Noram Lithium PEA is out. NORAM LITHIUM CORP: ZEUS PEA SHOWS 31% AFTER-TAX IRR USD$1.299 BILLION AFTER-TAX NPV
Noram Lithium Corp. has released the summary results of a National Instrument 43-101-compliant preliminary economic assessment (PEA) for the high-grade lithium deposit at its wholly owned Zeus lithium project located less than one mile from Albermarle's Silver Peak mine, which is currently the only lithium production facility in the United States. The PEA was prepared by ABH Engineering (ABH) an independent engineering services firm with extensive experience in mining and mineral processing. All dollar values are in U.S. dollars.
PEA highlights:
- Robust economics:
- $1,299-million net present value (NPV): base case after-tax net present value (NPV) of $1,299-million (8-per-cent discount rate);
- 31-per-cent internal rate of return (IRR): base case after-tax IRR of 31 per cent;
- Capital costs (capex): estimated initial capex of $528-million with after-tax payback period of 3.23 years;
- Gross revenue of $303.4-million/year;
- Low operating cost: operating cost (opex) of $3,355.30/tonne lithium carbonate equivalent (LCE) with a break-even price of $4016.6/tonne LCE LOM (life of mine).
- Long mine life (LOM): The mine production rate during full operation is set at 17,000 tonnes per day. The production schedule uses ore from the first 11 phases, which results in 40-year mine life (LOM). The mine production schedule results in 245.4 million tonnes averaging 1,093 parts per million lithium.
- Very low strip ratio: Mining strip ratios are very low, averaging 0.07:1 for LOM. Mining consists of a truck-and-shovel method, with blasting being unnecessary due to the ore softness.
- Low environmental impact: The leaching and filtration flowsheet includes dry stack tailings, thus, eliminating the environmental risk and long-term management issues associated with tailings ponds.
- LCE market price: Base case market price of $9,500/tonne LCE is well below long-term forecasted rate of $14,000/tonne.
- Price sensitivity: As noted in the sensitivity chart in the associated table, the after-tax NPV reaches $2,665-million at $14,250/tonne LCE (8-per-cent discount rate).
"We are thrilled with the results of this PEA," stated Sandy MacDougall, Noram's chief executive officer and director. "This study represents the most significant milestone to date for Noram and establishes us among limited peers as the newest low-cost, high-grade, near-term lithium producer in North America. I am very pleased with what our team has achieved quickly, on schedule, and at the opportune time considering current and forecasted demand for lithium carbonate. This initial economic assessment is the most significant step to date towards our goal of lithium production and provides the market with a benchmark to evaluate our project's viability and value compared with other lithium developers. We are excited as we enter 2022 pushing aggressively towards the completion of a prefeasibility study."
Net present value (NPV) $1,299-million Internal rate of return (IRR) 31% Life of mine (LOM) 40 years Operating cost (OPEX) $3,355.30/tonne Capital cost estimate $528-million Average annual production lithium carbonate equivalent (LCE) 31,900 tonnes Average daily mine production rate LOM 17,000 tpd LOM production 245.4 mt at 1,093 ppm Li LCE market price used in PEA study* $9,500/tonne Strip ratio 0.07:1.00 Payback period 3.23 years Gross revenue per year $303.4-million
PEA summary
Infrastructure
The project is located next to the Cypress Development's Clayton Valley lithium project and within one mile of Albermarle's Silver Peak lithium mine. The project is accessible via the Silver Peak Road, a two-lane road that connects the Silver Peak mine with Highway 95 to the east. General site infrastructure includes administration, laboratory, warehouse, reagent, comminution plant and lithium recovery plant. Tailings are to be conveyed to the tailings storage areas for final spreading and contouring by dozers.
Metallurgical testing
The objective of the metallurgical test program conducted on the Zeus lithium deposit was to develop a viable process flowsheet to produce lithium carbonate. Information generated during the test program was used to define the process variables. Metallurgical testing began in 2018 at Actlabs Ltd. and AuTec Innovative Extractive Solutions Ltd. This PEA report includes metallurgical testwork conducted by SGS Canada Inc. in collaboration with ABH Engineering.
The following observations, conclusions and interpretations were obtained from the metallurgical test program:
- Zeus lithium deposit ore is soft and disintegrates easily if agitated in water.
- Sulphuric acid solution effectively leaches lithium at high extraction.
- Testwork achieved 90-per-cent lithium extraction at 65 C, 30-per-cent solids density and two hours of residence time.
Mine option selection
An ultimate pit of processable material will be created, consuming most of the property area. The ultimate pit has been divided into phases of which the first 11 contain enough resources for 40 years of production at a 17,000 tpd production rate. Resources contained within the entire ultimate pit limits provide enough ore for over 190 years of production at 17,000 tpd. All resources regardless of the material classification are treated equally for the purpose of this study.
An optimized cut-off grade of 850 ppm was used to schedule the processed feed, compared with the economic cut-off grade of 400 ppm. Low-grade ore with grades between the economic cut-off of 400 ppm and optimized cut-off of 850 ppm are scheduled to be deposited in the low-grade ore stockpile. This is done to initially increase the average processed ore grade and improve the overall economics of the project by accelerating higher-grade material to earlier years.