Australia-listed Lepidico has rerun the economics of its Phase 1 project, comprising a mine in Namibia and a chemical conversion plant in Abu Dhabi, to reflect prevailing lithium price forecasts and to include new ore reserves.
Phase 1 investment fundamentals remain robust, the company said on Monday, reporting an aftertax net present value (NPV), using an 8% discount, of $457-million for the integrated project.
The pretax NPV is $522-million, of which 32% is attributable to the Karibib operation, in Namibia, and 68% to the Abu Dhabi chemical conversion operation.
Capital cost estimates remain unchanged at $266-million and the payback for the project remains less than three years, Lepidico said.
The greatest single variance in valuations since the May 2020 definitive feasibility study (DFS) is associated with the prevailing BMI lithium price forecast.
Lepidico said that lithium chemical prices have been particularly volatile over the past five years, and as a result, price forecasts have evolved rapidly.
Further, the inclusion of the Helikon 4 satellite openpit and the surface stockpile material at Rubicon ore reserves has added more years to the Phase 1 project life. The additional reserves extended the operating life by four years to 19 years on higher grade material of 0.62% lithium oxide.
Lepidico also said that the integrated Phase 1 project is positioned in the second quartile of the global all-in sustaining costs (AISC) curve for 2030 after by-product credits are taken into account.
Life-of-mine AISC are estimated to average $8 730/t lithium carbonate equivalent (LCE) ($7 680/t lithium hydroxide) while C1 costs are estimated at $5 890/t LCE ($5 185/t lithium hydroxide), after by-product credits.
Chemical plant by-products include caesium, rubidium, amorphous silica, sulphate of potash and a gypsum-rich residue, with no solid process waste.
The BMI 2023 cost curve indicates that the marginal cost of production is over $35 000/t LCE. However, at prevailing prices of $20 000/t to $25 000/t, some high cost lithium production has been curtailed. The marginal cost of production in 2030 is forecast to be about $30 000/t LCE, which provides fundamental support for the long term price forecast of US$28 980/t LCE real ($30 980/t lithium hydroxide).
Meanwhile, Lepidico said that it is continuing to work with advisers to develop funding structures and secure conditional finance commitments this quarter.
The company’s financing strategy for the vertically integrated project has centred on core funding from the public sector for the Karibib mine-concentrator and the Abu Dhabi chemical plant. However, the firm noted that these funding processes have taken “far longer than originally envisaged”.