Lithium Ionic Cashes In on Non-Core Asset to Fast-Track Bandeira Construction

• Lithium Ionic has agreed to sell its non-core Baixa Grande deposit to PLS Group for up to US$70 million in combined cash and royalty consideration.
• The deal delivers US$30 million in cash at closing, expected in the next few months, funding near-term spending at the company's flagship Bandeira project.
• Federal FPIC permitting is nearly complete, and the underground portal contractor shortlist has been narrowed following a tender process.
• Binding offtake terms with Chinese converter Yahua, at a US$1,000 per tonne floor, continue to underpin project financing conversations.
• Management frames the company's sub-0.1x valuation multiple against producing peer Sigma Lithium's ~1x as roughly tenfold re-rating potential.

Lithium Ionic Corp (TSXV:LTH) has agreed to sell its non-core Baixa Grande deposit, part of the company's Salinas land package in Brazil's "Lithium Valley," to PLS Group (ASX:PLS) in a transaction the company values at USD$60–70 million. CEO Blake Hylands told Crux Investor the deal brings forward cash the company needs to keep advancing its flagship Bandeira Lithium Project toward a construction decision, without requiring it to wait on debt or equity financing to fund near-term operational and long-lead spending.

The sale caps a 3-year hold on an asset Lithium Ionic always regarded as secondary to Bandeira, and it lands at a moment when the company is simultaneously working through the final stages of federal permitting and narrowing its contractor shortlist for Bandeira's underground portals.

Baixa Grande Divestiture: Deal Terms and Rationale

Baixa Grande sits adjacent to ground PLS acquired through its 2025 purchase of Latin Resources, and Hylands framed the geology as a natural extension of the same system. Lithium Ionic picked up the claims roughly 3 years ago and outlined approximately 20 million tonnes of resource on the property, work that Hylands said helped drive the eventual sale price to around eight times the company's original cost.

The consideration totals USD$37.5 million in cash, split between USD$30 million payable now and USD$7.5 million payable at final investment decision (FID) for the buyer's own project, or on an earlier fixed date agreed between the parties. On top of the cash, PLS is providing Lithium Ionic a 2% royalty on the property, which the company estimates could be worth a further USD$20–30 million depending on how it is valued.

"We look at this as a USD$60 to $70 million transaction, which is almost our market cap today, unfortunately in some ways, but that's the value we think we created here." 

Hylands said Lithium Ionic had fielded informal approaches on the asset for some time but had never seen the share price reflect any value for it. Discussions with PLS intensified earlier in 2026, culminating in a valuation the company felt was fair and a royalty structure that preserves some of the asset's upside. The cash portion of the deal is expected to close within the next few months.

Capital Allocation and Path to FID

Lithium Ionic is in the closing stages of the federal Free, Prior and Informed Consent (FPIC) process, a step Hylands said is nearly complete and one that returns Bandeira to the state permitting panel for its operating licence. Engineering on Bandeira is also close to finished, and the company has narrowed its contractor shortlist for the project's underground portals following a tender process.

Hylands said the Baixa Grande proceeds give the company flexibility to begin ordering long-lead items, including the processing mill, and to fund early operational costs at Bandeira ahead of construction financing closing. That sequencing matters because it lets the company keep moving on procurement without being dependent on the timing of a separate debt or equity raise.

"The permit gives us that next level of credibility, and it's re-rate as we move towards commercial production."

Interview with Blake Hylands, CEO of Lithium Ionic

Lithium Market Dynamics and Off-take Positioning

Hylands described current conditions as unusual: spodumene pricing has firmed and stabilised even as lithium equities, including some Australian producers, have lagged the commodity move. He said Lithium Ionic's projected all-in sustaining cost of roughly US$600 per tonne means pricing above US$2,000 per tonne is highly accretive to the project, a dynamic that has made conversations with prospective lenders and offtakers more productive.

The company's offtake structure underpins that case. Lithium Ionic has signed a five-year agreement covering 170,000 tonnes of spodumene concentrate with Chinese converter Yahua, at a floor price of US$1,000 per tonne with no ceiling. Hylands said the floor gives lenders visibility that the project generates cash on every tonne sold, supporting debt serviceability, while Brazil's open global trading position gives the company optionality that some North American projects, more tied to regional offtake, do not have.

