Barry FitzGerald: Investors have missed this key de-risking event, but Garimpeiro thinks Wildcat is purring

Wildcat Resources cleared a major hurdle for the Tabba Tabba lithium project to little fanfare. But Barry FitzGerald is taking note.

“Garimpeiro” columnist Barry FitzGerald has covered the resources industry for 35 years. Now he’s sharing the benefits of his experience with Stockhead readers.

Mining licences are not handed out willy-nilly nowadays. And before a would-be developer can get one, they must have a native title agreement in hand.

So securing an agreement with native title holders is a big deal and ordinarily could be relied on to fire up interest in a company and its project because a major risk factor has been overcome.

That didn’t happen during the week for lithium developer Wildcat Resources (ASX:WC8), with its shares pretty much left alone at 25.5c a share for a market cap of $342 million.

Given the importance of native title agreements, Garimpeiro was as surprised as anyone that the market did not re-rate the stock, not yet anyway.

The lack of a re-rate was doubly surprising because, and get this, Wildcat already has a mining licence covering its world-scale Tabba Tabba lithium project in the Pilbara because of historic tantalum production in the project area.

So two of the three big uncertainties nowadays in mine developments – the third is financing – are now in the bag for Wildcat.

It is a major advantage too. Having both means that Tabba Tabba has the jump on other hard-rock (spodumene) lithium projects both here and places like Canada and Brazil that don’t have mining licences and/or agreements with the local landowners.

Lithium market turning

And what a good time it is to be ready to go with a project – subject to financing and confirmation of robust economics in a definitive feasibility study – now that the lithium market has turned for the better.

The rally in lithium prices since June. Spodumene is up from the low US$800s a tonne to US$1200/t in response to the explosive growth in demand for battery energy storage systems on top of continued strong growth in demand for electric vehicles.

The fast-growing BESS sector has forced everyone to rethink their over-supply concerns in lithium by bringing forward the timing of the market potentially going into supply deficit.

The positive impact that has had on investor sentiment in the sector has fuelled massive share price gains in the ASX-listed lithium stocks, albeit from the smashed levels of June.

As the owner of a leading candidate to be one of the next spodumene projects to help meet future demand, Wildcat has been a beneficiary of the upturn in the lithium market, with its share price about doubling since mid-June.

But that too looks underdone given the scale of Tabba Tabba and its cleared hurdle of gaining a native title agreement, while already having a mining licence.

Key de-risking event

Argonaut’s Hayden Bairstow has a 50c price target on the stock, which currently trades at just 28c. In a note following news of the naïve title agreement he said it was a key de-risking event for the project.

“Wildcat is advancing the definitive feasibility study on the project, which we expect to be released in the second half of 2026,” he said in a note.

“Drilling results from Bolt Cutter could also provide a positive catalyst for the stock.”

Bolt Cutter is a recently discovered spodumene and petalite bearing pegmatite system some 10km west of the 74.1Mt Tabba Tabba resource. It is early days, but Bolt Cutter looks to have some serious scale, higher grades and less iron oxide.

Wildcat will be pumping out drill results in the coming months while also continuing to work on completing the DFS. It has $50m in cash to keep up the pace and also has the Adrah gold project in NSW it could monetise.

WC8 will also be working on a financing solution with its advisor Macquarie. Options included but aren’t limited to debt, equity and/or joint venture arrangements.

The earlier preliminary feasibility study priced an initial development at $687 million, which is too big an ask for a company with a current market cap of $342m to go it alone, unless the lithium market gets back to the crazy heights of US$8000/t spodumene of late 2022.

It couldn’t, could it? It’s highly unlikely. But then again, supply deficits do funny things to markets.

The views, information, or opinions expressed in this article are solely those of the columnist 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.

Originally published as Barry FitzGerald: Investors have missed this key de-risking event, but Garimpeiro thinks Wildcat is purring