Advantage Lithium Corp. reported the filing of its Preliminary Economic Assessment («PEA») Report following summary results announced on August 14, 2018.
The PEA report provides support for Advantage Lithium to proceed with development plans for 20ktpa capacity stand-alone Lithium Carbonate plant located at its Cauchari Joint-Venture project (“Cauchari JV”) in the province of Jujuy. The PEA report was completed by WorleyParsons Chile S.A. («WorleyParsons»), a leading integrated independent engineering services firm with extensive experience in the design and construction of Lithium brine projects in Argentina and Chile.
Key Points:
- US$ 830 Million after-tax NPV at 8% discount rate and IRR of 24.0 % for 20,000 TPY production of lithium carbonate. (Pre-Tax NPV – $1,321 Million)
- Pre- Production CAPEX estimate of US$ 401 million for a 20,000 TPY operation
- OPEX of US $3,667 /tonne of lithium carbonate average after production ramp-up
- Processing facilities design based on proven solar evaporation technology and conventional lithium brine processing, leveraging JV partner Orocobre’s project development experience
- Mine life of 25 years including a 3-year ramp up for 20,000 TPY production scenario based on conversion factors applied to 3Mt resource published in May 2018
- Cauchari resource conversion to Measured and Indicated well underway with DFS to commence imminently with completion scheduled in Q2 2019, both fully funded by the AAL/Orocobre Joint Venture
- The resource is open to the south and at depth, with potential to add significant tonnage with additional exploration, including in the deep sand unit
David Sidoo, CEO and Founder commented “We are very pleased that we have advanced our Cauchari JV from exploration through to a completed PEA in just over a year. The positive results first summarized in our news release of August 14 are now backed up with an independent study report that reflects the rapid advancement of the project engineering supported by Worley Parsons.
As reported previously, this clearly confirms the potential of Cauchari JV as a robust project with operating costs expected to be in the lower quartile of the industry cost curve. Advantage is progressing on schedule with our Phase III drilling and well testing programs aimed at improving our resource status to Measured and Indicated as an input to our dynamic production model. The results from this work are required to support resource to reserve conversion and to achieve our target Definitive Feasibility Study (“DFS”) which will commence in early October and planned for completion by Q2 2019.”
Economic Analysis Results – Updated
The economic results have been updated to reflect an improvement in the tax regime in Argentina with lower tax rates that were not reflected in the initial PEA announcement of August. The updated results show a slight improvement in Project Value, shown below reported against discount factors, with 8% selected as the base case:
| Discount Rate | NPV US$M (After Tax) |
IRR (After Tax) |
NPV US$M (Pre-Tax) |
IRR (Pre Tax) |
||
| Updated | 14/08/18 | % (Prev %) | Updated | 14/08/18 | % ( Pre %) | |
| 6% | 1132 | 1,121 | 24.3 (24.0) | 1768 | 1,763 | 28.8(28.2) |
| 8% | 830 | 827 | 1314 | 1,321 | ||
| 10% | 608 | 610 | 982 | 995 | ||
The PEA data takes into account royalties applicable to the Cauchari Project.
The economic analysis is based on brine grades and lithium volume estimated from the company’s published Inferred Mineral Resource only. Mineral resources that are not mineral reserves do not have demonstrated economic viability. There is no certainty that the Cauchari project evaluation envisioned by the PEA will be realized. The PEA is preliminary in nature and includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves.