He was candid about the concentration of demand: China currently accounts for roughly 85% of lithium conversion capacity, and expansions there move faster than in other regions. "We're already well past considering that," Hylands said of AI data centre demand for battery storage, describing a conversation with a Chinese counterparty. 

"We're looking at robotics next. Robotics is coming online, and that's going to be the next phase of battery demand we're going to need to feed into."

Valuation Gap Versus Regional Peers

Hylands pointed to a valuation disconnect between Lithium Ionic and producing regional peers as the clearest re-rating opportunity in the stock. 

"If you look at a neighbour like Sigma, it's not unusual for them to trade at a one or 1.1 times [P/NAV] multiple, and we look at us, we're less than a 0.1, so there's a 10 times potential return from where we're sitting today as we move to that construction and production phase." 

He argued that permitting, financing and construction milestones are the specific catalysts that close that gap, rather than commodity price alone, and that the Baixa Grande sale removes one funding variable from that sequence.

Investment Thesis for Lithium Ionic

• The Baixa Grande sale delivers US$30 million in cash imminently, a further US$7.5 million at a fixed milestone, and a 2% royalty worth an estimated US$20–30 million, funding near-term Bandeira spending without new dilution.
• Federal FPIC permitting is nearly complete, positioning the company to secure its Bandeira operating permit and unlock the project's remaining construction financing.
• Binding five-year offtake terms with Yahua, covering 170,000 tonnes annually at a US$1,000 per tonne floor with no ceiling, de-risk revenue and support ongoing lender discussions.
• Lithium Ionic trades below a 0.1x multiple against a roughly 1–1.1x multiple for producing regional peer Sigma Lithium, a gap management frames as a potential 10x re-rating opportunity into construction and production.
• Engineering is close to complete and the underground portal contractor shortlist has been narrowed, supporting the targeted move to construction and first production in the second half of 2027 into 2028.
• Watch item: physical spodumene pricing has stabilised even as junior lithium equities lag the commodity, a dislocation management expects to close as more projects, including Bandeira, move into production.
• The broader Itinga and Salinas land package retains exploration optionality, with management signalling appetite for further belt consolidation once market conditions support additional drilling.

Lithium Ionic's update lands inside a broader disconnect between commodity strength and equity performance. Spodumene pricing has held at relatively elevated levels through 2026, but lithium equities, including several Australian producers that started the year strongly, have pulled back. For a low-cost developer like Lithium Ionic, that gap is precisely where management sees opportunity: with an all-in sustaining cost target near US$600 per tonne, current pricing above US$2,000 per tonne offers substantial margin, and Hylands said lenders and offtakers are increasingly comfortable that the price environment has become less erratic than in the previous three to four years.

The demand side of that equation continues to run through China, where consumption growth remains difficult to fully track from outside the country. Hylands described a market where converter capacity additions are being sized at five to ten times current consumption, implying a structural shortfall if that capacity is to be kept fed. He also pointed to a shift already under way among Chinese counterparties, who consider AI data centre battery storage demand a settled trend and are now looking toward robotics as the next source of battery demand. 

Brazil's position as an open global trading jurisdiction adds a further dimension. Unlike projects more narrowly tied to North American or Chinese buyers, Lithium Ionic can direct future material broadly, a flexibility Hylands sees as increasingly valuable given the unsettled state of trade relationships between major economies. As more projects globally approach FID and production, management's central argument is that first-movers with de-risked permitting, offtake and financing will be best positioned to capture a demand cycle it believes is still under-priced by equity markets.

TL;DR

Lithium Ionic has agreed to sell its non-core Baixa Grande deposit to PLS for up to US$70 million, split between US$30 million upfront, US$7.5 million at a later milestone, and a 2% royalty worth an estimated US$20–30 million. CEO Blake Hylands says the proceeds fund near-term spending on Bandeira, the company's flagship Brazilian lithium project, as federal permitting nears completion and the underground portal contractor shortlist narrows. Binding offtake agreements with Chinese converter Yahua, at a US$1,000 per tonne floor, underpin the financing case. Hylands argues the stock trades at a fraction of producing peer Sigma Lithium's multiple, framing permitting and financing progress as the near-term catalysts for a re-rating.

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