After failing to discover economically viable lithium zones in Argentina where after it dropped its option to acquire the Pocitos West project from Millennial Lithium (ML.V), Liberty One Lithium (LBY.V) saw its share price slide from in excess of C$2 to less than 10 cents as of the time of writing.
In a recent corporate update, Liberty’s management says it’s still looking for new lithium projects, and ‘its research continually leads the company back to the lithium triangle in South America’, so it looks like Liberty One still has the same focus as before. Liberty One appears to be determined to go back to the Triangle, as it also gave up its North Paradox project in Utah.
Meanwhile, the company still had in excess of C$8M in cash on the balance sheet as of the end of September. This cash position, divided by the current share count of 66.63M shares results in a net cash position of roughly C$0.12/share, which means the current share price is valuing Liberty One at a 25% discount to its cash position. There’s no good reason for this discount (technically, Liberty One now is a shell without any meaningful assets) but there are two issues in the back of the market’s mind that could explain this discount. First of all, the collapse of the share price after failing to find commercially viable lithium brines hasn’t helped the credibility of the story, while, secondly, the fact the management is still taking their pay cheques at a full rate doesn’t help either. In the first nine months of the year, Liberty One spent C$630,000 on consulting and management fees as part of ‘key management personnel compensation’, and that doesn’t look good.
So for now, Liberty One Lithium is a cash-rich shell, and as it will eventually find an activity, it could be an interesting lottery ticket.