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Many investors are wondering which will be the next ASX lithium stock to be bought out. After all, it hasn’t been that bad of a year for M&A deals amidst lithium stocks with Azure getting an offer last week, Essential Metals closing a deal last week, Catalyst Metals (ASX: CYL) getting bought earlier this year and Liontown spending several months on the cusp of this fate.
In this article, we take a stab at this question – naming 4 candidates that can be the next ASX lithium stock to be acquired in the next year or so.
Our prediction of the 4 next ASX lithium stocks to be bought
1. Delta Lithium (ASX:DLI)
We’ll start with this ASX lithium stock, one for whom a near-term takeover may be a foregone conclusion. Consider that Chris Ellison’s Mineral Resources (ASX:MIN) has accumulated a near 20% stake in the company and Ellison himself becoming chairman of Delta. This company has four projects: the Yinnetharra and Mt Ida lithium projects, the Eureka gold project and the Earaheedy Basin lead and zinc project.
Ironically, the next most exciting thing about the company is that it also appears to have stumbled across gold at Mt Ida that could provide extra cash flow for the project. The Maiden Resource Estimate is 3.1Mt @ 4.1g/t for 412,000 ounces. This is on top of its 14.6Mt @ 1.2% lithium, a figure most recently updated just 4 weeks ago and representing a 136% increase in Indicated Resources from the last estimate.
2. Core Lithium (ASX:CXO)
This company might be content to just continue as it is, barring a super-compelling offer. It has the Finniss Lithium Project in the Northern Territory. Lithium was first discovered there in 2016 and the project has grown ever since. The April 2022 Definitive Feasibility Study (DFS) reported a JORC compliant Mineral Resource of 15 million tonnes (Mt) at 1.3% lithium oxide.
The study reported a Pre-Tax IRR of 80%, an NPV of $114m and free cash flows of $158m from $501m revenue. A 180,000tpa operation was anticipated. In the last year, the Mineral Resource estimate was increased by 62% to 30.6Mt @ 1.3% lithium. And most importantly, the company commenced its first production and generated $50.6m in revenue and a $10m profit.
With a market cap of $700m, you won’t be able to buy it this ASX lithium stock cheap for too much longer, even if lithium continues to stagnate.
3. Liontown (ASX:LTR)
We think the saga surrounding this ASX lithium stock has some way to go yet. Albemarle may have walked away from its attempts to buy the company over the last 12 months. But the company still has Gina Rinehart as its biggest shareholder, a high-quality project with high-quality spodumene, is in a favourable jurisdiction and just topped up its bank balance with a $1bn+ capital raising.
If the current share price lingers, other bidders may try and pounce on this one. Yes its $3.7bn price tag isn’t cheap, but it is certainly cheaper than the $6bn that it was trading at only a few weeks ago. A future suitor might find the Kathleen Project could well pay for itself.
4. Global Lithium (ASX:GL1)
Here’s another ASX lithium stock that is affiliated with Mineral Resources, counting it as a shareholder. Global Lithium’s key project is the Manna Lithium Project, which is 1 of only 14 JORC compliant lithium resources in Australia listed on the ASX along with the Marble Bar Lithium project which is another. Between them, the projects have a combined Mineral Resource of 54Mt @ 1.09% lithium. A future upgrade to this is expected in the first half of next year, in light of more recent drilling results.
We think plenty of larger companies would find Global Lithium quite appetising.
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