Mining is a capital-intensive activity requiring significant debt and equity outlays to start and continue operations. However, some ASX 200 lithium shares are bucking this trend with very low debt levels.
What's better is that some of these companies have had their price targets upgraded by brokers amid the demand for lithium rising globally.
One method we can use to assess a company's debt is through using the debt-to-equity (D/E) ratio. This is calculated by dividing the company's total liabilities by shareholder equity. It provides the added benefit of assessing a company's financial leverage and is easily comparable from firm to firm.
So let's cover the top five ASX lithium stocks with the lowest levels of debt and their most recent developments.
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AVZ Minerals Ltd (ASX: AVZ)
AVZ Minerals has the lowest D/E ratio out of the five at 0.006.
The most recent news for the company is that it was removed from the S&P/ASX 300 Index (ASX: XKO) on Monday amid its shares being halted since May. Shares are frozen at 78 cents each.
The voluntary suspension is in relation to the finalisation and release of an announcement regarding its mining and exploration rights for the Manono Lithium and Tin Project in the Democratic Republic of the Congo.
AVZ Minerals' share price is down 11% year to date.
Liontown Resources Limited (ASX: LTR)
Liontown Resources has a D/E ratio of 0.063.
The company's share price and that of its ASX lithium peers rallied on Monday. This was amid a broker improving the price targets of several lithium shares in this list.
JP Morgan lifted its target on the Liontown share price by 45% to $1.60.
Liontown shares are currently swapping hands for $1.81 apiece, down 2.16% on the day.
The company's share price is up around 5% year to date.
Core Lithium Ltd (ASX: CXO)
Core Lithium's D/E ratio is 0.238.
The company was one of the most traded ASX shares on Thursday, with it and many of its lithium peers enjoying positive developments. This included data from the Federal Chamber of Automotive Industries (FCAI) revealing electric vehicle sales hit an all-time high in Australia.
At the time of writing, Core Lithium shares are up 2.5% to $1.64.
The company's share price is up around 160% this year to date.
Allkem Ltd (ASX: AKE)
Moving up higher now is Allkem's D/E ratio of 11.7.
This company was one of the few that received positive broker coverage this week. Macquarie gave Allkem a price target of $21 per share on Tuesday.
In early trading on Friday, its shares are up 1.85% to $15.45.
Allkem's share price is up around 38% year to date.
Pilbara Minerals Ltd (ASX: PLS)
Finally, the ASX lithium share with the most leverage on its books is currently Pilbara Minerals, with a D/E ratio of 22.6.
The Pilbara Minerals share price hit a new all-time high of $4.41 on Thursday before closing at $4.25. In early trading on Friday, it has surpassed that mark and is currently at $4.42, up 4% on the day.
The company's share price is up nearly 25% year to date.
