TSX Venture Exchange Symbol: AAL
Highlights
- Proven and Probable Mineral Reserves of 1.02Mt of LCE
grading 480 mg/l Lithium sufficient to support 30 years of
production
- Reserves and production plan derived from a Measured and
Indicated mineral resource base of 4.8Mt LCE (April 2019) with appropriate modifying factors
applied
- Reasonable prospects to convert 1 Mt of Inferred
resources in the lower sand units of the salar into Measured and
Indicated resources through recommended additional drilling and
test work in the next phase of development
- Indicated Resources of 894,000t LCE in the West Fan Unit
have not yet been included in reserve modelling.
- US$ 671 million after-tax
NPV at 8% discount rate and after-tax IRR of 20.9 % based on a
25,000 tpa nameplate production facility of Battery Grade Lithium
Carbonate
- Pre-Production CAPEX estimate of US$ 446 million for a 25,000 tpa Lithium
Carbonate operation including contingency at 20 %
- Average OPEX of US$
3,560/tonne Battery Grade Lithium Carbonate at steady state
post ramp-up
- Processing facilities design based on proven solar
evaporation technology and conventional lithium brine processing,
leveraging and optimising JV partner Orocobre's project
experience
VANCOUVER, Oct. 22, 2019 /CNW/ - Advantage Lithium Corp.
(TSX Venture AAL) ("Advantage" or the "Company") is
pleased to announce the results of a Pre-Feasibility Study ("PFS")
based on production of Battery Grade Lithium Carbonate from a 25
ktpa nameplate capacity stand-alone plant located at its Cauchari
JV in the province of Jujuy, Argentina. The PFS was prepared by Worley,
Chile S.A. ("Worley"), a leading integrated independent engineering
services firm with extensive experience in the design and
construction of lithium brine projects in Argentina and Chile. FloSolutions SpA (FloSolutions)
prepared the resource and reserve estimates for the PFS as
summarised in this announcement.
Callum Grant, Interim CEO
commented "The PFS now demonstrates that we have a
solid project to a much improved level of confidence compared to
the 2018 Preliminary Economic Assessment. Not only have we doubled
the resource but more importantly those resources were upgraded to
Measured and Indicated categories earlier in 2019. Now we have a
Proven and Probable Mineral Reserve demonstrating the economic
viability of the asset to support long-life supply of battery-grade
Lithium Carbonate to the EV market; we're now at a different level
where the value of the asset is clear.
Based on these encouraging results, our intention is to engage
quickly with several parties who have expressed an interest in
making an investment decision in the Cauchari JV project."
Table 1: Pre-Feasibility Study Highlights
|
PFS
2019
|
Installed Production
Capacity (lithium carbonate)
|
25,000
tonnes
|
After-Tax Net
Present Value ("NPV") @ 8% Discount Rate
|
$671
million
|
After-Tax Internal Rate of Return
("IRR")
|
20.9%
|
Initial
Capital Expenditures
|
$ 446
million
|
Cash Operating
Costs (per tonne of lithium carbonate)
|
$ 3,560
|
Mine Life
|
30 years (note
3)
|
Payback Period
(from commencement of production)
|
4yrs 10mo
|
Average selling
price
|
US$ 12,166/tonne
LCE
|
Notes:
|
1.
|
All PFS costs are
quoted in Q3 2019 U.S. dollars
|
2.
|
Project economic
evaluation includes current Argentinian federal and provincial
fiscal legislation
|
3.
|
Based on current
Reserve Statement as of 15-September-2019
|
Capital Costs
The total Direct Capital cost of the
Project for a 25 ktpa nameplate facility of lithium carbonate is
estimated at US$ 318 million.
The total initial capital cost estimate is US$ 446 million which includes Direct Costs,
Indirect Costs and Contingency costs of US$
74 million estimated at 20% of the total initial capital
costs.
