Editing Lithium Power International (section)

== Financials ==

As of June 2021 (FY21), LPI reported cash of A$6.3m. Since the period end the company raised A$11.8m in net equity and sold its 70% interest in the lithium exploration properties in the Centenario salar in Argentina for A$1.2m. As a result, the company had a cash position of A$15.4m at the December quarter end. We estimate that LPI will end FY22 with cash of A$12.9m, which we believe should be sufficient to get it through the FID and potentially fund it up to the development stage. The company’s main cash outflows are its investments in the JV as well as corporate overheads. In FY21, LPI spent A$6.5m in payments to the JV capital and burnt A$2.2m in employee and admin expenses.

If the project development goes according to the current plan with the FID in 2022 and construction start in 2023, the JV will have to secure a funding package in 2022. As part of this package, we expect debt financing to be raised at the project level and to potentially coincide with securing an offtake. This leaves c US$250m to be raised in total equity. Out of this amount, we would expect LPI to contribute its 51.6% share, which equates to c A$181m over 2023–26. Based on the current share price, this represents a dilution of c 43%.

Overall, we expect the project to be highly cash generative. Based on our long-term lithium carbonate price assumption of US$17,000/t and cost assumptions as outlined in the DFS (direct cash cost of US$3,864/t and total cash cost of US$4,230/t including 1.2% royalty), we expect the project to generate average EBITDA of c US$167m per annum.