Lithium Demand Explosion Catalyzes Lepidico's Strategic Positioning

• Lepidico Limited is transitioning from the definitive feasibility study stage to development and operations, targeting first production in 2024. The company produces lithium and other byproducts using proprietary processes.
• The lithium market has seen significant price surges due to concerns about meeting growing demand, especially with significant projects like Rio Tinto's in Serbia being halted.
• Lepidico has an off-take arrangement with one of the leading trading companies, Traxxas. This arrangement has sparked many discussions with groups inside and outside the industry about the lithium market's rapid evolution.
• The global demand for lithium is expected to be around a million tons by 2025, driven primarily by the adoption of electric vehicles. However, obstacles like permitting of projects and securing equipment may hinder the industry's ability to meet this demand.
• ESG (Environmental, Social, Governance) concerns, including emissions, water usage, and land usage, are essential for lithium projects. Lepidico is focusing on reducing its carbon footprint and has projects in Namibia and Abu Dhabi that are fully permitted and ready for operation.

About Lepidico

Lepidico Ltd (ASX:LPD) is a lithium development company aiming to transition its Phase 1 project from definitive feasibility into operations for first production in 2024. Lepidico's proprietary process technologies allow it to produce lithium chemicals as well as other valuable byproducts like caesium, rubidium and potassium sulphate. With offtake agreements in place and permitting secured, Lepidico is poised to help meet the surging lithium demand.

Interview with Joe Walsh, MD of Lepidico Ltd.

Lithium Supply Crunch Accelerating

The lithium market is experiencing a supply crunch as demand explodes, especially from the electric vehicle industry. Major projects are facing delays and cancellations, creating uncertainty about new supply coming online. For example, Rio Tinto recently had the license revoked for its 58,000 tonne per year Jadar lithium project in Serbia.

Lepidico's Managing Director Joe Walsh explains that lithium demand could exceed 1 million tonnes per year by 2025, far above previous estimates of 1 million tonnes by 2030. With obstacles delaying new projects, existing major producers cannot increase supply fast enough. This is driving buyers to secure supply from new entrants and developers like Lepidico versus relying solely on incumbent producers.

Strategic Positioning

With TraxysIn this context, Lepidico holds a strategic position with its offtake agreement signed late 2021 with Traxys, a leading global lithium trader. Traxys has relationships with lithium consumers globally and is communicating openly about supply issues. Lepidico participates in these discussions, giving it unique market visibility.

Traxys must now secure more supply to meet its customer needs. But few projects are as advanced as Lepidico with a definitive feasibility study, permitting, and financing nearing completion. This makes Lepidico attractive for further offtake deals as Traxys and consumers seek to lock in supply.

Demand For Lepidico's Output Growing

Lepidico is experiencing surging interest in its Phase 1 production, including unsolicited approaches. Consumers increasingly want supply from new entrants versus relying solely on incumbent producers. Lepidico's conversations are accelerating with new and existing industry players anxious to secure supply.

Lepidico's strategic location, ESG credentials, and advanced project status are key advantages. The Namibia site has strong local and government support with minimal displacement or environmental impacts. This contrasts with opposition facing projects in developed countries.

Journey to Funding & Development

Development Finance Corporation, the US Government's emerging markets investment arm, is at an advanced stage of due diligence for funding Lepidico. Approval is targeted for Q3 2022 to enable Phase 1 development. First production has slipped to 2024 but will be coming online amid tight supply.

Lepidico is also focused on expanding its resource base. More drilling results will come through in Q2 2022 from exploration activity in Namibia. Growing resources helps demonstrate ability to expand future production, which buyers want to see.

The Phase 1 reserves can support 5,000 tonnes per year of lithium hydroxide. Lepidico is targeting a Phase 2 project of similar size by expanding resources to at least 7 million more tonnes. Further expansion to 20 million additional tonnes could support 15,000-20,000 tonnes per year production in Phase 3. This would utilize Lepidico's proprietary technologies and operational experience from Phase 1.

Conclusion

With first production imminent just as lithium demand is surging, Lepidico is strategically positioned versus lithium peers. Its proprietary process technologies, ESG credentials, permitting status and project execution de-risk Lepidico for investors relative to earlier stage opportunities. Lepidico is primed to benefit from the lithium supply crunch and deliver strong returns for shareholders as it transitions to producer status.