TORONTO (miningweekly.com) – Quebec-based lithium/tantalum project developer Critical Elements has struck a “game changing” strategic collaboration agreement with an unnamed chemical company that includes offtake for all products produced from the Rose project, in Quebec.

Without identifying its strategic partner, Critical Elements said its partner had more than 50 years of history, operating worldwide and being a financially strong company with specific knowledge, it guaranteed access to the major markets worldwide with an entry to significant customers.

"This is truly a game changing agreement for the company. The company now has a strong partner to complete its feasibility study and advance the Rose project," stated Critical Elements president and CEO Jean-Sebastien Lavallee.

As a result of the agreement, a feasibility study would be completed in collaboration with the strategic technical and commercial partner, who would in return have the option to participate in the project by providing equity in the project financing for an interest of up to 25%, should the feasibility study support the technical viability and economic practicability of the Rose project.

Subject to finalising the offtake agreement, the strategic partner would have the exclusive right to buy all Critical Elements’ products, including spodumene concentrate (technical and chemical grade), all lithium chemicals (carbonate, hydroxide and chloride), mica and tantalum concentrate.

The parties would use their commercially reasonable efforts to finalise and execute the offtake agreement by no later than 60 days after the feasibility study had been completed. The partner had also been granted a right of first refusal to become the exclusive offtaker for all products on any of the future projects of Critical Elements, or its affiliates.

With the diversified Rose project products and its long-term 17-year mine life, Critical Elements would be positioned to produce ceramic-grade lithium concentrate as well as meet the specifications for the fast-growing lithium battery market. The tantalum and mica concentrate also gave additional by-product diversification, making the Rose project unique among all the lithium assets, Lavallee said.

Lithium was critical to the future growth of hybrid and electric car production and mobile consumer electronic devices.

As with a number of minor metals, new technologies, leading to the miniaturisation of electronic devices, had resulted in increased use of tantalum. Tantalum-based capacitors, in particular, were on the rise and were increasingly used in automotive electronics, mobile phones, personal computers and wireless devices.

POSITIVE METRICS
A 2011 financial analysis of the Rose project based on price forecasts of $260/kg for tantalum pentoxide (Ta₂O₅) contained in a tantalite concentrate and $6 000/t for lithium carbonate (Li₂CO₃) showed an estimated after-tax internal rate of return (IRR) of 25% for the Rose project, with an estimated net present value (NPV) of C$279-million, at an 8% discount rate.

The payback period was estimated at 4.1 years. The pre-tax IRR was estimated at 33% and the NPV at $488-million, at a discount rate of 8%.

The operation was expected to produce 26 606 t/y of high-purity (99.9% battery grade) Li₂CO₃ and 206 670 lb/y of Ta₂O₅ over a 17-year mine life.

The project hosted a Canadian National Instrument 43-101-compliant indicated resource of 26.5-million tonnes of 1.30% lithium oxide (Li₂O) equivalent or 0.98% Li₂O and 163 parts per million (ppm) Ta₂O₅ and an inferred resource of 10.7-million tonnes of 1.14% Li₂O equivalent or 0.86% Li₂O and 145 ppm Ta₂O₅.