First Berlin Equity Research has published a research update on European Lithium Limited (ISIN: AU000000EUR7). Analyst Simon Scholes reiterated his BUY rating and increased the price target from EUR 0.19 to EUR 0.22. Abstract: European Lithium (EUR) has announced that it has secured AUD10m in financing from the investor MEFI L.P. (Magna) of which AUD2.5m is available for immediate draw down. The money will be used to finance the definitive feasibility study (DFS) of the Wolfsberg Lithium Project, which is expected to be completed in April 2019. We expect these funds to strengthen EUR's position in ongoing negotiations with potential offtake partners. EUR has also stated that it is considering moving its primary listing from Sydney to Vienna. Given that the project is located in Austria, this move makes good sense in our view in terms of consolidating support from Austrian and wider European financial and political circles. EUR has opted to produce lithium hydroxide rather than the more commonly produced lithium carbonate because lithium battery manufacture is shifting towards increased use of nickel and reduced use of cobalt. This trend requires the use of lithium hydroxide rather than lithium carbonate. According to Benchmark Mineral Intelligence (BMI), usage of lithium hydroxide will grow 2.5 times faster than lithium carbonate. Our long term lithium hydroxide price assumption is almost unchanged on our May study at over USD18,000/tonne. We have raised our price target from EUR0.19 to EUR0.22 mainly because of the 5% appreciation of the US Dollar against the Australian Dollar since May. We maintain our Buy recommendation.
