Lepidico’s strategic objective is to fast track the business to free cash flow generation, demonstrate the commercial viability of L‐Max®and become a globally significant lithium chemical producer. So we take a look if the company is fulfilling their vision and see What the Future Hold for Lepidico Shares (ASX:LPD)

About Lepidico (ASX:LPD)

Lepidico (ASX:LPD) is a global lithium exploration and development company with offices in Perth and Toronto. Differentiated by its 100% owned clean-tech L-Max®process technology that extracts lithium and recovers valuable by-products from less contested lithium-mica and phosphate minerals. Lepidico’s strategic objective is to become a vertically integrated business, from mine to production of battery grade lithium chemical.

Lepidico Shares Price (ASX:LPD)

Shares in Lepidico have fallen massively from their highs of $0.037, with signs of not much in the tank to stage a recovery from the current price of $0.012. Today’s prices are down 68% since reaching the 52 weeks high back in late January 2021. ASX:LPD has shown some signs of increasing volume over the last few weeks to move the price slowly upwards.

Lepidico Shares Price
Lepidico Shares Price

Lepedico shares are still trading up 71% on the year to date.

Should I Buy Lepedico Shares: Investor Sentiment

After surveying 177 Investors about their current ASX:LPD shares sentiment: BUY-HOLD-SELL, as well as their target price over the next 12-months here, are the results;

The results from this survey show there is currently a strong SELL investor sentiment on ASX:LPD shares. So how much are ASX:LPD shares worth? Let’s get into it.

Should I Buy Lepedico Shares: Fundamentals

Based on the current fundamentals, we don’t believe this business can be valued on financial performance alone, due to the small-capitalisation of the stock other methods would typically be employed to value this company. Lepidico is not yet profitable and boasts A$4.0 million dollars on its balance sheet with no debt.

Market cap (intra-day)73.82M
Enterprise value 79.06M
Trailing P/EN/A
Forward P/E N/A
PEG ratio (5-yr expected) N/A
Price/sales (ttm)18.08
Price/book (mrq)1.33
Enterprise value/revenue 19.36
Enterprise value/EBITDA 56.49
Should I Buy Lepedico Shares Fundamentals

Should I Buy Lepidico Shares: Financials

Historical Data

ASX:LPD for the Quarter ending 31 March 2021, reported no income for the quarter, however have cash receipts of $4.0million for the 9 months. Expenses were up slightly from the previous quarter and slightly higher than the TTM quarters. This seemed to be coming from slightly higher development costs and increased staffing costs. The company is not currently producing any recurring meaningful revenue to value the company.

The only takeaway from the Q3 report was the fact the company does not carry any debt on their balance sheet. As with all resource producers, the shares price typically has a degree of correlation with the underlying raw material price.

Lepidico Shares, correlation with underlying raw material

Income Statement

This is the income statement from the previous full year. Here we can see a total of $63,558 of income generated, however, there are significant outflows of funds to administrative expenses and employment benefits. We would be expecting significantly more revenue to justify this amount of overheads for the company.

Balance Sheet

We can see that ASX:LPD has $4.7million cash on hand, given the above income and expenses, we expect ASX:LPD will need to conduct a series of capital raising’s or share purchase plans over the following quarters in order to fund operations/development of their projects.

ASX:LPD Balance Sheet

ASX:LPD String of Capital Raisings and SPP’s

ASX:LPD has over 6.2 billion shares on Issue, the company seems to be continuing the trend of increasing staff salaries and ballooning development costs for the sake of shareholders. It seems that the credit raisings have taken place only to secure the management teams wages, with some exceeding well over $350,000.

Lepidico’s vision is to maximize long term community benefits and shareholder value in the sustainable development of its lithium resources – wherever it operates. However, the vision of creating shareholder value has simply not seemed to be happening with shares down a massive 85% since December 2017.

ASX:LPD Management Team

The current management team of Lepidico seems to have all been appointed around a similar time in late 2016.

Mr Mark Rodda
BA, LLB
Director (Non-executive)
Appointed 24 August 2016

Mr Gary Johnson
MAusIMM, MTMS, MAICD
Chairman (Non-executive)
Appointed 9 June 2016

Mr Julian “Joe” Walsh
BEng, MSc
Managing Director (Executive)
Appointed 22 September 2016

ASX:LPD Share Price

Corresponding, the share price had a massive catalyst in late 2017, however, since then management has struggled to lift the share price significantly. It is important to note there was a large bullish sentiment towards the lithium sector as a whole in leading into 2017. So share price movement may be more attributed to the sentiment of lithium as compared to actual company performance.

Share Price of ASX:GXY (note the spike in late 2017)

We believe the management team can do a lot more for shareholders here.

What About The Companies Projects?

One the company website it boasts 3 projects, 2 chemical plants and a single lepidolite site in Namibia.

The Pilot Plant in Perth

Feasibility study commenced in July 2017, with the commissioning of the Pilot Plant in Late 2020.

The Namibia Lepidolite Site

Lepidico holds an 80% interest in the Karibib Project, located within the Karibib Pegmatite Belt in central Namibia in southwestern Africa. The project includes the historical Rubicon and Helikon lepidolite pegmatite deposits.

Locality Map of the Namibia Site

The project comprises a Mining License (ML 204) of 69 kmand three Exclusive Prospecting Licences (EPLs 5439, 5555 and 5718) that together cover an area totalling 1,054 km2.  Access to the Project is via the national highway from the capital city Windhoek located approximately 180 km to the south east, with the deep-water port of Walvis Bay located 210 km to the south west.

In our opinion the Karibib site is years away from any meaningful production. This is also confirmed in the Q3 report released by the company highlighting that they intend to start mining production in late 2022. Although the company has approx. $4million of cash on hand, mine setup will take significantly more funding.

The Processing Plant In Abu Dhabi

Plant commissioning targeted for Late 2020, the company had an agreement with Alvarrões Lepidolite Mine back in 2018 to process Ore, however we are yet to see any meaningful revenues flow from this agreement.

Prophets Take:

Lepidico shares have underperformed the benchmark over the 5 year period. The company is involved in mining in what we consider a higher risk mining legislation being in Africa. We believe there will continue to be a series of large share purchase plans and capital raising’s for the company to stay afloat whilst mine production is planned.

Due to the significant unknowns in this company and the current market capitalisation of $60million, we will be staying clear of LPD:ASX shares as we see this as a significantly high risk stock with unknown reward attached to it.

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