Lithium Energy has released an extraordinary scoping study with financial metrics showing its lithium brine project in Argentina could churn out up to $1.15 billion a year … and that is for a 19-year mine life.
The company says the operation is capable of producing up to 40,000 tonnes of lithium carbonate equivalent (LCE) per annum and can be paid back in just two years. The study numbers – at the high-case estimate – also show an eye-popping pre-tax net present value of US$3.9 billion (AU$6.2 billion) and a pre-tax internal rate of return of 44 per cent based on a forecast cash operating cost of US$4611 (AU$7247) per tonne of LCE.
Management says the economics of the project is based on a life-of-mine assumed price of US$25,000 (AU$39,295) per tonne of lithium carbonate.
Using the low-case production estimate of 20,000 tonnes of LCE per year, the company expects a mine life of 36 years, a capital payback period of 2.5 years, an annual EBITDA of $US378 million (AU$594 million) and a pre-tax internal rate of return of 41 per cent.
We are extremely pleased with the results of the Scoping Study, confirming the Solaroz Lithium Brine Project as a high-margin project with significant upside, positioned to become a material producer of battery-grade lithium into the accelerating demand curve of the net zero energy transition. Lithium Energy executive chair William Johnson
The Solaroz brine project takes in about 12,000 hectares of what has become widely known as the area’s “Lithium Triangle”. The zone is projected to host about a third of the world’s lithium resources in underground bodies of fluid known as brines and is nestled between Argentina, Bolivia and Chile.
Lithium Energy released its maiden mineral resource earlier this year, with 3.3 million tonnes of LCE. A high-grade core of 1.34 million tonnes of LCE with an average concentration of 405 milligrams per litre lithium is within the resource.
Just last week, the company converted more than 70 per cent of its 3.3-million-tonne resource estimate into the higher indicated category. Significantly, its neighbours include lithium majors Allkem and Lithium Argentina Corporation.
As one of only three groups that control the lithium concession rights on and adjacent to the Olaroz Salar, ASX-listed Allkem was an early mover in the region and has been producing lithium carbonate since 2015, using traditional brine-evaporation pond methods.
Lithium Argentina’s Cauchari-Olaroz project, which it holds in a joint venture with Ganfeng Lithium, has only recently started production of lithium carbonate on the neighbouring Salar de Cauchari.
Lithium Energy says results from the scoping study are based on the current operations of Allkem and Lithium Argentina, using conventional evaporation ponds for processing brines from the Salar de Olaroz to produce LCE.
However, the company believes there is significant potential upside to Solaroz, with additional exploration underway and the project economics based on only 1.3 million tonnes of LCE out of its 3.3-million-tonne resource.
Just last month, it unveiled the best hit yet from its drilling at Solaroz, with a diamond drillhole showing 24m at a grade of 483mg/l lithium from 233m. The hole is considered a step-out and was not included when the maiden resource estimate was delivered.
Management is also looking into the benefits of using the direct lithium extraction (DLE) method that does away with evaporation ponds. The DLE process involves pumping lithium brine to the surface directly into a processing plant, where one of several absorption methods is applied to extract the lithium from the brine – taking less than a day.
While getting to the top end of production is not a certainty, even at the lower-case scenario, Lithium Energy’s scoping study is bulging with some more-than-handy numbers.
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