Elevra Lithium Building Platform For Growth

This story features ELEVRA LITHIUM LIMITED, and other companies.
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Analysts believe Elevra Lithium's funded North American expansion and the underappreciated Moblan project provide substantial long-term production growth.

• Elevra Lithium’s Moblan project labeled one of the world's most attractive greenfield developments
• Thus far, market not willing to price in production growth beyond FY27
• Company successfully completed a $275m institutional placement at $12.20 per share in May
• June quarter production up 15% quarter-on-quarter

By Mark Woodruff

In initiating coverage of hard rock lithium producer Elevra Lithium ((ELV)) last week, analysts at UBS highlight the company’s high-grade, long-life Moblan development as one of the world’s most attractive greenfield lithium developments.

Formed through the 2025 merger of Sayona Mining and Piedmont Lithium, Elevra combines a debt-free balance sheet with US$321m in cash, plans to expand production at its North American Lithium (NAL) operation and longer-term growth from 60%-owned Moblan. Both deposits are in Quebec.

The pipeline of growth assets also includes Carolina Lithium in the US, with potentially integrated downstream conversion opportunities.

The company also has early-stage exploration projects in Western Australia’s Pilbara (gold and lithium) and South Murchison (lithium) regions.

UBS believes the market is not yet pricing in production growth beyond FY27 levels of around 200ktpa. As a result, ongoing progress on projects towards production is expected to create additional shareholder value.

In a similar vein, Canaccord Genuity believes the market attributes minimal value to Moblan, expecting greater clarity around development plans to act as a valuation catalyst, supported by peer developer valuations.

Attributable production is forecast by UBS to more than triple by FY36, supported by staged expansion at NAL and the eventual development of the higher-quality Moblan asset, which this broker feels will become an increasingly important driver of value over time.

Overall, UBS views Elevra as a compelling investment within its peer group. While acknowledging its relatively high-cost operations, the broker believes the stock trades at an attractive discount to discount while offering compelling long-term production growth prospects.

It’s felt investors are still assessing the company’s combined outlook following the merger, overlooking NAL’s cash margins of more than 50% and its potential to generate further upside through near-term production growth.

Balance sheet

Before the recent weakness in spodumene prices, management successfully completed a $275m institutional placement at $12.20 per share on May 13.

Canaccord expects Elevra’s balance sheet to strengthen further by around US$70m following the recently announced sale of its 22.5% interest in the Ewoyaa lithium project and 4.1% stake in Atlantic Lithium, with completion expected in the first quarter of FY27.

With FY27-28 earnings (EBITDA) from NAL forecast at US$619m, Canaccord believes Elevra will be well positioned to fund the expansion of NAL while supporting pre-development activities at the Moblan project.

In Macquarie’s opinion, funding risk has eased materially following the $275m institutional placement, the $146m Canada Growth Fund convertible note package (announced on May 12) and the completed $15.5m share purchase plan.

The note package, which remains subject to conditions including shareholder approval, represents a strategic partnership with the Canadian government designed to accelerate the expansion of the NAL operation while advancing the Moblan project.

Size of the opportunity

While Moblan permitting timing remains somewhat uncertain, with UBS assuming around five years, this broker estimates Elevra could triple attributable spodumene production to around 600ktpa by the mid-2030s from about 200kt in FY27.

This reflects 100% of around 350ktpa from NAL and a 60% share of around 450ktpa from Moblan.

The combined output equates to roughly 75ktpa of lithium carbonate equivalent, sufficient for around 110GWh of batteries or 1.8m electric vehicles. The broker assumes an average 60kWh battery.

Such an expansion would lift Elevra’s production to globally significant levels while adding long-life, low-cost assets to its portfolio, the analysts highlight.

According to UBS, the company would also be seen as a key participant in the development of Quebec’s hard-rock lithium industry, alongside projects such as Rio Tinto’s ((RIO)) Becancour/James Bay, PMET Resources’ ((PMT)) Shaakichiuwaanaan and Cisco (owned by Toronto-based Q2 Metals Corp), as well as the broader North American battery supply chain.

Recent reporting

June quarter production was pre-reported at a “strong” 54kt, according to Canaccord, a 15% quarter-on-quarter rise.

Sales were lower at around 34kt at a realised price of US$919/t, reflecting an inventory build of approximately 20kt to around 41kt.

Canaccord forecasts cash costs of US$880/t on production and US$1,817/t on tonnes sold. Cash is expected to rise 172% to US$307m, supported by proceeds of around US$193m from the recent equity raising.

The outlook for the lithium price

UBS remains positive on lithium demand, raising its 2026 lithium carbonate equivalent (LCE) demand growth forecast to 21% from 16% after strong growth in global battery production and installations.

While larger average electric vehicle battery sizes and accelerating energy storage deployments continue to support demand, rising inventories are creating near-term uncertainty, prompting UBS to recently lower its short-term lithium price forecasts for 2026 and 2027 by -9% and -12%, respectively.

Elevra’s share price implies a SC6 spodumene price of around US$1,500/t into perpetuity, compared with the broker’s long-term forecast of US$1,400/t and the current spot price of around US$2,165/t.

UBS forecasts prices will peak near US$4,000/t in the first half of 2027.

North American Lithium

Management aims to expand production at NAL by more than 70% by FY30.

Certainly, UBS sees a credible pathway to improved performance through process optimisation and a staged production expansion to around 350ktpa from 200ktpa, a 50% increase on expected FY26 production.

UBS believes previous operational issues, largely linked to weather-related design flaws in the crushing and materials handling circuits, should be addressed through planned upgrades and debottlenecking.

Longer-term costs (AISC) are expected to trend towards around -US$700/t, supporting strong margins and free cash flow (FCF) relative to lithium price forecasts by UBS.

Outlook

Last week, Macquarie retained its $14.50 target price for Elevra Lithium, identifying FY27 production guidance, completion of the Ewoyaa divestment and shareholder approval of the Canada Growth Fund convertible notes as key near-term catalysts.

Key risks, according to this broker, remain lithium price volatility, execution of the NAL expansion, funding and approval risks associated with the growth package, and potential delays or cost inflation at the Moblan development.

UBS begins its research coverage on Elevra with a Buy rating and $12.00 target.

The $13.25 average target of these two daily covered brokers implies 58.3% upside to Friday’s closing share price of $8.37.

Outside daily coverage, Canaccord Genuity has a Buy rating and $18.30 target.

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