Int’l Lithium pegs Mariana after-tax NPV at $192M (U.S.)
INTERNATIONAL LITHIUM Corp. has released the results of a preliminary economic assessment (PEA) for the Mariana lithium brine project located in the province of Salta, Argentina.
• 25-year mine life producing 10,000 tonnes per year of lithium carbonate equivalent plus 84,000 tonnes per year of sulphate of potash;
• The estimated capital expenditure (capex) and operational expenditure (opex) are for a conventional brine extraction facility, solar evaporation ponds and SOP processing with a level of accuracy of negative 30/plus 50 per cent;
• Capex estimated at $243-million (U.S.) for 25-year mine life;
• Net present value of $192-million (U.S.) after-tax at 10-per-cent discount rate, internal rate of revenue of 20-per-cent posttax;
• Project results remain positive, even with important negative variations on the driver variables, indicating project strength and resilience; thus, the PEA study indicates Mariana’s proposed 10,000 t/y LCE concentrated brine and 84,000 t/y SOP fertilizer operation has the potential to generate strong economic returns.
The PEA was prepared by Advisian, a division of the WorleyParsons Group, for Mariana Lithium Corp. to provide a PEA of its Mariana lithium brine project in accordance with National Instrument 43-101 — Standards of Disclosure for Mineral Projects. The PEA technical report assesses the potential economic viability of developing the 14 exploration licences (Minas) that cover the Salar de Llullaillaco (the salar) and surrounding area (23,560 hectares) for the purpose of extraction of lithium brine resources and processing of two products — lith4ium carbonate equivalent and sulphate of potash. All figures are quoted in United States dollars. It should be noted that the company did not play any significant part in the production of the PEA report and that the conclusions are therefore those of the consultants. Cautionary note
The preliminary economic assessment is preliminary in nature, and it 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, and there is no certainty that the preliminary economic assessment will be realized. The PEA includes the results of an economic analysis of mineral resources, and mineral resources that are not mineral reserves do not have demonstrated economic viability. Current ownership of the Mariana project is through a joint venture company, Litio Minera Argentina SA, a private company registered in Argentina, owned 82.754 per cent by Ganfeng Lithium through its wholly owned subsidiary, Mariana Lithium Corp., and 17.246 per cent by International Lithium. In addition, International Lithium has an option to acquire another 10 per cent in the Mariana project through a back-in right.
John Wisbey, chairman and chief executive officer of the company, said: “It is good finally to have received this preliminary economic assessment (PEA) showing a posttax NPV for Mariana of over $190-million (U.S.) (over $250-million (Canadian) at current exchange rates) with net annual cash flows of $96-million (U.S.) after production starts. It is significant how much the high concentration of sulphate of potash is worth to the project, which is a large credit on top of the lithium revenues. Our present share in Mariana is 17.246 per cent and it would rise to 27.246 per cent if we exercised our back-in right, which would currently cost us about $7-million (Canadian). It should be noted that the conclusions of the PEA were prepared by Advisian based on work carried out by the project managers. The cut-off for data supporting the PEA is March 31, 2018. The process methodology is based on the assumption that conventional brine extraction and evaporation methods will be the only method used for the production of lithium and potassium compounds at Mariana. It is our belief that additional value can be created for the project by use of appropriate membrane technology on site in Argentina, and we will be supportive of initiatives to use this method to complement the current plans for evapora-
tion. Additionally, we are hopeful that the estimate of 10,000 tonnes per annum of production and a 25-year mine life are on the conservative side, given the 1,248,000 tonnes of indicated resource and the 618,000 tonnes of inferred resource reported in 2016. Nevertheless, these solid numbers in the PEA give us great encouragement that Mariana has been worth investing in and that, provided that Ganfeng and we can together finance the project appropriately, it is capable of delivering a significant return to our shareholders.” Preliminary economic analysis
The economic analysis of the Mariana lithium project is based on an operating capacity of 40,150 t/y of 4.7 per cent lithium concentration brine and production of 84,000 t/y of SOP fertilizer product.
To perform the project’s economic evaluation, Advisian used a discounted cash flow (DCF) financial model with a 10-per-cent discount rate. Capital and operating costs estimates are as shown in the following sections. Other main inputs for this model are an assumed ramp up and production program, and a market and pricing forecast included herein. Results of the model comprise the project’s NPV and IRR. The attached table presents the project’s base case economic analysis results.
(See ILC Table 1 on page 16)
Capital and operating costs Capital expenditures are based on an operating capacity of 40,150 t/y of 4.7 per cent lithium concentrated brine and production of 84,000 t/y of SOP fertilizer product. Capital equipment costs were obtained from in-house data and solicited budget price information. The estimate is compliant to AACE Class 5 standard. Accuracy of this estimate is expected to be within a negative-30-per-cent/plus-50-per -cent range.
(See ILC Table 2 on page 17)
(See ILC Table 3 on page 17)
Summary and conclusions:
• The technical solutions included in the PEA technical report are standard, time-proven designs for main operating facilities. This approach provides a solid, workable base case to which other design alternatives can be related and compared.
• Advisian has estimated capex and opex for a conventional brine extraction facility, solar evaporation ponds and SOP processing with a level of accuracy of negative 30/plus 50 per cent, including equipment, materials, indirect costs and contingencies during the construction period, is estimated to be $243.4-million (U.S.).
• The project economic analysis indicates that, for the base case, the after-tax NPV (10 per cent) is $191.7-million (U.S.) and IRR is 20.0 per cent.
• Project results remain positive, even with important negative variations on the driver variables, indicating project strength and resilience; thus, the PEA study completed by Advisian indicates the project’s proposed 10,000 t/y LCE concentrated brine and 84,000 t/y SOP fertilizer operation has the potential to generate strong economic returns. A National Instrument 43-101 technical report is required to be filed, in conjunction with the disclosure of the PEA in this news release, within 45 days.
Afzaal Pirzada, PGeo, a qualified person as defined by NI 43-101 and a consultant to the company, has reviewed and approved the all disclosure of scientific or technical information in this news release.
About International Lithium Corp. International Lithium has a significant portfolio of projects, strong management, and a strategic partner and keystone investor, Jiangxi Ganfeng Lithium Co. Ltd., a leading China-based lithium product manufacturer. The company’s primary strategic focus is now on the Mariana project in Argentina and on the Raleigh Lake project in Canada.
The company has a strategic stake in the Mariana lithium-potash brine project located within the renowned South American lithium belt that is the host to the vast majority of global lithium resources, reserves and production. The Mariana project strategically encompasses an entire mineral-rich evaporite basin totalling 160 square kilometres, which ranks as one of the more prospective salars, or salt lakes, in the region.
We seek Safe Harbor.
Maurice Brooks, Kirill Klip, David Shen, Ross Thompson, Xiaoshen Wang, John Wisbey
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