Table 2: Initial Capital Cost Breakdown
Item
|
US$
Million
|
Direct Capital
Costs
|
318
|
Brine wellfield
|
13
|
Evaporation Ponds
|
120
|
Liming Plant
|
7
|
Lithium Carbonate Plant
|
60
|
General Services including power supply
|
88
|
Infrastructure
|
30
|
Indirect Capital
Costs
|
54
|
Contingency (20%)
|
74
|
TOTAL CAPEX,
MUSD
|
$446
|
Deferred Capital Expenditure
The Project economic
evaluation includes additional capital expenditure totalling
US$ 157.5 million for expansion of
the well field production from the initial NW sector into the SE
sector along with increasing the evaporation pond area and
additional salt harvesting machinery purchasing, in order to
maintain stable lithium production over the life of mine. The
deferred capital expenditure is planned for year 5 and year 9.
In addition, the Project includes sustaining capital expenditure
of US$ 2.7 million per year and a
peak working capital expenditure of US$ 33.5
million.
Operating Costs
The Operating Costs estimates are also
divided into Direct Costs and Indirect Costs, as shown below in
table 3. This table reflects the variations in costs produced by
the effect of expanding the well field production from the initial
NW sector into the SE sector along with increasing the evaporation
pond area.
The life of mine (LOM) average Direct Costs associated with the
brine extraction and processing operations are estimated at
US$ 3,493 per tonne of lithium
carbonate. Indirect Costs include G&A and some local
costs and are estimated at $67 per
tonne for a Total OPEX average of US$
3,560 per tonne.
Table 3: Operating Cost Breakdown
Operational
costs
|
Initial
costs
|
Phase
1
(yr.
5)
|
Phase
2
(yr.
10)
|
US$/tonne
|
US$/tonne
|
US$/tonne
|
DIRECT
COSTS
|
|
|
|
Chemical
reagents
|
1,676
|
1,707
|
1,610
|
Salt removal and
transport
|
458
|
524
|
666
|
Energy
|
260
|
265
|
273
|
Manpower
|
168
|
181
|
209
|
Catering and camp
services
|
94
|
98
|
109
|
Maintenance
|
300
|
313
|
409
|
Freights
|
225
|
225
|
225
|
DIRECT COSTS
SUBTOTAL
|
3,181
|
3,314
|
3,501
|
INDIRECT
COSTS
|
|
|
|
General &
Administration - Local
|
67
|
67
|
67
|
INDIRECT COSTS
SUBTOTAL
|
67
|
67
|
67
|
TOTAL PRODUCTION
COSTS
|
$3,248
|
$3,381
|
$3,569
|
Accuracy of both CAPEX and OPEX cost estimates are within – /+
25%.
Mineral Resources, Reserves and Mine
Plan
The Project's Mineral Resources were defined in
the Technical Report: "Cauchari JV Project, Updated Mineral
Resource Estimate" prepared by FloSolutions with an effective date
of April 19, 2019 and summarized in
Table 4 below:
Table 4: Cauchari JV Project Lithium and Potassium Resources
estimate1, 2 (April 19, 2019)
|
Measured
(M)
|
Indicated
(I)
|
M+I
|
Inferred
|
Aquifer volume
(km3)
|
10
|
21
|
31
|
11
|
Mean specific
yield
|
6.6%
|
5.9%
|
6.1%
|
5.6%
|
Brine volume
(km3)
|
0.6
|
1.2
|
1.9
|
0.6
|
|
Li
|
K
|
Li
|
K
|
Li
|
K
|
Li
|
K
|
Mean grade
(g/m3)
|
35
|
291
|
26
|
238
|
29
|
255
|
27
|
225
|
Mean concentration
(mg/l)
|
527
|
4,438
|
452
|
4,145
|
476
|
4,238
|
473
|
3,867
|
Resource (kt Li,
K)
|
345
|
2,800
|
550
|
5,000
|
900
|
7,800
|
290
|
2,400
|
Resource (kt LCE,
kt potash)
|
1,850
|
5,400
|
2,950
|
9,600
|
4,800
|
14,900
|
1,500
|
4,600
|
Note 1:
|
numbers may not add
due to rounding
|
Note 2:
|
lithium is converted
to lithium carbonate equivalent (LCE) with a conversion factor of
5.32. Potassium is converted to potash with a conversion factor of
1.91
|
The resource estimation work was followed by the development of
a three-dimensional numerical flow and transport model (FEFLOW
Code) to evaluate options for wellfield configurations and brine
production schedules and to develop a Reserve Estimate. The
modeling work was carried out by the DHI Group1 under
supervision of FloSolutions. Table 5 summarizes the Reserve
Estimate for the Cauchari JV Project.
