Critical Elements Lithium Corp V.CRE

FL filed PFS recently yet trades at a premium to CRE?

[Speedypete]

FRONTIER LITHIUM FILES NI 43-101 PRE-FEASBILITY STUDY FOR PAK PROJECT IN NORTHERN ONTARIO 

TSX.V RELEASE | July 14, 2023 | TSX.V:FL; FRA:HL2; OTCQX: LITOF

Sudbury, Ontario, – Frontier Lithium ("Frontier" or "the Company"), Ontario's leading lithium developer, has recently filed the "Pre-Feasibility Study for the PAK Project " technical report (the "Technical Report"). As communicated in a news release dated May 31, 2023, this Technical Report outlines the preliminary feasibility assessment of the 100% owned PAK Project, located north of Red Lake in Ontario, and a proposed hydrometallurgical plant that would convert spodumene concentrate feedstock into lithium chemicals. The Technical Report confirms the vertically integrated project could be North America’s largest and lowest-cost producer of lithium hydroxide, supplying the rapidly growing electric vehicle industry on the continent.  
The Technical Report is effective as of the 31^st day of May 2023, the summary press release is located at here. The full Technical Report is available on SEDAR (www.sedar.com) and can be located here.

Pre-Feasibility Study Highlights: A 24-year total project life, with after-tax pay back of capital expenditures in less than 5 years following commercial production 

• Life of Project Cash Flow (unlevered) of US$8.07 billion over 24-year total project life;
• Total initial capital expenditure estimate of US$468 million for the technical grade concentrator and expansion capital ofUS$576 million for the chemical grade concentrator and chemical plant with a contingency of 20% included.
• Sustaining Capital of US$90 million ;
• Post-tax Net Present Value at an 8% base case discount rate ("NPV ₈ ") of US$1,739 million and IRR of 24.1% [see Tables and Figures below];
• Post-tax net "undiscounted" Cash Flow (before initial capital expenditures) of US$5.98 billion ;
• Annual Average EBITDA of US$251.3 million ;
• Chemical plant producing 12,520 tonnes of battery-quality Lithium Hydroxide Monohydrate (LiOH-H ₂ O) per year with an average selling price of US$22,000 per tonne and a 7,360 tonnes of battery-quality Lithium Carbonate per year with an average selling price of US$20,500 per tonne;
• PAK and Spark deposits are open along strike and to depth;
• All-in cash costs of US$7,433 per tonne of Lithium Carbonate Equivalent; and
• After-Tax Pay Back of Capital Expenditures is 4.9 years after the start of commercial operations.

 
In addition, with regard to this particular release, the Company hereby presents the following sensitivity analysis tables and figures that were hitherto undisclosed. The sensitivity analysis reveals that the USD:CAD exchange rate and battery grade (“BG”) lithium hydroxide price have the most significant influence on both the Net Present Value (“NPV”) and Internal Rate of Return (“IRR”) compared to the other parameters, based on the ranges evaluated. Overall, the NPV and IRR of the Project is positive over the range of values used for the sensitivity analysis when the sensitivities are analyzed individually. 

PFS OVERVIEW

1.  LITHIUM CHEMICALS FOR THE NORTH AMERICAN ELECTRIC VEHICLE MARKET

• The PAK Project has the ability to produce 7,360 metric tonnes of lithium carbonate and 12,520 m.t. of lithium hydroxide annually. This production tonnage meets the specific requirements of original equipment manufacturers (OEMs), such as automotive companies operating in the North American electric vehicle market. As the electric vehicle market continues to evolve and expand, the ability to adapt and meet changing customer demands becomes crucial. The lithium chemicals to be produced by Frontier Lithium will be tailored to the needs of the industry, supporting the growth of electric vehicles manufacturing in the region and building in optionality for the future demand profiles through adjustments in production capacity and product mix to align with future market trends and customer preferences.

