Is Standard Lithium a buy as shares spike on positive results from the Arkansas project? | Invezz

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On Tuesday, Standard Lithium Ltd (CVE:SLL) shares surged 8% after reporting positive results from a preliminary economic assessment (PEA) of its South-West Arkansas Lithium project.

The company said it expects a pre-tax net present value of $2.83 billion discounted at 8% and an IRR of 40.5%. As a result, it estimates an after-tax NPV of $1.97 billion at an 8% discount rate and 32.1% IRR.

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The company also projects increased on-site resources of 1.19 million metric tons of lithium carbonate and forecasts a CapEx of about $870 million.

 Lithium also said its PEA assumes the production of battery-quality lithium hydroxide averaging 30,000 metric tons annually, over a 20-year period.

Should you bet on Lithium’s exciting project?

As of this writing, Standard Lithium is valued at a market cap of $1.51 billion. Therefore, the current stock price values the company below the after-tax NPV of its South-West Arkansas Lithium project.

Therefore, when you consider its Mojave project in Bristol Lake, the stock could be substantially undervalued. 

Therefore, although shares have spiked more than 430% over the last 12 months, it may not be too late to buy.

Source – TradingView

Can the bull run continue?

Technically, Standard Lithium shares appear to be trading within an ascending channel formation in the intraday chart. As a result, the stock has surged closer to the overbought conditions of the 14-day RSI.

However, shares seem to have more room to run before retesting recent highs of about $9.10.

Therefore, investors could target extended gains at about $9.10, while $7.63 and $6.78 are crucial support zones.

Time to buy Standard Lithium stock?

In summary, although Lithium shares have surged nearly 260% this year, the stock still has room left to run before crossing to overbought conditions. Moreover, the company;’s current market cap is below the after-tax net present value of its South-West Arkansas project.

Therefore, with the Mojave project not even accounted for in the preliminary economic assessment report, Standard Lithium could be more valuable than its present market cap.

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