Table 5: Cauchari JV Project Lithium Reserve Estimate
(September 15, 2019)
Category
|
Year
|
Brine
Volume
(Mm3)
|
Average
Li
concentration
(mg/l)
|
Li metal
(kt)
|
LCE
(kt)
|
Proven
|
1-7
|
75
|
560
|
42
|
223
|
Probable
|
8-31
|
317
|
470
|
149
|
793
|
Total
|
1-31
|
392
|
480
|
191
|
1,016
|
Notes to the Cauchari
JV Lithium Reserve Estimate:
|
|
|
1.
|
Effective date of
this Reserve Estimate is: 15 September 2019.
|
2.
|
The Lithium Reserve
Estimate represents the lithium contained in the brine produced by
the wellfields as input to the evaporation ponds. Brine production
initiates in Year 1 from wells located in the NW Sector. In year 9,
brine production switches across to the SE Sector of the
Project.
|
3.
|
The PFS wellfield
configuration maintains LOM Li concentrations from all pumping
wells above 350 mg/l, which is considered a practical cut-off grade
for the lithium reserve estimate.
|
4.
|
Approximately 21
percent of M+I Resources are converted to Total
Reserves.
|
5.
|
Potential
environmental effects of pumping have not been comprehensively
analysed at the PFS stage. Additional evaluation of potential
environmental effects will be done as part of the next stage of
evaluation.
|
6.
|
Additional
hydrogeological test work will be required in the next stage of
evaluation to adequately verify the quantification of hydraulic
parameters in the Archibarca fan area and in the Lower Sand unit as
indicated by the sensitivity analysis carried out on the model
results.
|
7.
|
Mineral Reserves are
derived from and included within the M&I resources in the
resource Table 4 above.
|
8.
|
Indicated Resources
of 894,000t LCE contained in the West Fan Unit are not included in
this PFS production profile. There is a reasonable prospect that
through additional hydrogeological test work Inferred Resources in
the Lower Sand Units will be converted to M+I Resources.
|
9.
|
Numbers may not add
due to rounding.
|
______________________
|
1
|
The DHI Group is a
global leader in surface and groundwater modeling solutions; DHI is
the developer of the FEFLOW modeling software. For more
information see www.dhigroup .com
|
Processing
The process is unchanged from the PEA
design and scaled up due to the increased production capability
resulting from expanded lithium resource. Brine is pumped to the
surface and directed to a series of evaporation ponds and since
Cauchari brine is a low Mg/Li type of brine, the magnesium is
removed with slaked lime as magnesium hydroxide. The brine also
contains sufficient sulphate in order to precipitate the calcium as
gypsum liberated from the lime. During the evaporation process
principally halite salts, glaserite and some sylvite and borate
salts are crystalized generating a concentrated lithium solution
suitable to precipitate lithium carbonate. The concentrated lithium
solution is further polished in order to reduce the calcium,
magnesium and other metal levels in order to produce an industrial
technical grade, which is then re-crystallized in order to make a
very pure battery grade product. Battery grade lithium
carbonate product is planned to be transported to Antofagasta, Chile for shipment overseas.
Production is modelled to start in 2022 with the plant ramping up
over 3 years to a steady state of 25 ktpa lithium carbonate.
Production Profile Over Life Of Mine
Advantage
Lithium's marketing and product development strategy has been
established to meet customer specifications and develop QA/QC
protocols for offtake arrangements to achieve Battery Grade as the
operation ramps up.
