VANCOUVER (miningweekly.com) – Budding Canadian lithium producer Nemaska Lithium has published more bullish scenarios for its flagship Whabouchi mine and concentrator, located in the Eeyou Istchee James Bay territory, and on the hydromet plant, located in Shawinigan, both in Quebec.
With more than a year’s experience at the mine and close to nine months operating portions of the plant, coupled with drilling success, management is confident it can increase both lithium carbonate equivalent (LCE) output by 20% and extend the life-of-mine LOM by 27%, or seven years, to 33 years.
Nemaska said annual revenue is expected to increase by 58%, while capital intensity is expected to increase by only 16%. Over the 33-year LOM, Whabouchi is expected to more than double previous revenue estimates of C$9.2-billion, to C$19.2-billion.
The total capital expenditure is 46% higher over the 2016 feasibility study at C$801-million, mainly owing to added flexibility of the plant to create desired lithium products, including additional LCE production expectations and a more robust flow sheet.
“We have increased the overall capacity of the commercial project by 20% and added flexibility to the hydromet plant, increased the lithium carbonate production capacity up to 16 000 t/y, while maintaining the flexibility to produce up to 100% of lithium hydroxide, as both products are in high demand and the known lithium carbonate sales price is now very similar to that of lithium hydroxide,” said president and CEO Guy Bourassa.
About 42% of the cost increase comes from the mine and the remainder of costs are still expected to be among the lowest quartile for lithium producers and for a hard rock project. It compares well to a recent brine start-up at Orocobre’s Olaroz mine, in Northern Argentina.
However, the after-tax cash flow is up 146% to C$9.6-billion, from C$1.9-billion previously, with the net present value, using an 8% discount rate, more than doubled to C$2.4-billion, from C$1.2-billion estimated previously. The after-tax internal rate of return remains essentially the same at 30.5%, compared with 30.3% forecast previously.
Interestingly, the capital payback only rises to 2.9 years, instead of the 2.7 years previously predicted.
The operating expenditure of the Whabouchi project is also higher, based on the company’s early operating experience and the ability to create an even better 6.3% lithium oxide spodumene concentrate.
With lithium pricing wind at its back, the result is a much stronger economic outlook. The Whabouchi project now can boast C$14 640 cash operating margins, which is double that reported in the 2016 feasibility study. The 2018 feasibility study is based on 47% higher lithium hydroxide pricing at $14 000/t, with the average lithium carbonate price climbing 67% to $11 719/t.
Over the LOM production, the company is expected to produce seven-million tonnes spodumene concentrate, which will be converted into about 770 000 t of battery-grade lithium hydroxide and about 361 000 t of battery-grade lithium carbonate, which equates to about 213 000 t/y of concentrate being converted to about 23 000 t/y battery-grade lithium hydroxide and 11 000 t/y of lithium carbonate.
The hydromet plant capacity is expected to increase 20% from 27 400 t/y, to 33 000 t/y LCE. LCE output capacity is now expected to be 16 000 t/y – a five-fold increase over the previous capacity.
"We have been actively engaged on project financing for several months and are now at the stage of confirmatory due diligence with numerous groups interested in participating in the financing of the project. Given the alternatives being evaluated, we are confident that the project financing will be completed during the current quarter,” Bourassa advised.
Meanwhile, Nemaska also reported on Monday that it had produced – and has made available for pick-up by its customer – another 2 t of battery-grade lithium hydroxide solution, made from Whabouchi spodumene concentrate. To date, the company has delivered 3 t of lithium hydroxide solution produced from its Whabouchi concentrate.
An independent laboratory has confirmed that the lithium hydroxide solution produced by Nemaska to date more than complies with market lithium hydroxide values. Cathode producers are mainly concerned with the impurity levels in the lithium hydroxide they receive from suppliers, as these impurities impact on the overall performance of the battery.
Nemaska also reported on Monday that it had received an instalment payment of C$4.6-million from Sustainable Development Technology Canada for having achieved the second milestone in the development of the Phase 1 lithium hydroxide plant.
Nemaska’s TSX-listed equity is trading under pressure on Tuesday, as investors contemplate added equity requirements due to be met during the current quarter. After initially gaining more than 2% after the morning bell, the equity dipped more than 12% to an intraday low of C$2.10 a share.