Shares of U.K.-based CleanTech Lithium could soar by 600%, according to investment bank Canaccord Genuity. Analysts at the bank said the London-listed stock has the potential to rise to £2.80 ($3.40) over the next 12 months as long-term lithium demand continues to rise. The stock was trading around £0.40 on Monday at 2 p.m. London time. Founded in 2017 and based in Jersey, CleanTech Lithium is a lithium exploration and development company — that has yet to actually mine any of the metal. The company made its public market debut in March 2022 and its stock has risen by 15% since then. It aims to supply the key battery material to the electric vehicle-making industry from its mines in 2026. Earlier this month, CleanTech Lithium released its first economic study of its Laguna Verde project in Chile, which Canaccord Genuity said indicated that it would eventually be a low-cost producer among brine projects globally. “We believe that the stock has been ‘flying under the radar’ since its 2022 IPO. However, with the recent release of the first economic study, and several potential catalysts throughout 2023, we expect the stock to perform strongly over the coming year,” said Alexander Bedwany, equity analyst at Canaccord in a note to clients on Jan. 6. CTL-GB 1Y line Chart showing shares of London-listed CleanTech Lithium ‘Speculative buy’ The investment bank has rated the stock a “speculative buy,” meaning that it bears a “significantly higher risk” than a stock with its typical buy rating and could lead to a material loss for investors. In addition, the investment bank said the growth and buildout phase of CleanTech Lithium means normal fundamental criteria cannot value the company. Lithium demand outpaced supply in 2022. Spot prices of battery-grade lithium carbonate in China rose by nearly 700% last year, driven by a rise in electric car sales. To meet the increasing lithium demand, companies are investing in new mines and expanding existing ones which, if successful, will increase the supply of lithium and help stabilize prices in the long term. ‘Direct lithium extraction’ CleanTech Lithium plans to extract the metal through “direct lithium extraction,” which is believed to be more environmentally friendly and uses less water than other alternatives such as brine harvesting. In contrast, the brine evaporation technique, which is the current industry standard, has come under criticism for the vast quantities of water it uses in water-starved regions. CleanTech Lithium says it also plans to use renewable energy, making its eventual lithium extraction process carbon-neutral. While the direct lithium extraction process isn’t new, it is yet to be deployed at scale for extracting lithium and adds to the execution risk for CleanTech Lithium, according to Canaccord.
