Wildcat Resources Ltd (ASX: WC8) recently announced the results of exploration drilling near its developing Tabba Tabba lithium project in Western Australia, with the team at Shaw and Partners impressed with the results.
Shaw has a buy recommendation on the shares and a very bullish price target on the company, which we'll come to shortly.
Image source: Getty Images
Exploration success
First, let's have a look at this week's news.
The company said that exploration drilling at the Bolt Cutter lithium discovery had shown that mineralisation extended more than 2.3km to the northwest and up to 800m to the northeast.
The Bolt Cutter discovery is 10km west of the Tabba Tabba project, which is in the Pilbara region of WA.
Some of the best drilling results from Bolt Cutter included 9.4m at 1.3% lithium oxide from a depth of 23.2m and 8.1m at 1.2% from a depth of 39.7m.
Wildcat said further drilling on Bolt Cutter would start soon to both extend the discovery and for infill purposes.
The company also said it remained well-funded with $48.5 million in cash as at the end of December.
The company said re the Tabba Tabba project:
The Tabba Tabba Project is an advanced lithium and tantalum development project that is located on granted Mining Leases just 80km by road from Port Hedland, Western Australia. It is nearby some of the world's largest hard-rock lithium mines. The Project was one of four significant … pegmatite projects in WA, previously owned by Sons of Gwalia. The others were Greenbushes, Pilgangoora and Wodgina which are now Tier-1 hard-rock lithium mines. Tabba Tabba is the last of these assets to be explored and developed for lithium mineralisation.
Shares looking cheap
The Shaw and Partners analysts said they expected demand for lithium to remain high.
They added:
Current high fuel prices have created a perfect storm for electric vehicle demand and we expect will tip the lithium market into deficit by the end of the year. With prices surging, Wildcat is poised to be producing lithium during the current cycle.
They were also encouraged by the drilling results from Bolt Cutter:
Results to date demonstrate strong potential for Bolt Cutter to grow in scale both laterally and at depth. Bolt Cutter is likely to be a key component of Wildcat's two-pronged strategy of exploration and development, with organic growth from discoveries providing a clear pathway for integration into broader development plans. Wildcat is moving quickly toward production, having made its major discovery on already granted mining leases. This unusual status, combined with a signed Native Title Agreement, significantly truncates the regulatory and permitting timeline, allowing the company to target first production in 2028. This will allow Wildcat to capitalise on the current lithium price cycle as the market moves into deficit later this decade.
Shaw has a price target of $1.20 on Wildcat shares compared with 39.5 cents currently. Wildcat is valued at $509 million.
