A prominent research firm has issued a bullish call on Rock Tech Lithium, projecting massive potential gains for the stock following a challenging period for shareholders. First Berlin Equity Research has reinstated coverage with an aggressive buy recommendation, citing the company’s strategic position in addressing Europe’s critical raw materials deficit.
A Stark Contrast: Current Price Versus Ambitious Target
Simon Scholes, an analyst at First Berlin, resumed coverage of the German-Canadian lithium developer on December 22. His assessment is unequivocal, assigning a “Buy” rating alongside a price target of 2.40 Canadian dollars. From current trading levels, this target implies a theoretical upside of approximately 243 percent. For investors who have endured a year-to-date decline of around 37 percent in the value of their holdings, this projection offers a starkly contrasting outlook.
The timing of this analysis is significant. Rock Tech is approaching a crucial milestone for its planned converter facility in Guben, Germany: the final investment decision (FID).
Strategic Positioning Fuels Optimistic Valuation
The analyst’s positive scenario is heavily underpinned by geopolitical and supply chain dynamics. Research indicates European demand for lithium hydroxide is forecast to surge by 270 percent by the year 2030. Currently, over 80 percent of the global supply originates from China.
Rock Tech aims to directly address this supply gap. The Guben project holds a privileged status as one of only three German initiatives classified as strategic under the EU’s Critical Raw Materials Act. This designation facilitates access to substantial funding pools, including resources from the recently announced RESourceEU action plan, which earmarks an additional three billion euros for such projects.
Should investors sell immediately? Or is it worth buying Rock Tech Lithium?
First Berlin’s constructive view is supported by several key operational factors:
* Regulatory Approval: The Guben converter is fully permitted and designed for an annual production capacity of 24,000 tonnes.
* Offtake Security: A binding purchase agreement is already in place with automotive giant Mercedes-Benz.
* Cost Competitiveness: Estimated operating costs are positioned just above the lowest industry quartile, enhancing the project’s long-term viability.
Managing Costs and Securing Capital to Build Confidence
Despite strong political backing, market skepticism persists, reflected in a share price trading near 0.46 euros. In a move to rebuild investor confidence, management has recently focused on optimizing project economics. The estimated capital expenditure (CapEx) for the Guben facility has been reduced by 50 million euros to a revised total of 680 million euros.
Concurrently, the company is advancing its financing strategy. It has already secured support commitments totaling 150 million euros, including from the European Investment Bank. The current focus is on obtaining further subsidies and securing binding offtake agreements for the remaining 40 percent of the plant’s planned production capacity.
The Path Forward: 2026 as a Pivotal Milestone
Analysts at First Berlin suggest Rock Tech is well-placed to reach its final investment decision in 2026. Successfully concluding the full financing package and remaining customer contracts would significantly de-risk the investment proposition. Until then, the stock represents a speculative bet on Europe’s commitment to financially back its strategic autonomy ambitions in the critical raw materials sector.
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