Snow Lake Resources (LITM) Stock: Unconvincing Project Economics – Seeking Alpha

by | Dec 12, 2022 | Financial

Just_Super/iStock via Getty ImagesMacro-economic Overview Lithium is big. The battery mineral is a critical component underpinning mass-scale EV vehicle production, presently at the heart of investment projects in Argentina, Chile, Australia, and Canada. The sustainability agenda pushed widely by various political groups has promoted the electrification of transport, boosting the commodities industry and global mining. Gone are dirty old offshore oil rigs, making way for lithium brine pans, and capital-intensive hard rock surface mining activities. Almost surreal, it is as if we have moved one problem to create another perchance only evidenced some years down the line. Only time will tell. The Biden administration has demonized big oil, chastising US super-majors for generalized spikes in global energy prices, only to see those very firms tighten purse strings, abandon capital projects, and return cash to shareholders. Therefore, oil prices have been supported, fueling an inflationary boom not seen for the past 40 years. Oppositely, the current US administration has praised the nascent EV industry. It has provided tax breaks, incentives, and copious amounts of public jawboning, spinning the benefits of green energy. Snow Lake Resources Exponential EV sales growth is expected to support lithium prices well into the second half of the decade. That should be positive for projects like Snow Lake Resources (NASDAQ:LITM). Its Canadian lithium dream remains a way off but most of the puzzle pieces are present for big upside. That is why investors may be scratching their heads; the firm’s capital destruction has been jarring with a -81.69% equity price implosion since inception. I am bearish on Snow Lake Lithium as the project is premised on a range of assumptions that may not materialize. With more robust lithium projects being developed in other parts of the world, investors should look elsewhere. Company Introduction Snow Lake Resources is a lithium-focused natural resources company. The company engages in exploration and development of battery minerals in Canada, holding an interest in the Thompson Brothers Lithium property and a 100% interest in the Snow Lake lithium project. The company is Canadian based with headquarters in Winnipeg, Canada. TradingView Snow Lake Resource …

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