First Berlin – Rock Tech Lithium Inc. Research Update (06/02/2018)

First Berlin Equity Research has published a research update on Rock Tech Lithium Inc. (ISIN: CA77273P1027). Analyst Simon Scholes reiterated his BUY rating and increased the price target from CAD 1.50 to CAD 2.10.

A flurry of carmaker electrification announcements and government policy prescriptions has driven an average rise of 92% in the share prices of Rock Tech Lithium (RCK) and its peers (Critical Elements, Frontier Lithium, Nemaska, Sayona Mining) since the end of June 2017. The past seven months have also seen an increasing number of equity, project financing and M&A deals in the lithium sector. We expect this activity to gather pace in 2018 as the strategic value of the remaining independent projects such as RCK are thrown in to sharper relief, and energy storage emerges as an additional significant source of lithium demand. Recently published drilling, prospecting and channel sampling results suggest that RCK is well on track to achieve our target of an NI 43-101 compliant 15.8m tonnes of ore (163k tonnes Li2O in situ). The positive market environment suggests that RCK will be at least able to maintain its current adjusted enterprise valuation of CAD477 per tonne of in situ Li2O. Our valuation is based on the product of this figure and our exploration target. After diluting for existing warrants and options outstanding, we now see fair value for the share at CAD2.10 (previously: CAD1.50). We maintain our Buy recommendation.