Atlantic Lithium – directors buy a big load of shares at around current market price
Earlier this month the shares of Atlantic Lithium (LON:ALL) were suspended on assertions of textbook corruption in obtaining mining licences in Ghana.
The slur was centred around comments made by Blue Orca Capital, however Atlantic Lithium responded quickly that the report was ‘false and misleading’ while being ‘factually untrue’ – the shares were requoted the next day.
The £169m capitalised Sydney, Australia -based group, which is an African-focussed lithium exploration and development company, is targeting to deliver Ghana’s first lithium mine.
The group has announced that it has commenced auger drilling at its Ewoyaa Lithium Project, due to take five months and test multiple targets.
Atlantic Lithium is advancing a portfolio of lithium projects in Ghana and Côte d'Ivoire through to production.
Its flagship project, the Ewoyaa Project in Ghana, is a significant lithium spodumene pegmatite discovery.
Piedmont Lithium funding
Piedmont Lithium has funded the company with $103m towards its development, which based on the Pre-Feasibility Study, has an indicated Life of Mine revenues exceeding $4.84bn, producing a spodumene concentrate via simple gravity only process flowsheet.
Atlantic Lithium holds 560 sq.km & 774 sq.km of tenure across Ghana and Côte d'Ivoire respectively, comprising some significantly under-explored and highly prospective licences.
The group’s shares fell from 38.5p on Monday 6 March to a 19.69p low when the shares were suspended two days later.
They bounced back to hit 30.5p the next day as the suspension was lifted, before drifting lower to 25.5p a week later.
That was before the company’s Chairman Neil Herbert purchased an additional 1.88m shares at 27.48p each, while Finance Director Amanda Harsas acquired 0.57m shares at 26.90p each.
Herbert now has 7.35m shares representing 1.21% of the Atlantic Lithium equity. Amanda Harsas now holds 0.73m shares (0.12%).
Analyst Opinion – 78p valuation
Analyst Yuen Low at Liberum Capital considers that the drilling now planned improves the resource confidence and potentially adds to the current resource estimate.
He has a Buy rating out on the shares, looking for a valuation of 78p a share.
Liberum Capital note that there is a very good potential for significant resource upgrades post the Definitive Feasibility Study, due to be completed before the end of June this year.
“Increased resource tonnage will allow the DFS to evaluate an extended mine life and increased throughput to enhance Project economics.”
Estimates now suggest that nil sales for 2023 and 2024 and pre-tax losses of A$7.0m this year and A$9.2m next year, to end June.
However, a massive A$1.27bn sales is estimated for the end June 2025 year, with pre-tax profits coming in at a mega-A$994.1m.
Yuen Low has a current Target Price of 56p on the shares, which are 4% higher at 27.75p.
For investors prepared to take the longer-term view the share price upside could be very substantial.