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ALTURA MINING LTD (OTCMKTS:ALTAF) Is Today's Lithium Stock Focus

ALTURA MINING LTD (OTCMKTS:ALTAF) Is Today's Lithium Stock Focus
Written by
Jarrod Wesson
Published on
November 9, 2017
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Today, we need to talk about a new business profile that has returned outstanding stock returns recently; ALTURA MINING LTD (OTCMKTS:ALTAF), a lithium miner. Company LogoThe stock price went from trading close to $0.10 in June 2017 to hit record highs in November. The share price as of today is $0.30.It is not only that. The amount of shares that changed hands last month was astonishing. More than 4 million shares changed hands some days. Have a look at it and form your own opinion: 1 year chart for ALTAFThe company and the lithium playALTURA MINING LTD (OTCMKTS:ALTAF), which is also being traded in Australia as Altura Mining Ltd (ASX:AJM), is another lithium company benefiting from the increase in demand of this mineral.If you are not aware of the lithium play and have not read our articles about lithium stocks, listen to this. The increase in the demand of electric batteries for laptops, electric vehicles and smart phones has created an unprecedented demand of lithium. As a result, its price has increased significantly from the year 2014: Lithium Price (Source: https://images.angelpub.com/2017/31/45725/lithium-price-chart.png)How is Altura trying to profit from this positive trend?Altura is focused on "the independent supply of lithium raw materials" and is developing a world class lithium project at Pilgangoora region of Western Australia. The project seeks to mine and process on the average 1.54 Mtpa of ore to produce approximately 219,000 tonnes of lithium spodumene concentrate per annum, commencing from Q4 2017. We could read in the annual report that its net present value is about $411 million. Additionally, the mine life is expected to be 13 years.The initial financial figures released in its last annual report are astonishing. Please check them and note the IRR, and the payback:

  • Project EBITDA A$M 1,064
  • Total cash cost FOB/tonne product5 A$ 315.90
  • Net present value (NPV)6 A$M 411
  • Internal rate of return (IRR) % 58.1
  • Discount rate % 10 Project payback period years 1.8

What's the estimated reserve?According to the company materials, there is "an Ore Reserve estimate of 34.2 million tonnes at 1.04% Li2 O and a Mineral Resource estimate of 44.0 million tonnes at 1.00%." We believe that if the company continues the work and these reserves are proved, the value of the company should multiply.Have look at the following video. Managing Director, James Brown, discusses the Altura Mining story:

SourceFinancial FiguresThe company does not only seem to provide an interesting IRR. Its financial situation seems quite solid. The following information is from the last balance sheet reported for the year 2017:

  • Cash and cash equivalents: $13.2 million
  • Mine development cost: $59 million
  • Total assets: $88 million
  • Total Liabilities: $31 million
  • Weighted average number of ordinary shares: 1,358,286,271 shares

Additionally, the company is already generating revenues; $1.2 million for the fiscal year 2017.Last Developments releasedOn October 6, 2017, the company released that it had raised A$26 million from investors. It was said that the funds will be used to finance the developments of stage 2 expansion study planned for the Altura Lithium Project. Additionally, it was noted that the money will also be used for exploration and general working capital costs.From the press release, we appreciate that the company highlighted "strong interest from international investors in how advanced the Altura Lithium Project already is." In this regard, the company released that construction is already more than 50% complete. We believe that this new information made the market push up the share price.Additionally, on October 19, 2017, it was released that the Altura Lithium Project is continuing on schedule with 90% of plant and equipment now at the mine site ready for installation. We appreciate the news as well as the reaction of the market, which made the share price increase from approximately $0.20 to close to $0.30.Additionally, we need to note the following words from Altura Managing Director, Mr James Brown, in which a very positive tone is present:

"We are seeing excellent progress with most development areas being on, or ahead, of schedule. With construction around 50% complete in duration, we remain confident of achieving our target of first concentrate sales in the June Quarter next year. The progress is especially pleasing for our shareholders following our very successful recent $26 million equity raising that will fund progress on our Stage 2 expansion study." Source

On top of it, on October 31, 2017, the company released its annual report, wherein we found once again that the financial situation is quite solid. ConclusionCurrently trading with a market cap of $135 million, ALTAF is an exciting story among small caps. The biggest catalyst seems to be the new information that will be released about the lithium mine. If the company continues to operate on schedule, the first production numbers will be released soon. Market participants have been seduced by the IRR and the payback period of the project and are providing the financing needed for the project. To sum up, we believe that the market will hear many more news about this company and this is only the beginning.We will be updating our subscribers as soon as we know more. For the latest updates on ALTAF, sign up below!Image courtesy of Rob Kidnie via FlickrDisclosure: We have no position in ALTAF and have not been compensated for this article.

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