosures:

1. Atlas Lithium Corp. is a billboard sponsor of Streetwise Reports and pays SWR a monthly sponsorship fee between US$4,000 and US$5,000.
2. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Atlas Lithium Corp..
3. Steve Sobek wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
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