Barry FitzGerald

“Based on the not unreasonable assumption that big name producers know more than Goldman Sachs about lithium’s supply/demand outlook, Garimpeiro is not losing any sleep about the lithium boom fading anytime soon.”

Fitz is in a fighting mood. And with the big corporation action among lithium explorers not showing any signs of abating, so he should be. At a glance, we’ve seen:

– Chile’s lithium king SQM, one of the biggest producers in the world, pump $20 million into Azure (ASX:AZS) for a 19.99% stake. That prompted an instant 36% rise in January.

– IGO and China’s Tianqi’s $136 million agreed takeover bid for Essential Metals (ASX: ESS), triggering a 41% rise on the day news broke, again last month.

– And just about everyone circling the recently dual-listed Patriot Battery Metals, which has been producing spectacular drilling results in Quebec. (Up 245% since its December IPO.)

So who’s left? Plenty, but Garimpeiro’s only got eyes for one – Red Dirt Metals (ASX:RDT). It was trading mid-week at 47.5c for a market cap of $211m. If there were a Goldilocks zone for a lithium takeover target, that would be it.

But obviously there has to be a real project. RDT has a 12.7Mt resource grading 1.2% lithium under its belt at its Mt Ida project near Menzies. That’s a little bit better and a little bit bigger than the resource Essential’s handing over to IGO/Tianqi.

And it “recently added the broadscale Yinnetharra pegmatite field inland from Carnarvon to its exploration portfolio”, Garimpeiro notes. Tasty.

Mt Ida could be producing by the end of the year, and the RDT team are planning 400 holes by September to get a handle on the goods at Yinnetharra.

There’s one thing standing in the way of any takeover talks though – RDT’s executive chairman David Flanagan is a noted independent specialist, and he’s keen to see what Red Dirt can grow into.

It’s the approach he took at Atlas Iron when it floated as a $10m goldie in 2004, but grew to a $3.5 billion iron ore operation after surviving the GFC.

That sounds like a win each way.

In the good books

It’s always good to check in on what the experts are doing, and as it happens, this week, three leading brokers – Ord Minnett, CCZ Equities, and MA Moelis – made some additions to the Buy lists.

Ord Minnett put the word out to Accumulate Camplify (ASX:CHL). It reckons the RV rental platform can evolve into a company with “significant scale and growth potential” following the acquisition of PaulCamper.

In its favour – a good track record since inception, solid outlook for domestic leisure, and a long runway given that its market share in Australia within its addressable markets is somewhere south of 1%.

Cash? Around $24m with no debt. And it’s planning on delivering positive free cashflow in FY24.

CCZ Equities likes the look of the excellently named BirdDog Technology (ASX:BDT). BirdDog’s main product – proprietary tech that enhances the quality, speed and flexibility of a video – is a leader in its field.

Sales last quarter disappointed with unaudited revenue of $7.4m, 24% lower than pcp. But CCZ reckons “current upside potential outweighs the downside considerations”. It has it down as a Buy because “we envisage growth to return towards mid-FY24”.

Its model suggests a valuation of $40.5m or 20c per share based on FY23 forecasts. As of today, BirdDog’s share price is trading at 14c.

MA Moelis has a Buy out on industrial contract labour company Mader Group (ASX:MAD), which just reported eye catching FY23 Q2 quarterly revenue of $145m, up 54% vs pcp. Nice.

MA Moelis thinks management’s outlook is too conservative and sees strong growth in markets like Canada and the US.

“We retain a Buy rating with increased target price of $5.00 (prior: $4.05) based on 12x EV/FY24 EBIT,” it says. “We are of the view MAD remains in an upgrade cycle.”

Guy Le Page

RM Corporate Finance

And finally, a quick shot of lithium from Guy Le Page, who likes Pursuit Minerals’ (ASX:PUR) recent acquisition of Trilogy Minerals whose main asset is the Rio Grande Sur project, a salar that covers approximately 27,500ha in Argentina.

“At a market capitalisation of around $50 million, put this on the watch list as I believe the news flow from what looks to be a fairly aggressive program could surprise on the upside as it looks to move into the development phase later in CY 2023,” he says.

He’s got a lot more to say about that here, because he’s, well, Guy Le Page.

The views, information, or opinions expressed in the interviews in this article are solely those of the interviewees and do not represent the views of Stockhead. Stockhead does not provide, endorse or otherwise assume responsibility for any financial product advice contained in this article.