Name of the Project
Pilgangoora lithium/tantalum Stage 2 expansion project.

Location
Western Australia.

Project Owner/s
Pilbara Minerals.

Project Description
A definitive feasibility study has delivered exceptional results and has reaffirmed the Pilgangoora project’s scale, quality, competitive forecast cash-operating costs, robust operating margins, long life and exceptional economic returns.

The study has outlined a compelling business case for starting the expansion of the Pilgangoora lithium/tantalum project at five-million tonnes a year of run-of-mine ore production, and processing capacity within months of starting the production of spodumene concentrate from the two-million-tonne-a-year Stage 1 operation.

The Stage 2 openpit mine is based on the processing of five-million tonnes a year of ore feed to produce a chemical-grade spodumene concentrate using an ore reserve of 80.3-million tonnes grading 1.27% lithium oxide or spodumene, 123 parts per million (ppm) tantalum pentoxide and 1.08% iron oxide.

Openpit mining will continue to be delivered by mining contractors using conventional drill-and-blast, load-and-haul operations.

Ore will be hauled using a skyway arrangement to a grade-based finger on the run-of-mine pad from where the ore will be blended and fed into the processing plant. Mine schedules and cost modelling assume that 100% of the ore will be rehandled to feed into the processing plant.

To maximise the upside potential of the processing plant to achieve a feed capacity higher than five-million tonnes a year, the processing plant design will retain the current two-million-tonne-a-year (Train 1) circuit in its current form and introduce a second three-million-tonne-a-year processing circuit (Train 2) to operate in parallel with Train 1. This is in line with the prefeasibility study scenario that proposed two 2.5-million-tonne-a-year configurations.

Designing the circuit in this manner provides processing flexibility (upside) for the plant to achieve higher throughput capacity and/or processing a wider ore feed variation for nominal additional capital.

Waste will be hauled to the tailings management facility as part of cell construction or ex-pit waste landforms.

The mining fleet size in terms of volumetric capacity will remain largely unchanged; however, the number of drills, trucks and excavators needed during the mining operation will increase to accommodate the increased ore and waste mining to feed the processing plant.

The Stage 2 expansion will be a globally cost-competitive operation producing between 800 000 t/y and 850 000 t/y of high-quality spodumene concentrate over its 17-year mine life. However, Pilbara Minerals is confident that the mine life will be extended through the conversion of mineral resources to ore reserves, based on the recent May 2018 mineral resource update, which showed a 35% increase in the total measured and indicated resource to 129-million tonnes grading 1.35% lithium, 123 ppm tantalum pentoxide and 0.61% iron oxide.

Potential Job Creation
Not stated.

Net Present Value/Internal Rate of Return
The project has an after-tax net present value, at a 10% discount rate, of A$2.16-billion.

Capital Expenditure
Stage 2 capital expenditure is estimated at A$230.9-million.

Planned Start/End Date
Construction is expected to start in November 2018, and commissioning and first production is targeted late in the fourth quarter of 2019.

Latest Developments
Pilbara Minerals has closed the book on partnering at its Pilgangoora lithium project announcing that it will undertake an incremental approach to the Stage 2 expansion.

The company appointed Macquarie Capital in March this year to assist in managing a partnering process for the Pilgangoora project, which considered a range of options. These include the outright acquisition of between a 20% and 50% equity interest in the project, a long-term offtake agreement, the joint development of lithium hydroxide conversion facilities and a product streaming financing proposal.

Pilbara received a range of proposals from domestic and global parties, however, none of the proposals represented an ‘appropriate valuation’ for the Pilgangoora project, prompting Pilbara to close the partnering process.

Pilbara’s attention is now focused on optimising the current Stage 1 operation and advancing the Stage 2 expansion in a "measured and sensible" manner.

In response to varying customer timelines, Pilbara will undertake the expansion by subdividing its development into an incremental and phased build-out, which will substantially reduce the upfront capital expenditure (capex).

The revised Stage 2 expansion being considered will require changes to the process plant only, with no changes required for power, crushing or logistics facilities.

The revised development will use latent capacity within the Stage 1 plant, while an alternative mass balance flow is being considered to allow for the production of more concentrate from the heavy-media separation (HMS) circuit.

Additional equipment will be included within the scope of the first phase of the revised expansion strategy to further improve the water quality supporting both the existing Stage 1 and Stage 2 circuits, which will aid the operation and maintenance of the HMS circuit.

Pilbara is now conducting further technical studies for the revised Stage 2 development in the hopes of completing a feasibility study by December this year, positioning the company to make a final investment decision thereafter.

As part of any final decision for the expansion, Pilbara will re-evaluate its funding options to take into account the expected reduction in upfront capex for the first phase of the revised Stage 2 development, which is expected to cost between A$60-million and A$70-million.

The company has reported that funding plans could include a combination of existing cash, future operating cash flows, revised customer prepayments under existing Stage 2 offtake agreements, and an appropriate mix of debt and equity.

The proposed Stage 3 expansion will be placed on hold until market demand justifies the development.

Key Contracts and Suppliers
Trepanier (geology and resources); AMC Consultants (mining and mine design); Minnovo Engineers (process plant infrastructure, including plant capital and operating estimates); ATC Williams (tailings management facility and geotechnical) and Groundwater Resource Management (hydrogeology and hydrology).

On Budget and on Time?
Not stated.

Contact Details for Project Information
Pilbara Minerals, tel +61 8 6266 6266 or fax +61 8 6266 6288.