LITH:CC - Lithium Chile Delivers Positive Preliminary Economic Assessment for the Arizaro Project in Argentina
(TheNewswire)
CALGARY, ALBERTA – TheNewswire - August 8, 2023– Lithium Chile Inc. ( TSXV:LITH ) ( OTC:LTMCF ) (“ Lithium Chile ” orthe “ Company ”) is pleased to report the results of its PreliminaryEconomic Assessment (“ PEA ”) for the production of lithiumcarbonate from its Salar de Arizaro lithium brine project in the SaltaProvince of Argentina (“ Arizaro ”). The PEA provides an independenteconomic assessment of the potential of Arizaro, based upon thelithium resources outlined in the July 2023 Resource Estimate.
ARIZARO PEA HIGHLIGHTS:
-
Pre-tax Net Present Value(“NPV”) US$1.8 billion
-
LOM Average Li CO price of $21.396 per tonne
-
After-tax NPV $1.1 billion
-
Pre-tax Internal Rate of Return(“IRR”) of 29.3%
-
After-tax IRR of 24.1%
-
PEA mine and processing plantproduces 25,000 LCE LOM over 19.1 years.
-
Pre-tax initial capital paybackperiod 3.5 years; after-tax payback 3.6 years
-
Average LOM annual pre-tax cash flowover operating period: $329 million; annual after-tax cash flow: $229 million.
-
Initial Capital Costs(“Capex”) estimated at $823million.
-
Operating cost (“Opex”) estimatedat $5,197/t LCE.
The PEA was completed by Ausenco Chile Limitada(“ Ausenco ”) in accordance with National Instrument 43-101 Standardsof disclosure for Mineral Projects (NI 43-101). The assessmentincludes and demonstrates that the Arizaro project has the potentialof a 25,000 tonnes per annum (“ tpa ”) commercial-scale operation to producebattery-grade lithium carbonate (“ LCE ” or“ Li 2 CO 3 ”).
Under the leadership of President and CEO, Steve Cochrane andPresident of South America, Jose de Castro Alem, Lithium Chile hasachieved key milestones which has culminated in the successfulcompletion of the PEA. Mr. Cochrane remarked, " The filing of this technical report isanother important milestone. These results support our view that theArizaro Project has the potential to be a world class producer ofLithium Carbonate. We are excited about continued advancement of thisproject - a continuing journey of near-term enhancement opportunitiesthat have already been identified.”
Lithium Chile’s President, South America, Jose de Castro says:“ We are very proud of our entireArgentinian team, whose previous unique experience in starting upother Lithium projects has worked in creating real value for allstakeholders in the Arizaro project, including communities in which wework, as well as all shareholders of Lithium Chile. We have achievedin less than 2 years this important step and we are confident inadvancing quickly to eventual production”.
ECONOMIC ANALYSIS AND SUMMARY:
Initial Capital Costs
The cost estimates include the initial investment andsustaining capital for a lithium concentration plant with an annualcapacity of 25,000 tonne LCE.
Summary of Initial CapitalCost:
| Description |
| US$ millions |
| Direct Costs: |
| Brine Extraction Wells |
| $45 |
| DLE Plant |
| $108 |
| Reverse Osmosis |
| $70 |
| Mechanical Evaporation |
| $33 |
| Chemical Plant |
| $31 |
| Purification |
| $24 |
| Dry Product Handling |
| $28 |
| General Utilities |
| $75 |
| Infrastructure |
| $39 |
| Direct Costs Total |
| $452 |
| Project Indirect |
| $152 |
| Resin DLE (first fill) |
| $28 |
| Contingency |
| $190 |
| Total Initial Capital Costs |
| $823 |
OPERATING COSTS
The most relevant cost under operating cost is reagentsconsumption (50.8%) followed by energy (16.6%). Both costs add up toUS$85.7 million, representing 67.5% of the operating directcosts.
Summary of Operating Costs:
| Description |
| US$ million per year |
| US$/tonne Li2CO3 |
| Direct Operating Costs: |
| Chemical Reactive and Reagents |
| $64.56 |
| $2,583 |
| Resin & Membrane replacement |
| $13.31 |
| $533 |
| Energy |
| $21.14 |
| $846 |
| Manpower |
| $8.88 |
| $355 |
| Catering and Camp Services |
| $6.85 |
| $274 |
| Maintenance |
| $5.61 |
| $224 |
| Site Vehicle Costs |
| $0.29 |
| $11 |
| Bus – In/Bus – Out transportation |
| $0.55 |
| $22 |
| Consumables |
| $0.63 |
| $25 |
| Li 2 CO 3 Transportation |
| $5.20 |
| $208 |
| Direct Cost Subtotal |
| $127.02 |
| $5,081 |
| Indirect Cost Subtotal |
| $2.92 |
| $117 |
| Total Operating Costs |
| $129.94 |
| $5,197 |
CASH FLOW ANALYSIS
The economic analysis was performed assuming an 8%discount rate. Cash flows have been discounted to the beginning of theconstruction January 1, 2025, assuming that the project executiondecision will be made, and major project financing would be carriedout at this time. The pre-tax net present value discounted at 8%(NPV8%) is US$1.846 million with a pre-tax internal rate of return(IRR) of 29.3% and payback period of 3.5 years. On an after-tax basis,the NPV 8% is US$1.1 billion with an IRR of 24.1% and payback periodof 3.6 years.