2.  A PHASED APPROACH

• The development of the PAK project and hydromet chemical plant will be completed in phases to allow for efficient resource allocation, to minimize upfront capital expenditure, and de-risk project execution. The first phase will focus on the production of spodumene concentrate to generate revenue and support the concurrent development of necessary infrastructure to build the proposed mine-to-lithium hydroxide chemical plant facility.  Implementing a phased approach also enables a more streamlined and controlled project development process, enabling a thorough understanding of the resource base and an optimization of the refining process in advance of chemical plant construction. This approach ensures that the subsequent refinery build-up is well-informed, efficient, and aligned with market demand.

3.  GROWING REGIONAL DEMAND

• The North American electric vehicle market is experiencing significant growth, with strong commitments of over CAD$25 billion to build Ontario battery capacity by 2030. This strong regional growth provides a favorable market environment for the lithium project. The project can capitalize on its strategic North American location, the growing demand for electric vehicles and the need for lithium chemicals to support battery production.
• The commitments to build Ontario battery manufacturing capacity indicate a long-term future in sustainable transportation and the development of the electric vehicle ecosystem. By supplying locally produced lithium chemicals, the project can contribute to the regional supply chain, reduce dependence on imports, and strengthen the overall resilience and competitiveness of the North American electric vehicle market.

4.  OPPORTUNITIES FOR FURTHER UPSIDE

• The project offers opportunities for further upside through the potential conversion of additional mineral resource to mineral reserves. The PFS reserve calculation includes only one-third of the identified resources. None of the 32.4 million tonne of inferred mineral resources were included in the PFS mineral reserves. This indicates significant exploration potential and the possibility of scaling the project.
• Frontier has a strong track record in resource exploration and development, and the continued exploration efforts within the PAK Lithium Project could uncover additional mineral resources. The potential to tap into additional resources ensures the project will be responsive to future market demands and supports long-term sustainability.

[monkeyhere171]

Will be incorrect to compare apples to oranges so directly comparing CRE and FL is not the best way. If you look at their market cap vs their NPV noted in the PFS you will see FL trades with a slight premium but then thisnis based on 1/3 of the identified resources. CRE has NO any other identified resources so potential for expansion is priced as ZERO by the market. However FL has already drilled

[Speedypete]

My point was its a long old road from PFS to whether or not they can even get the permits 

[tess4344]

Had to pipe in here at this point. I get that you got burnt by Nemaska Monkeyhere171, so if we're comparing aplles, this is not Nemaska and management is making sure that we don't wind up like them. CRE management is taking the tortoise approach which is frustrating everybody including myself. I would rather take more time then rush into something that we might regret. In regards to

[monkeyhere171]

Tess4344, We are saying the same things - both are undervalued  FL based on the known resource is significantly undervalued  CRE based on permitted mine and proven reserves. And the market is giving ZERO value for the land package for now as there are no resources identified. So can't just say one is more valued then the other as IMO both are discounted. 

[tess4344]

We can say though that CRE is many many years ahead of FL so definitely we are more advanced. The After Tax NPV at 8% are close, CRE at US$1.9 Billion and FL at approx. US$1.7 Billion,? CRE's After Tax IRR of 82.4% is much higher than FL's 24.1% CRE has approx. 217.79 million shares outstanding compared to FL's 227.63 million shares but CRE has done much of it's legwork, how

[monkeyhere171]

Again, you are comparing 1/3 of FL's resources too 100% of CRE's. If FL got permits they will be much higher but why CRE is undervalued?? Let's recap: - Prior to permits being granted they have been saying financing is following 'instantaneously' as Haver put it in October 2022. - Permits were granted and suddenly a change of tunes!! Start talking about mine life. No other news

[tess4344]

I don't really care about FL's resources to tell you the truth.monkeyhere171. I agree that we are undervalued and I will not make excuses for management;s communications. If they sign a bad deal, you would be the first to complain after the Nemaska fiasco. I will re-iterate, if they need more time to get this right, I will wait. If you don't want to wait, then sell the shares you