PERTH (miningweekly.com) – Critical minerals developer Allkem has reported a more than $572-million cost blowout at its capital projects being developed globally following a review and updated technical studies as part of its proposed merger with NYSE-listed Livent Corporation.

The company told shareholders this week that the updated studies had confirmed the robust economics and tier-one nature of the asset base and had further de-risked both company growth and future production.

“These project updates confirm the robust economics and tier-one nature of our asset base, further de-risking company growth, future production and profitability. The studies, which are underpinned by our significant operating and project development experience, demonstrate low costs and low capital intensity that will maximise margins and shareholder returns throughout the pricing cycle,” said MD and CEO Martin Perez de Solay.

“The Allkem project portfolio provides us with a solid base to enhance our vertical integration strategy and relationships downstream in the global supply chain.”

JAMES BAY

Allken this week reported that an updated feasibility study for the James Bay lithium project in Quebec, had resulted in the capital cost increasing from the $285.8-million estimated in the 2021 feasibility study, to $381.5-million, in line with inflationary conditions.

The updated study was based on an average production of 311 000 t/y of spodumene concentrate, with an 18.8-year mine life, compared with the 321 000 t/y production targeted in 2021 over a mine life of 19 years.

With the two-million-tonne-a-year processing plant design remaining unchanged, the project’s post-tax net present value (NPV) is now estimated at $1.7-billion, up from the $823-million estimated in 2021, while its post-tax internal rate of return has increased from 35.2% to 45.4%.

Cash operating costs for James Bay are now estimated at $407/t of lithium oxide concentrate, up from the $333/t previously estimated.

“The feasibility study update results confirm the exceptional value that will be generated for all stakeholders through the development of this project. Inflationary impacts on operating and capital costs are within expectations and as seen at other projects, however, the project economics remain strong with an increase of more than 100% in the pre-tax NPV to $2.9-billion reflecting an increase in lithium price assumptions and market outlook,” said Perez de Solay.

“Pleasingly, there remains significant potential for this resource to grow as we conduct further drilling to test extensions of the recently upgraded resource of 110 million tonnes.”

SAL DE VIDA

At Sal de Vida, in Argentina, development capital has increased from the $271-million in the previous study to $374-million for mechanical completion, with the Stage 2 expansion capital increasing from $523-million to $657-million.

The financial metrics for the Stage 1, 15 000 t/y lithium carbonate asset have seen the pre-tax NPV increase from the $1.23-billion in the previous report, to $2.01-billion, while operating costs have increased from $3 612/t to $4 529/t owing to the increased prices of soda ash, lime, natural gas and labour costs.

For the Stage 1 and Stage 2 operation, and a production rate of 45 000 t/y of lithium carbonate, the pre-tax NPV has increased from $3.04-billion to $5.51-billion, with the operating cost increasing from $3 280/t to $4 003/t.

“The updated study results clearly demonstrate the exceptional value and robustness of this project and its future expansion. As expected, global inflation has resulted in higher capital and operating costs but it remains clear that we will deliver material shareholder value through the development of Sal de Vida,” said Perez de Solay.

“Pleasingly the resource and reserve have continued to grow and will underpin future development.”

CAUCHARI

At the Cauchari lithium brine project, in Argentina, Allkem has reviewed and updated the project’s mineral resource and ore reserves, the project cost and schedule estimates, and the project economics.

Compared with the 2019 prefeasibility study, development costs have increased from $446-million to $659-million for mechanical completion, based on a 25 000 t/y of lithium carbonate production capacity.

Substantial mechanical completion, pre-commissioning and commissioning activities are due for completion in the first half of 2027, with first production expected by the second half of 2027 and ramp-up likely to take one year.

The project’s pre-tax NPV has increased from $0.84-billion to $2.52-billion.

“The updated study results clearly demonstrate the value of the Cauchari project on a stand-alone basis. With the study update being based on the historic work performed by Advantage Lithium Corporation we do see substantial opportunities to integrate this asset into our Olaroz complex. These opportunities would likely reduce capital and operating costs and these are being explored as part of our Olaroz Stage 3 expansion studies,” said Perez de Solay.

OLAROZ

At Olaroz, also in Argentina, the project’s post-tax NPV is now estimated at $4.56-billion, up from the $1.74-billion estimated in a 2022 economic study, based on the Stage 1 and Stage 2 operation producing 42 500 t/y of lithium carbonate equivalent.

Long-term operating costs for the combined Stage 1 and Stage 2 operation are estimated at $4 149/t lithium carbonate equivalent, up from the $3 206/t estimated in 2022.

Olaroz Stage 1 is the original project which commenced operation between 2013 and 2015 during the production ramp-up, with a maximum production capacity of 17 500 t/y of lithium carbonate. The Olaroz Stage 2 expansion, targeting an additional 25 000 t/y of lithium carbonate, produced first wet concentrate in July 2023, and is scheduled to commence production in the second half of 2023.

Ramp-up activities would take one year to complete.