A new analysis of where Trek Metals is at suggests there’s plenty of upside for investors as the company ramps up its search for battery metals.

Shares in Trek Metals are poised for a three-fold increase as the team that founded lithium powerhouse Pilbara Minerals prepares to kick-off a major battery metals exploration campaign in WA, according to a new report from Rawson Lewis.

The report, released on 18 May 2023, set a price target of $0.25 for Trek Metals (ASX:TKM) – more than three times its last traded price of $0.072, which had the company capitalised at $25 million, prior to the recent $7.5 million placement.

Rawson Lewis initiated research coverage on Trek with a “speculative buy” recommendation, with veteran analyst Mike Harrowell saying the valuation is underpinned by the recent rebound across the junior lithium sector, the company’s strong exposure to two essential battery metals – lithium and manganese – and the quality of its Board and management team.

The Trek Board includes Tony Leibowitz, Neil Biddle and John Young – the same trio that founded ASX-50 lithium producer Pilbara Minerals.

Lithium drilling to drive rerating

With Trek’s first drilling program at the Tambourah Lithium Project in the Pilbara about to commence, Harrowell says the market “has not priced in much in the way of success, so any drill intersections averaging 1% Li20 or more are likely to have a positive impact on the company’s share price”.

Given Tambourah’s location in the heart of a known lithium province that includes Pilbara Minerals’ world-class Pilgangoora lithium mining operations, the project’s known lithium occurrences and the serious exploration credentials of the Trek Metals Board, investors will be watching results from the forthcoming program with great interest.

Harrowell says spodumene lithium explorers that have reported drill intersections of 1% Li20 or more currently trade at an Enterprise Value of between A$38M and over A$61M (Trek’s EV is A$26M) and the size of the re-rating will depend on drilling success:

“If Trek can report a Resource, it will fall into a peer group with EVs of A$300-400 per tonne of Lithium Carbonate Equivalent (LCE) or A$66M to A$412M”.

Manganese not valued in Trek share price

Harrowell goes on to say that, in addition to its lithium upside, Trek has a quality manganese asset that is “not valued in Trek’s share price” and “could add extra upside”.

Trek completed the acquisition of the Hendeka Manganese Project in the Pilbara region last November, including a quality manganese resource of 11.3Mt at 15% Mn.

“While manganese is not used in all lithium battery chemistries, it is increasingly used in high performance applications to achieve high energy density for a given weight of battery, which is the key to solving issues relating to vehicle range and related customer anxiety,” Harrowell says.

“It is also cheaper and has a more stable price that competitors, nickel and cobalt, making it more attractive to industry,”

“By having an existing Resource and the potential to expand it, Trek is already on the way to being able to enter the market to produce High Purity Manganese Sulphate Monohydrate (HPMSM).”

Trek recently commenced a metallurgical test work program to determine the characteristics of the Hendeka ore and the potential to produce both DSO (direct shipping ore) and battery-grade manganese products, including HPMSM which is seeing growing demand for use in lithium-ion battery cathode manufacturing.

Harrowell values the existing manganese resource at Hendeka at between A$5-10M and says, in the event of positive results from both the lithium and manganese assets, “we expect TKM will trade between 15-35cps” – suggesting plenty of upside for investors.



This article was developed in collaboration with Trek Metals, a Stockhead advertiser at the time of publishing.


This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.