PERTH (miningweekly.com) – A preliminary economic assessment (PEA) of the Rincon lithium project, in Argentina, has estimated a 16.5-year mine life based on the production of 10 000 t/y of high value lithium carbonate.
ASX-listed Argosy Minerals on Wednesday reported that the PEA estimated a pre-tax net present value of $399-million and an internal rate of return of 53%, with the project to cost some $141-million to develop.
The PEA estimated an average annual pre-tax free cash flow of $74-million during commercial production, with earnings before interest, taxes, depreciation and amortisation (Ebitda) margins of 61%.
Argosy noted that the PEA financials excluded Rincon’s potential to produce some 35 000 t/y of potash and 25 000 t/y of magnesium hydroxide as by-products.
“We are delighted to deliver the preliminary economic assessment conducted on the Rincon lithium project, which confirms that our project is one of the best new lithium development projects worldwide in terms of high investment returns, Ebitda margins and market significance,” said Argosy MD Jerko Zuvela.
“The PEA, together with our operational Stage 1 plant provides Argosy with a convincing investment proposition to secure additional project finance and strategic partnerships to continue our progress to commercial development.”
Zuvela said that the results of the PEA further validated the company’s fast-track development strategy to fully develop the Rincon lithium project towards commercial production.
Subject to funding, Argosy will now look to undertake environmental permit work, with the aim of having these approved by the first quarter of 2019, while awarding major contracts by the second quarter of 2019, allowing construction to start in the third quarter of 2019.
First lithium carbonate production has been targeted for the first quarter of 2021.
Argosy said that the company would require additional funding to undertake development work at Rincon, adding that the company could pursue alternative strategies, including the complete or partial sale of the asset, or a joint venture.