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Date : 13/12/2022

Stock Report: Leo Lithium Ltd (ASX: LLL)

Leo Lithium Ltd (ASX: LLL) is an Australian mining company listed on the ASX. Through its participation in the Goulamina Joint Venture, the firm is committed to advancing the Goulamina Lithium Project. The company’s priority is finishing Stage 1’s construction and operations on time so that they may start shipping Spodumene to customers before the electric car industry experiences a sudden and dramatic increase in demand.

As the need for electric vehicles (EVs) and energy storage continues to rise, investors are reminded that many of the lithium juniors will likely be required in the mid-to-late-2020s to meet that demand. This implies you need a bigger stomach for risk and a longer time horizon to invest in these businesses.

In October, the United States government announced $2.8 billion “to accelerate U.S. manufacture of batteries for electric cars and the electric grid.” Then, in late October, Australia announced its “support for important minerals advances.”

ASX LLL: Financial Health

Since Leo Lithium Limited (ASX: LLL) very recently started business in 2019, no meaningful information is accessible about its financial performance. Read more for our stock report on Leo Lithium Ltd (ASX: LLL).

Leo Lithium has more liquid short-term assets (95.3M A$) than short-term liabilities (14.1M A$). There are no long-term debts for LLL. Over the last five years, LLL has incurred zero debt. Since Leo Lithium Limited is debt free, its operating cash flow is not required to service debt service. Since LLL is debt-free, there is no need to worry about how to pay interest.

A one-time gain of A$75.8M significantly impact June 30, 2022, financial statements of Leo Lithium. Compared to the Metals & Mining industry average of 33.8%, LLL’s year-over-year profit rise was 5.911.24%. When comparing LLL’s P/E (9x) to that of the Australian Metals and Mining sector average (13x), it is clear that LLL represents an excellent value (11.3x).

Since LLL has not disclosed any recent dividend distributions, we cannot compare LLL’s dividend yield to the lowest 25% of dividend payers.

Since its listing, the LLL ASX share price has hardly budged, rising from $0.50 to $0.56, a 14% rise. The firm has a current market valuation of AUD 547M.

Leo Lithium Ltd Stock Report lll asx share price trend on tradingview

Based on the Leo Lithium Ltd Stock Report & Analysis are ASX-LLL Shares on the to buy list?

Lithium price

Naturally, ASX:LLL investors pore through supply-and-demand models and cost curves to get an opinion on future pricing. Get the commodity pricing right, and you’ll give yourself a fighting chance when investing in the correct firms involved in the resource sector. The price of lithium products has skyrocketed during the last year.

Within the last 30 days, the spot price of 99.5% China lithium carbonate increased by 6.05%, while the spot price of China lithium hydroxide increased by 5.68%, as reported by Asian Metal. The price of Lithium Iron Phosphate (Li 3.9% min) increased by 3.33 percent. Over the last 30 days, the cost of Spodumene (6% min) increased by 4.53%.

Benchmark Mineral Intelligence reported that battery-grade lithium carbonate costs RMB 529,000 ($73,525), and lithium hydroxide costs RMB 524,000 ($72,825). Benchmark also said: “In addition to strong growth in demand from the EV industry, contacts told Benchmark that growing demand from the energy storage sector in recent months has also filled several lithium producers’ order books until 2023, putting upward price pressure on the lithium chemicals market.”

What is happening with the price of lithium?

There is widespread concern among investors that lithium commodity prices are about to fall. This month, the price of the mineral reached an all-time high before beginning a slow decline.

This is primarily because China is the largest consumer of lithium batteries and the world’s largest manufacturer of electric cars (EVs).

The commodity’s price and the price of ASX lithium shares are in flux due to the increasing number of COVID-19 cases in China, the government’s zero-COPID policy, continued lockdowns, and the slowdown in EV sales.

LLL: Lithium demand

Lithium mining and processing are not new fields, but their demand profiles are shifting. Since lithium only exists in compounds, so it must be mined from hard-rock deposits or brines before it can be refined into a usable chemical. Applications in glass and ceramics and additives in steel and aluminium manufacturing have historically been the primary drivers of demand for lithium chemical products. Because of lithium’s high energy density per unit weight, lithium chemical compounds are now often used in the rechargeable battery cells of today’s cutting-edge electric cars. Lithium chemical products are in high demand as the globe moves away from fossil fuels and toward cleaner technologies such as electric automobiles.

The ASX lithium stocks performance 

Despite rising speculation of global recessions, lithium stocks in the S&P/ASX 200 Index (ASX: XJO) have had a fantastic year.

As a critical component in batteries, businesses involved in the commodity could weather the economic storm. Many specialists share this view.

In fact, despite Treasurer Jim Chalmers’ forecast of global recessions, Macquarie improved its prognosis for lithium prices earlier.

Speaking to ABC, Chalmers expressed his confidence that Australia will be spared the worst of the global economic downturn, even though many of Australia’s trade partners would be hit hard. He further added; a recession is not in the cards for us.

The way forward in the lithium industry

Given the trends above, it’s wise to hedge our bets with some exposure to the lithium market. Despite the elasticity of supply, demand, and price predictions, it is still vital to value each opportunity with some degree of pessimism because of the inherent uncertainty in the lithium paradigm. Over the coming decade, the ASX lithium stocks market will undoubtedly be flooded with a plethora of new explorers-cum-developers, some of which will be excellent investment prospects, and others will seek to capitalize on investor confidence.

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