The production mix and profile used in the cash flow model
during the ramp-up and operational life is as follows:
Table 6: LCE Production Profile2 (tonnes per
annum)
Year
|
Technical
Grade
|
Battery
Grade
|
Total
|
1
(Q3&Q4)
|
5,000
|
0
|
5,000
|
2
|
5,000
|
12,000
|
17,000
|
3
|
1,500
|
18,500
|
20,000
|
4-18
|
0
|
25,000
|
25,000
|
19-25
|
0
|
21,000
|
21,000
|
26-30
|
0
|
20,000
|
20,000
|
31
(Q1&Q2)
|
0
|
8,000
|
8,000
|
Total
|
11,500
|
660,500
|
672,000
|
Note 2: based on
recovery factor of 66% from brine produced from wellfield bore to
final product
|
The operation plan for the PFS is based on the extraction of the
lithium-rich brine by a conventional wellfield with pump
installations and proven processing techniques. This has been
simulated over the life of mine by FloSolutions, resulting in the
Reserve Estimate, summarised in table 5 above.
The Reserve Estimate represents the lithium contained in the
brine produced by the wellfields as input to the evaporation ponds.
Brine production initiates in Year 1 from wells located in the NW
Sector. In year 9, brine production switches across to the SE
Sector of the Project until year 31 when currently defined reserves
are depleted.
Lithium Markets and Price
A marketing and product
pricing study, used in the project economic analysis, was completed
by Roskill, UK an independent marketing consultant engaged by
Advantage Lithium.
Economic Analysis
Project design, production and cost
parameters were input to the Worley Discounted Cash Flow Model for
the PFS. Table 7 summarises the model results based on
discount factors 6%, 8% and 10% with mid-range 8% selected as the
base case:
Table 7: Economic Evaluation Results
Discount
Rate
|
After
Tax
|
Before
Tax
|
NPV
US$
million
|
IRR
%
|
NPV
US$
million
|
IRR
%
|
6%
|
959
|
20.9
|
1,609
|
26.2
|
8%
|
671
|
1,158
|
10%
|
468
|
841
|
Project economic evaluation incorporates current Argentinian
federal and provincial fiscal tax legislation and royalties,
including assumptions regarding provincial participation, to be
confirmed during the next stage of development.
The economic analysis is based on brine grades and lithium
volume estimated from the company's updated Resource and Reserve
Estimates used to develop the production plan.
A weighted average price of US$
12,166 per tonne of lithium carbonate Battery Grade was used
over the life of mine.
An NI 43-101 report is required to be filed, in conjunction with
the disclosure of the PFS in this news release, within 45 days.
The technical information contained in this News Release has
been reviewed and approved by Marek
Dworzanowski, of Worley and Frits
Reidel of FloSolutions. Both Marek
Dworzanowski and Frits Reidel
are "Independent Qualified Persons" as the term is defined in
National Instrument 43-101.
To find out more about Advantage Lithium Corp. please contact
the company at (604) 343-3760 or by email
at info@advantagelithium.com
ADVANTAGE LITHIUM CORP.
Per: "Callum
Grant"
About Advantage Lithium Corp.
Advantage Lithium Corp is focused on developing its 75%
owned Cauchari lithium project, located in Jujuy, Argentina.
The Company also owns 100% interest in three additional lithium
exploration properties in Argentina: Antofalla, Incahuasi, and
Guayatayoc. The Company is headquartered in Vancouver, British Columbia and trades on the
TSX Venture Exchange (TSX-V: AAL) and OTCQX Best Market in the U.S.
(OTCQX: AVLIF).
Further information about the Company can be found
at www.advantagelithium.com.
Cautionary Statement:
Certain information contained in this press release constitutes
"forward-looking information", within the meaning of Canadian
legislation. Generally, these forward-looking statements can be
identified by the use of forward-looking terminology such as "is
expected", "intends", or "has the potential to". Forward looking
statements contained in this press release may include statements
regarding the future operating or financial performance of
Advantage that involve known and unknown risks and uncertainties
which may not prove to be accurate. Actual results and outcomes may
differ materially from what is expressed or forecasted in these
forward-looking statements. Such statements are qualified in their
entirety by the inherent risks and uncertainties surrounding future
expectations. The forward-looking statements included in this press
release are made as of the date of this press release and the
Company disclaims any intention or obligation to update or revise
any forward-looking statements, whether as a result of new
information, future events or otherwise, except as expressly
required by applicable securities legislation.
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
SOURCE Advantage Lithium Corp