Ion Energy Ltd (CVE:ION), a lithium exploration company with its sights set on Mongolia, is estimated to hold a valuation of C$34 million according to research firm Couloir Capital, which announced it was initiating coverage of Ion last week.
The Canadian company has one of the largest exploration licenses in Mongolia, Couloir said in a report from May, making Ion an emerging company in the country. Its project, Baavhai Uul, is a property comprising more than 80,000 hectares in the southeast, near China.
That bodes well for Ion, given the demand for lithium-ion batteries in the region.
“This is a significant potential advantage to the company – one of the largest and fastest growing demand drivers for lithium is the usage of lithium compounds as electrolytes in lithium-ion batteries, which in turn are being utilized in electric vehicle (EV) batteries,” the firm wrote. “The vast majority of the world’s downstream lithium processing capacity is located in China, and Baavhai Uul is conveniently located in close proximity to the China-Mongolia border, in an infrastructure rich zone.”
Ion is undergoing a reverse takeover transaction with shell company Spirit Banner Capital Corp, the report said, and is expecting to raise $2 million, which the firm believes will then be used largely for exploration activities.
“As it stands today, Ion is on track to become Mongolia’s first lithium brine miner, and may stand to benefit from broader electrification megatrends that we expect to intensify whilst the company builds out its brine asset,” Couloir wrote.
Because Ion is still in the early exploration phase, the firm declined to specify a price target and rating but estimated a C$34 million valuation based on the following inflection points:
- Completion of the RTO transaction and subsequent equity financing
- Announcements regarding the beginning and/ or completion of phase 1A of the planned exploration program
- Announcements regarding the beginning of phase 1B of the planned exploration program, and the confirmation of the significant presence oflithium at Baavhai Uul
- Favourable developments in the lithium and EV battery markets
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