Why Delta Lithium is Poised to Capitalize on Surging Lithium Demand

Delta Lithium is an Australian lithium exploration and development company focused on fast-tracking lithium projects to production in Western Australia, a region that produces over half of the world's lithium. With two high-potential lithium assets and plans to commence mining operations in late 2023, Delta Lithium represents an intriguing investment opportunity in the booming lithium market.

Delta Lithium Executive Chair David Flanagan highlights that Western Australia currently produces more lithium than the rest of the world combined. The region provides access to immense lithium resources and has well-established infrastructure, expertise and regulatory frameworks that support efficient mine development. With surging demand for lithium to manufacture batteries for electric vehicles and energy storage, Western Australia's lithium sector is poised for tremendous growth. Delta Lithium is well-positioned to capitalize on the region's advantages with its focus on rapidly progressing projects to production.

Near-Term Production Potential at Flagship Mt Ida Project

Delta Lithium's flagship project is the wholly-owned Mt Ida lithium project, located around 240km north of Kalgoorlie in Western Australia. Mt Ida was a historic gold mine that produced over 300,000oz of gold at 18g/t over 18 years up until the 1940s. Recent drilling has outlined significant lithium mineralization hosted in spodumene-rich pegmatites.

Delta Lithium has an approved mining proposal for Mt Ida and is targeting its first production from a direct shipping ore (DSO) operation in late 2023. The company plans to subsequently construct an on-site concentrator to produce lithium concentrate and export it from the port of Geraldton. Over 200,000m of drilling has been completed to date, defining an initial inferred resource that will be updated to indicated category towards the end of 2022 along with a scoping study.

The Mt Ida project provides Delta Lithium with a clear pathway to near-term lithium production to capitalize on strong market demand. Furthermore, gold mineralization could provide credits that enhance the economics. The project's extensive existing infrastructure from the former gold mining operation also reduces capital requirements.

World-Class Potential at Early-Stage Yinnetharra Project

Delta Lithium's 100% owned Yinnetharra project covers 575km2 of highly prospective lithium tenure with over 100 outcropping pegmatites identified to date in the Gascoyne region, Western Australia. Although early-stage, Yinnetharra has demonstrated the potential to be a world-class lithium deposit. Initial drilling at the Melinda prospect has delivered exceptional results including long intercepts of high-grade lithium mineralization. Two parallel pegmatites at Melinda are up to 1.7km long and remain open at depth, with thicknesses up to 400m. Significant widths of over 1% Li2O have been intersected.

The maiden drill program at Yinnetharra has outlined extensive lithium mineralization over a small portion of the large project area. Further drilling and exploration are planned in 2023 to systematically test the huge potential. Yinnetharra provides Delta Lithium major upside to delineate a major new lithium deposit and add to its production pipeline.

In just over 12 months, Delta Lithium has acquired and aggressively advanced two lithium projects with near-term production potential at Mt Ida complemented by longer-term multi-million tonne resource growth upside at Yinnetharra. With exploration expenditures ramping up to A$7 million per month and over 300,000 metres of drilling planned over the next 15 months, news flow will be continuous.

This rapid progress is reflected in the pace of Delta Lithium's market valuation, which has risen from under A$50 million in August 2021 to around A$600 million today. As the company continues to derisk its assets and build critical resource mass, its valuation trajectory has further upside.

Strong Cash Position Funding Growth

Delta Lithium ended June 2022 with a strong cash balance of A$33 million, providing it with a significant funding base to fast-track its projects. The company estimates its current cash position will fully fund operations until early 2024 based on planned expenditures.

In August 2022, Delta Lithium also secured a A$15 million loan facility from major shareholder Waratah Capital to provide additional funding flexibility. It has approximately A$25 million in free cash available to commence initial construction at Mt Ida.

Delta Lithium has assembled an accomplished board and management team with a track record of successfully discovering minerals assets and progressing them into production. Chairman David Flanagan previously led Atlas Iron through the feasibility, financing and development of three iron ore mines. Managing Director Glenn Jacobs has over 25 years' of experience including significant lithium expertise. The team also includes individuals with extensive experience in exploration, mining, processing and downstream lithium markets. This depth of technical expertise and mine development experience reduces development risks and increases the likelihood of executing Delta Lithium's fast-track strategy.

Strategic Partners Validate Potential

In May 2022, Delta Lithium secured a transformational A$100 million strategic partnership with the Japanese industrial group ITOCHU Corporation. The agreement provides critical project funding along with off-take rights and technical collaboration leveraging ITOCHU's significant expertise across lithium-ion battery and EV value chains. The major investment and strategic alignment with Delta Lithium provide third-party validation of the enormous potential of the company's asset portfolio from an industry leader.

In addition to the strategic partnership with ITOCHU, Delta Lithium has received significant endorsement from institutions including Waratah Capital, Hancock Prospecting and Mineral Resources (MinRes). These groups have been accumulating stock on the market. Delta Lithium's register also includes directors from major mining companies and lithium producers, providing further validation. The company's ability to attract this high-quality institutional and individual investor backing indicates confidence in its strategy and lithium assets.

Rising Lithium Demand Supports Growth Outlook

Delta Lithium is targeting its first lithium production in 2023 into an extremely favourable market backdrop underpinned by surging lithium demand, especially from the EV industry. Independent forecasts predict lithium demand will grow 5-10 fold by 2030 as EV adoption accelerates.

Limited new lithium supply is coming online, creating forecasts of growing deficits and tight markets over the coming decade. This supply-demand imbalance will support strong lithium prices over an extended period, enhancing the compelling economics of Delta Lithium's projects. The company is positioning itself to take maximum advantage of the positive long-term trends in the lithium market.

With advanced lithium projects in Tier-1 mining jurisdiction Western Australia, Delta Lithium has clear potential to generate strong returns for investors as it transitions to producer status. Near-term cash flow potential from its Mt Ida project combined with massive resource upside at Yinnetharra provides an attractive risk-reward balance. Significant funding in place, an experienced management team, strategic partner validation and rising lithium demand tailwinds further strengthen the investment case. Delta Lithium offers exposure to the lithium bull market through assets covering the full development cycle from exploration to production.

The Investment Thesis for Delta Lithium

• First mover advantage in the underexplored region: Delta Lithium's projects are located in an emerging lithium region that remains underexplored compared to more established lithium districts. The company has been able to secure highly prospective ground with limited competition. As the region's potential becomes more widely recognized, Delta Lithium will benefit from a first-mover advantage.
• Leverage to lithium price upside: Analysts expect lithium prices to remain strong for the rest of the decade due to structural supply deficits. Delta Lithium provides leverage to potential further upside in lithium pricing as its projects move into production.
• Potential for resource expansion and new discoveries: Both Mt Ida and Yinnetharra have significant resource expansion potential from existing mineralization as well as good prospects for new discoveries over large underexplored land holdings. Positive exploration results can provide share price catalysts.
• Vertical integration potential: The company has discussed ambitions to potentially integrate downstream into lithium hydroxide production to capture additional margin. Vertical integration could enhance profitability.
• Strong ESG credentials: Delta Lithium highlights its commitment to high ESG standards including positive community engagement. This could provide a competitive advantage in permitting and accessing capital.
• Value accretion from project de-risking: Delta Lithium's valuation should continue rising as it systematically de-risks its projects and achieves key milestones towards production. The current market valuation still reflects the early-stage nature of the company's assets.

In summary, Delta Lithium provides investors with leveraged exposure to the attractive lithium thematic combined with significant upside potential from resource growth, new discoveries, vertical integration and asset de-risking. If executed successfully, the investment case is compelling.