The Latin Resources Ltd (ASX: LRS) share price could be heading a lot higher from here.
That's the view of analysts at Bell Potter, which have initiated coverage on the small cap ASX lithium share today.
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What is the broker saying about the Latin Resources share price?
According to the note, the broker has initiated coverage on the company's shares with a speculative buy rating and 18 cents price target.
Based on the current Latin Resources share price of 10.5 cents, this implies potential upside of 71% for investors over the next 12 months.
Though, the broker warns that its speculative rating recognises a "higher level of risk and volatility of returns."
What did the broker say?
Bell Potter is bullish on the Latin Resources share price due to its 100%-owned Salinas Lithium Project in the key Brazilian mining state of Minas Gerais.
It notes that an initial JORC mineral resource estimate (MRE) is expected by the end of 2022 and appears to believe it could be a sizeable resource that supports a large lithium operation. It said:
We estimate that LRS will deliver an initial MRE of up to 15Mt in December 2022 with defining features being a relatively high grade (~1.3% Li2O) and its delineation as a single deposit. […] we expect that the deposit could notionally support +200ktpa spodumene concentrate operation.
The broker concludes:
We expect material value accretion as LRS moves from lithium prospector to announcing a MRE at Salinas and ultimately defining its path to development. Our LRS valuation is based on modelling a notional project development at Salinas, heavily risked for its early stage of assessment. We expect the company to aggressively pursue the required feasibility studies and environmental permitting to de-risk Salinas with further potential upside from step-out and regional exploration over the short term.
