Year-end Results and Outlook Reaffirm our Core Investment Thesis; Construction of Muskogee, OK Plant on Track; Reiterate BUY Rating.

Stardust Power CEO Roshan Pujari updated investors on the company’s year-end results call last Thursday after the close. No official financial guidance was provided.

For FY’24, Stardust incurred a net loss of $23.8M and for the period from March 16, 2023 (inception date) through December 31, 2023, i.e. the prior period, the Company incurred a net loss of $3.8M, the increase driven by higher G&A expenses tied to public co. expenses and a broader scope of operations.

Loss per share was ($0.55) for FY’24, compared to ($0.09) for the prior period, the increase being driven mainly by higher G&A expenses due to personnel-related costs and finance charges. Our estimate was ($0.08).

We view the recently announced agreements with Sumitomo (supply) and KMX Technologies (VMD concentration technology) as promising, although investor psychology regarding the macro environment for lithium pricing and Stardust’s financing options for the plant construction remain sunsettled, likely pressuring shares.

Plant construction timeline appears on track. The $1.2B two phase construction project will first complete a production line with a capacity of 25,000 metric tons/year (expected to be in2027), followed by the second production phase doubling the capacity.

Management highlighted several capital raising events recently, including raising $5.75M via anequity transaction with an institutional investor, issuing 4.79M shares of common stock at $1.20/share along with 4.79M cash warrants at an exercise price of $1.30. Additionally, on March 17, 2025, the Company entered into a warrant inducement agreement with the same investor, generating approximately $2.9M in gross proceeds from the exercise of 4.79M warrants at a revised exercise price of $0.62.

We attribute the recent selloff of SDST shares to: (1.) Continued softness in lithium pricing worldwide, spurred by continued oversupply of lithium from China, together with increased geopolitical and trade uncertainty, and (2.) Recent capital-raising announcements from the company, and the increased likelihood of additional capital raises. We note that management’s execution thus far has been consistent with its stated goals and timelines.

We continue to believe that the company’s operating model remains superior to alternative forms of lithium extraction and refining.

Changes to our model: We are maintaining our 2028 estimates. We are leaving our revenue estimates for YE25, YE26 and YE27 estimates unchanged, but are reducing our EPS estimates for those years to ($0.29), ($0.26) and ($0.52), respectively, due mostly to higher SG&A expense assumptions and higher estimated financing expenses.

We are maintaining our Buy rating on SDST shares, noting the increasingly positive developments on the trade policy front from Washington for Stardust as well as solid execution of the construction project to this point.

Construction of Muskogee, OK Plant on Track; Reiterate BUY Rating; Adjusting Price Target to $17 on increased share count assumption (previously $19).

Our several conversations with Stardust Power’s management team after the company reported 3Q 2024 results at the end of last week confirm our core thesis: (1.) Several industry trends are likely to shift domestic demand from China and South America-sourced lithium to ecologically friendly, US produced alternatives; (2.) The company is proactively broadening its sources of downstream brine inputs, including the announced partnership with KMX Technologies as well as other transactions likely to secure a broader-based input supply.

In recent months, China-based lithium producers have been flooding the global market and engaging in what the U.S. State Department described as predatory pricing. Lithium pricing has softened over the last several quarters, likely due in part to these actions.

Key takeaways from last week’s earnings call, to reiterate: (1.) Timeline of plant construction is on track; (2.) Management is “cautiously optimistic” on lithium pricing trends after several years of decline; (3.) The recent geopolitical headwinds for the lithium supply market, brought on by China, now appear poised for a reversal after Trump’s victory and the Republicans’ control of Congress; (4.) Management is exploring ways to broaden the available sources of brine through leveraging its partnership with KMX Technologies for its brine concentration technology and possibly through opportunistic M&A.

Construction of the Muskogee, OK midstream refinery lithium plant using Direct Lithium Extraction (DLE) upstream technology is proceeding on schedule. The required Front-End Loading (FEL-3) study began in Q3 and will likely take six to nine months to complete. After that, the construction of Phase One of the plant (output capacity of 25K tons per year) will likely take 18-24 months to complete.

We are adjusting our 12-month price target on SDST shares from $19 to $17, based on a higher share count assumption for 2028. Recent financing announcements by management point to a higher likelihood of at least some dilutive effects of such transactions going forward. Our adjustment does not reflect any changes to our revenue and profitability assumptions in our model.

We reiterate our BUY rating on SDST shares.

• On June 27th, we initiated coverage of Stardust Power, Inc. with a Buy rating and a $19 twelve-month price target. The company’s shares began trading yesterday under the new ticker symbol SDST, after Stardust Power completed its business combination with Global Partner Acquisition Corp II (Nasdaq:GPAC). (Please see our June 27th initiation report published under the ticker symbol GPAC).
• In our initiation report we wrote that, in our opinion, Stardust Power represents a new breed of clean process-based lithium producers in the U.S., set to challenge the entrenched near-monopoly of mining companies in China and other overseas markets like Chile.
• With demand for lithium continuing to accelerate, we believe that developed nations in America and the EU will gradually be shifting their demand to environmentally-friendly suppliers.
• Stardust Power is set to deliver multiple benefits to domestic customers as an eco-friendly U.S.-based producer: Significant savings in overseas shipping and logistics costs, environmental compliance, and a greatly simplified domestic supply chain.
• Stardust Power is poised to become one of the major suppliers of battery-grade lithium in the U.S., as it completes its central lithium refinery plant in Muskogee, Oklahoma, capable of producing 50,000 tons of battery-grade lithium annually with a plan to scale up production over time.
• We expect that the Muskogee plant will go online in 2026, and that Stardust Power will be shipping 25,000 tons of battery grade lithium per year staring in 2026, scaling up to 50,000 tons in 2027. Assuming that run rate, and given current lithium carbonate pricing in the range of $23 - $25K/ton, we are modeling Stardust Power’s revenue to be $75.9M in 2027 and $483M in 2028, growing over 500% y/y on accelerating demand for domestically produced, battery-grade lithium.
• Additionally, we believe that the company can generate $203M in EBITDA in 2028 after theMuskogee plant is fully operational, with EBITDA margins expanding from 28.6% in 2027 to 42% in 2028.
• Our $19 price target assumes a reasonable, peer-group average valuation of 3.3x on an EV/Revenue basis, discounting our 2028 YE revenue estimate to the current year using an annual discount rate/WACC of 15%. Our price target assumes full share conversion and a share count of 48 million shares.
• Founder and CEO Roshan Pujari and other members of the Stardust Power management team will ring the opening bell of the Nasdaq Global Market (“Nasdaq”) on July 11, 2024, to commemorate Stardust Power’s public listing.