Core Lithium Ltd (ASX: CXO), based in Adelaide, Australia, is engaged in the exploration of lithium and base metals deposits like copper, gold, iron, silver, uranium, lead, and zinc in Northern Territory and South Australia. The company’s flagship asset and current target is the development of its wholly-owned highly prospective Finniss Lithium Project situated in Northern Territory’s Bynoe pegmatite field in the capital city of Darwin.
On April 26th, 2019, the company released its Quarterly Activities and Cashflow Report for the three months to March 31st, 2019. During the concerned period, Core Lithium focused on a number of initiatives aimed at further enhancing the value and potential of Finniss Lithium Project.
The global Mineral Resource of the Project was increased to 8.85Mt @ 1.3% Li2O after the inclusion of an initial Mineral Resource Estimate for the Hang Gong Deposit of 1.4Mt @ 1.2% Li2O; and upgrading the Mineral Resource at the Carlton Deposit to 1.1Mt @ 1.3% Li2O. Some preferred lead contractors for various packages of work were shortlisted.
Core also strengthened its management team with the recruitment of Simon Iacopetta to the role of Chief Financial Officer, enlisted Mr Noel O’Brien in a metallurgical consulting services capacity, and appointed Sean Buxton to the role of Project Manager for the Finniss Project. Going forward, the company has engaged Adelaide-based consultancy, Workplace Partners to develop and implement human resources, industrial relations and work, health and safety systems for the Finniss Project.
The company closed the quarter with cash and cash equivalents of around AUD 1.92 million.
Subsequent to the end of the reporting period, Core Lithium released a Definitive Feasibility Study (DFS) for the Finniss Project on April 17th, 2019 which stated that the project contains a low risk, open pit mining operation and DMS processing of up to 180,000 tpa of high-quality lithium concentrate with strong margins. Besides, the DFS also depicts a low start-up capital costs of AUD 73 million as well as AUD 158-million free cash flows that would enable a payback of 1.5 years.
Besides, the high Pre-Tax Nominal IRR of 80% and the NPV of AUD 114 million reflect excellent DFS economics along with a revenue of AUD 501 million. There exists significant potential upside to economics through conversion of more Mineral Resources into Ore Reserves as the project is expanded further to include Carlton, Hang Gong and Booths-Lees along with regional exploration planned for 2019.
The discussions for financing are progressing with debt markets and strategic financiers. Regulatory approvals and offtakes are also underway to ensure accelerated construction timetable due to commence in second half of 2019 to further ramp up commercial production by the first half of 2020.
The company also informed that over one third of the Project Capex can be met with USD 20 million pre-payment (AUD 29 million) commitment by Core’s largest shareholder as well as major Chinese lithium and carbonate producer – Yahua Group.
On April 1st, 2019, Core and Yahua expanded the existing binding lithium offtake agreement by 50% whereby Core will now supply 75,000t per annum of 5.5% Li2O concentrate from the Mineral Lease covering the Grants and BP33 lithium deposits until November 30TH, 2023.
Core’s current market cap stands at AUD 33.33 million with ~ 694.47 million outstanding shares. On April 26th, 2019, the CXO stock is trading at AUD 0.047, down 2.08% (As at 03:45 PM AEST).
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