Analysts Highlight Major De-Risking in Lithium Sector After Key Approval

Source: Streetwise Reports 11/25/2024

Atlas Lithium Corp. (ATLX:NASDAQ) announced late last month that it has received the operational permit for its Neves Project, located in Minas Gerais, Brazil. See what analysts are saying about this “major de-risking event.”

Atlas Lithium Corp. (ATLX:NASDAQ) announced late last month that it has received the operational permit for its Neves Project, located in Minas Gerais, Brazil. The permit allows the company to construct and operate a lithium processing plant, develop open-pit mining operations, and sell lithium concentrate produced on-site. This milestone completes a critical permitting process that began in September 2023, with the approval unanimously granted by a voting board on October 25, 2024. The Neves Project is now fully authorized to advance toward production.

Atlas Lithium’s CEO, Marc Fogassa, underscored the importance of this milestone, stating in the news release that permitting is considered one of the most significant hurdles in any mining project. He noted the company’s commitment to environmental responsibility and job creation, emphasizing that the modular design of the company’s processing plant should facilitate its rapid installation and commissioning. The plant, which is nearing shipment to Brazil, was engineered for minimal environmental impact, including low and recyclable water usage.

Analysts have described the receipt of the permit as a “major de-risking event” for the project and the lithium sector as a whole. Jake Sekelsky of Alliance Global Partners reaffirmed his Buy rating with a US$45 price target on October 28, noting that the permit provides a clear path for production and significantly reduces uncertainties surrounding the project. Sekelsky pointed out that the permitting process was completed efficiently. He also said that Atlas could enhance the project’s potential through future expansion and that the Neves Project is strategically positioned to benefit from anticipated recoveries in lithium prices. To that end, he cited recent M&A activity in the sector as a sign of optimism for future demand.

That next day, Heiko Ihle of H.C. Wainwright also reiterated his Buy rating, assigning a US$19 price target. Ihle described the operational permit as a critical milestone that validates Atlas Lithium’s ability to achieve near-term production. He showcased how the processing plant is expected to generate initial revenues while advancing the company’s growth trajectory. Ihle further explained that the ongoing development of the Neves Project could unlock further shareholder value, particularly as Atlas prepares for the release of a Definitive Feasibility Study (DFS) and updated Mineral Resource Estimate (MRE).

Roth MKM similarly maintained a Buy recommendation with a US$19 price target on November 12. The firm acknowledged the Neves Project’s significant progress and suggested that the underlying assets, now fully permitted, could make Atlas Lithium an attractive acquisition target.

The Overall Lithium Sector

On November 4, Carbon Credits reported on the challenges facing the lithium market due to falling prices and oversupply. This was seen particularly in Asia, where seaborne lithium carbonate prices declined by 3.8% in October to approximately US$10,000 per metric ton. Despite the downturn, the article pointed to continued optimism for the long-term demand for lithium, driven by electric vehicle (EV) adoption and renewable energy growth.

It stated that “investments in lithium production continue to grow despite the current market downturn,” referencing strategic actions by major stakeholders to strengthen domestic supply chains.

According to Alex Koyfman in an article published on November 6 for Energy and Capital, the U.S. lithium industry faced a critical strategic disadvantage; the country produced only 1% of the global lithium supply despite its dominant role as a consumer in the lithium-ion battery market. Koyfman noted that political and industrial priorities have historically driven domestic lithium development, with permitting approvals for substantial projects signaling a pragmatic commitment to securing future battery materials.

He remarked, “Trump’s America-centric ideologies promote the development of domestic lithium and lithium battery production,” emphasizing the importance of localizing supply chains to reduce reliance on geopolitical rivals.

On November 19, Popular Science published an article by Mack DeGeurin exploring the environmental and social costs associated with increased lithium mining. DeGeurin described lithium as essential to powering electric vehicles, renewable energy infrastructure, and high-tech devices, estimating that global demand for lithium could increase tenfold by 2050.

He underscored the tension between the need for expanded mining and its environmental impact, writing, “Critical metals are at the core of the iPhone, Teslas, and countless other high-tech products,” while cautioning that mining operations risk further polluting the planet and displacing communities.

The Catalysts For Atlas

According to the company’s investor profile, the Neves Project is strategically positioned in Brazil’s Lithium Valley, which is seen as an emerging hub for lithium production. The project benefits from robust infrastructure, including proximity to intercontinental ports and access to renewable energy. Atlas Lithium’s modular processing plant is designed for rapid deployment and environmental efficiency, with a focus on minimizing its ecological footprint.

Upcoming catalysts for Atlas Lithium include the shipment of the company’s completed Dense Media Separation (DMS) lithium processing plant to Brazil later this year from South Africa, where the modular facility was manufactured. Furthermore, the company anticipates the release of a Definitive Feasibility Study (DFS) for the Neves Project in first half of 2025. [OWNERSHIP_CHART-11040]

This report is expected to provide further clarity on the project’s economic potential and operational metrics. Additionally, the company’s Salinas Project, located nearby, offers further exploration upside, with ongoing geological studies and planned drill programs anticipated to yield positive results.

With all necessary permits secured, Atlas Lithium is positioned to capitalize on the growing demand for lithium, driven by the global shift toward renewable energy and electric vehicles. Analysts and the company agree that the Neves Project represents a pivotal step in Atlas Lithium’s journey toward becoming a significant lithium producer.

Ownership and Share Structure

About 34% of Atlas Lithium is owned by management and insiders. About 11% of the shareholders are institutional. Strategic partners hold another 12%. The rest, about 43%, is retail.

Top shareholders include Waratah Capital Advisors Ltd. with 4.34%, Mitsui & Co. Ltd. with 12.27%, and Candace Shira Associates LLC with 1.39%, according to Reuters.

Its market cap is about US$130 million. It trades in a 52-week range of US$34 and US$6.25.

Sign up for our FREE newsletter at: www.streetwisereports.com/get-news

Important Disclosures:

1. Atlas Lithium is a billboard sponsor of Streetwise Reports and pays SWR a monthly sponsorship fee between US$4,000 and US$5,000.
2. James Guttman wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
3. This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company.

For additional disclosures, please click here.

( Companies Mentioned: ATLX:NASDAQ, )

Source: https://www.streetwisereports.com/article/2024/11/25/analysts-highlight-major-de-risking-in-lithium-sector-after-key-approval.html