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Shares in Atlantic Lithium Limited (AIM: ALL, OTC: ALLIF), the West Africa-focused lithium exploration and development company, jumped 44% in the first week of December, on the back of a resource estimate upgrade that increased Ghana’s first lithium resource by almost 50%.

The news has come at the end of a positive year for Atlantic Lithium, which has seen its share price increase from 12.50p in January to the current 26.80p (as at 10/12/21), or 114% YTD.

What is ALL?

Atlantic’s main assets are in Ghana, comprising lithium mining licences that are “significantly under-explored and highly prospective”, with other gold and lithium assets in Cote d’Ivoire and Chad. The company’s flagship asset is the Ewoyaa Project in Ghana, a lithium pegmatite discovery that may well become West Africa’s first lithium producing mine. The project is fully funded to production under an agreement with Piedmont Lithium for US$102m, which is set to produce a premium lithium product.

Atlantic Lithium was formerly known as IronRidge Resources (IRR), before changing its name on 22 November 2021. The new name came with a new ticker, but the company’s ISIN number and SEDOL remain unchanged.

Why is the ALL share price on the move?

Atlantic Lithium’s mineral resource estimate upgrade for the Ewoyaa deposit and surrounding pegmatites is important, as it significantly improves the project’s economics and life of mine. Vincent Mascolo, CEO of Atlantic Lithium, said: “We are pleased to have increased Ghana’s first lithium resource by nearly 50% to 21.3 Mt at 1.31% Li2O, and will continue to further enhance this compelling project with ongoing drilling programmes.”

Atlantic is also busy with exploration programmes in Côte d’Ivoire, at its Zaranou Gold Project, representing a diversification of revenues. At Zaranou, drilling efforts have focused on the Ehuasso – Coffee Bean – Mbasso target, while drilling has also started at the Ebilassokro and Yakassé targets.

However, such is the potential of the Ewoyaa lithium project that Atlantic announced a restructuring to refocus its strategic direction. Its gold assets in Côte d’Ivoire and Chad will be demerged into a new gold-focused entity. Shareholders and investors will no doubt be pleased to know that, as Atlantic says, the demerger “will further unlock the value of Zaranou and our other gold assets”. This includes the completion of the acquisitions of the Vavoua, Bodite and Bianouan licences, which will provide Atlantic with additional highly prospective ground to explore. The restructuring also entailed a decision taken earlier this year to divest its non-core bauxite and iron ore interests in Australia and Gabon.

Atlantic Lithium has a strong balance sheet, thanks in part to an agreement signed with Piedmont Lithium to fully fund the Ewoyaa Lithium Project through to production. Atlantic’s latest company update (30 June 2021) reports a cash position that has jumped more than 160% to A$19.1m, from A$7.3m in 2020, thanks to successful capital raisings during the financial year of A$33.8m.

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Lithium price

Another factor to watch out for is the price of lithium, which, like copper and aluminium, has been on the rise on the back of increased demand while supply remains constrained. According to Benchmark Mineral Intelligence, the lithium index is up almost 252% YTD. The imbalance should remain positive for the price of lithium and therefore also Atlantic’s share price.

Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

James Norris

James Norris

James is a highly experienced writer and editor, gained from more than 20 years in the financial services industry, in particular wealth management and asset management.

He initially worked as a financial journalist for a number of leading media brands, including the FT Group, Financial News, Euromoney and Incisive Media, covering most aspects of the asset management industry. More recently, James switched to work as an in-house content specialist for fund management and wealth management groups, including JP Morgan Asset Management, Quilter Cheviot Investment Management, AXA Investment Managers and Invesco Perpetual.

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