Lithium exploration and development company, Lake Resources NL (ASX:LKE) has reached a key milestone by successfully concluding a strong and compelling Pre-Feasibility Study (PFS) into the technical and economic viability of the Company’s Kachi Lithium Brine Project.
Besides allowing Lake Resources to ramp up the project development initiatives, the PFS indicates the project’s potential to deliver high purity lithium carbonate product at premium pricing to Tier-1 electric vehicle makers, based on a sustainable and scalable process.
The PFS involved the costing and engineering of preferred process design alternatives aided by Lilac’s technology, with Hatch appointed to provide design and engineering services.
PFS Results – Compelling Economics, Cost Competitveness
The PFS offers LKE several aspects to understand the commercial viability of the financially robust project. Besides delivering an attractive potential financial performance, the unlevered project carries the following key PFS Metrics:
- Life of project EBITDA of US$3,890 million
- Annual EBITDA for the project of US$155 million, 62% EBITDA Margin
- Conservative long-term future price assumptions of USD 11,000/t for battery-grade lithium carbonate
- Competitive capital cost (capex) estimate of US$544 million including contingency, and operating cost (opex) of US$4178/tonne LI2CO3
- Pre-tax NPV8 of US$1050 million, 25% IRR
- Post-tax NPV8 of US$748 million, 22% IRR based on annual production target of 25,500 tpa LCE
- Indicated Mineral Resource for an initial 25 years
On the location front, the Kachi Lithium Brine project shares a prime location next to large producers in the Lithium Triangle that produces 40% of the world’s lithium at the lowest cost.
The Project is based on the Salar de Carachi Pampa where around 175 km2 area has been explored and is a host to 700 to 880-metre deep fault-bounded north-west orientated depression, while being partially obscured by a basalt shield volcano and associated debris fan.
Through its wholly-owned Argentine subsidiary Morena del Valle Minerals S.A., LKE’s 100% owned project includes 70,000 hectares of mineral concessions over the salar which was drilled 3150 metres in 15 holes into the salar, down to 400 metres depth, resulting in a maiden JORC resource of:
- 1.0 million tonnes LCE at 290 mg/L lithium (Indicated)
- 3.4 million tonnes LCE at 210 mg/L lithium (Inferred)
With resource remaining unclosed at depth as well as laterally, Lake Resources looks forward to further drilling to expand and upgrade the same. As reflected by an Mg/Li ratio of 3.8 to 4.6, and an average drainable porosity at 8%, the reserve is believed to have low impurities.
Moreover, the 25,500 tpa LCE production target for the PFS was centred on the 100% utilization of the JORC Indicated Resource and was free from any Inferred Resource.
The production of 25,500 tpa of battery-grade lithium carbonate is targeted by the plant design through the treatment of brine with Lilac’s direct lithium extraction technology based on ion exchange and involves the annual treatment of about 23 million cubic metres of brine at 250 g/L lithium, with an overall plant recovery of 83.2%.
Source: Company's Report
Further to the purification and concentration, the eluate is supplied into a traditional lithium carbonate plant, while the elimination of boron does not require solvent extraction plant.
Although the study was established on 24K mg/L feedstock to the lithium carbonate plant, the possibility of concentration to 60k mg/L lithium feedstock for the lithium concentrate shipping to the off-site has been indicated by the later developments by Lilac.
With no evaporation ponds used, the lithium-depleted brine reflects high purity and ensures low contamination and can be reinfused underground to support the Salar’s water balance and ensure sustainability.
The extraction test work is indicative of production of 99.9% lithium carbonate product with low impurities within several hours through Lilac process, unlike 18 to 24 months for conventional evaporative concentration processes.
The Road Ahead
The expected premium pricing for a preferred high-grade product is aiding the process of negotiations regarding the financing. The PFS results offer a robust room for these negotiations as well as for a definitive feasibility study (DFS).
The PFS has shown a robust engineering and cost case untill now, while additional engineering studies are expected to be driven to reduce operating and capital costs for the project, according to the company.
LKE believes that :
- Replacing gas with a solar PV and storage system for 8-12 hours per day can help to partially reduce the operating cost
- Optimization of the plant layout to minimize earthworks, concrete, and steel and completing a pilot project to reduce contingency can help to limit capital cost
Further, the Company looks forward to delivering product samples from the pilot plant modules to prospective off-takers and additional engineering work to lower up-front capital and continuing operating costs.
Backed by the latest encouraging results, LKE is optimistic of progressing the project further. While being confident of further resource development to extend the life of the project, the company anticipates considering staged development beginning indicatively at 10K tpa LCE.
LKE stock last traded at AUD 0.038 on 30 April 2020.
Source: Company's Report
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