value of 2500 tpd mineAfter reading the news release i was wondering what a 2500 tpd mine would generate producing a 6% Li2O spodumene concentrate. Li2O converts to 2.5 times Li2CO3 which sells for $6000 a ton. At a 1% grade we would produce 9000 tons of Li2O a year which theoretically could be processed into 22500 tons of Li2CO3 which makes each ton of 6% concentrate worth about $900. (120 lbs Li2O = 300 lbs Li2CO3 x $3lb) Obviously it would sell at a discount as it still needs to be processed into the carbonate. I believe in my discussions with the president he said it would sell for about $600 but mining would be much
cheaper. In the original feasability study from ten years ago they were expected to be $75 a ton so we could probably double them now but no more than $200. Thus the mine would produce $36 million in free cash flow a year. I believe the set-up cost would be no more than $25-30 million since it is merely an open pit operation with a concentrator. Canada Lithium is much more expensive as they are building a carbonate processing facility.Thus start up capital is paid back in the first year with the rest being profit. Thats a IRR of 100% if I am not mistaken. Even if we are bought out for $30 million($1 per share) the economics are still very impressive for the acquiring company. Jean has stated he would take a dollar at this point. If the new drill program doubles or even triples the size of the deposit then $2-3 dollars is very realistic. Lithium is starting to really attract alot of mainstream attention and if the next set of results is good to great we should be on our way to a dollar very quickly. Would appreciate any feedback regarding my math and assumptions and thanx in advance.
Longrider