Lithium Power International - Lower risk, higher reward

After a sharp correction in H222 and H123, lithium prices have recently enjoyed a healthy bounce back, providing support to lithium equities. However, Lithium Power International’s (LPI’s) shares continue to be held back by the political uncertainty in Chile. Acknowledging the initial market scepticism, we believe that the recent introduction of a Chilean national lithium policy establishes a clearer path to production for new projects. Based on our model, LPI’s share price implies a net present value (NPV) discount rate of more than 40%, which we believe is an overly conservative risking for the Maricunga project, which is at a final investment decision stage, even allowing for the Chilean regulatory uncertainty.