Cash Flow Chart:
SENSITIVITY
Sensitivity analysis that was conducted on the Arizaroproject revealed that the project is most sensitive to changes inlithium carbonate price, and to a lesser extent to initial capitalcosts, operating costs and sustaining capital requirements.
After-Tax IRR Sensitivity:
| % |
| -30.0% |
| -15.0% |
| Base Case |
| 15.0% |
| 30.0% |
| Li 2 CO 3 Price |
| 14.7% |
| 19.7% |
| 24.1% |
| 28.2% |
| 32.0% |
| Initial Capex |
| 31.5% |
| 27.4% |
| 24.1% |
| 21.6% |
| 19.5% |
| Opex |
| 26.2% |
| 25.2% |
| 24.1% |
| 23.1% |
| 22.0% |
| Sustaining Capex |
| 24.8% |
| 24.5% |
| 24.1% |
| 23.8% |
| 23.5% |
After-Tax NPV Sensitivity:
| US$ million |
| -30.0% |
| -15.0% |
| Base Case |
| 15.0% |
| 30.0% |
| Li 2 CO 3 Price |
| $415 |
| $779 |
| $1,138 |
| $1,496 |
| $1,852 |
| Initial Capex |
| $1,300 |
| $1,220 |
| $1,138 |
| $1,055 |
| $973 |
| Opex |
| $1,320 |
| $1,229 |
| $1,138 |
| $1,046 |
| $955 |
| Sustaining Capex |
| $1,166 |
| $1,152 |
| $1,138 |
| $1,124 |
| $1,109 |
After-Tax PaybackSensitivity:
| Years |
| -30.0% |
| -15.0% |
| Base Case |
| 15.0% |
| 30.0% |
| Li 2 CO 3 Price |
| 5.4 |
| 4.2 |
| 3.6 |
| 3.1 |
| 2.9 |
| Initial Capex |
| 2.9 |
| 3.2 |
| 3.6 |
| 3.9 |
| 4.2 |
| Opex |
| 3.4 |
| 3.5 |
| 3.6 |
| 3.7 |
| 3.8 |
| Sustaining Capex |
| 3.5 |
| 3.5 |
| 3.6 |
| 3.7 |
| 3.7 |
Cautionary Statement: The reader is advised that the PEA summarized in this news release is intended toprovide only an initial, high-level review of the Project potentialand design options. The PEA mine plan and economic model includenumerous assumptions and the use of both indicated and inferredmineral resources. Inferred mineral resources are too speculative tobe used in an economic analysis except as allowed for by NI 43-101 inPEA studies. Mineralresources are not mineral reserves and do not have demonstratedeconomic viability. There isno certainty that the Arizaro project envisioned by the PEA will berealized.
UNIQUE PROJECT ADVANTAGES
The Arizaro Project enjoys certain unique advantages,which support a rapid development schedule, and low capital andoperating costs:
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The process selection considers the incorporation of aDirect Lithium Extraction (DLE) stage. DLE processes have shorterstart-up and ramp-up times, mainly due to their smaller infrastructurerequirements and the ability to be designed with a modular concept.This modularity allows for incremental expansion, enabling a fasterramp-up to meet increasing demand. Additionally, the crucial aspect ofbrine's chemical composition homogeneity further enhances theefficiency and effectiveness of the process. With consistent brinecomposition, DLE operations achieve more predictable and reliablelithium recovery rates, enabling better production capacity planningand meeting demand requirements with confidence. Overall, integratingDLE into the process proves to be a strategic choice, streamliningoperations and ensuring a reliable supply of lithium.
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Multiple opportunities to enhance project economicsthrough optimization and further engineering have already beenidentified.
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More than 60 technologies combination were studiedduring PEA and trade off permits to optimize main sustainabilityvariables, water and energy usage, water basin balance, reagent usageand Capex and Opex.
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Major discovery of lithium brines in the basin andmajor metallurgical testing including best possibilities for water andenergy usage.
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Unique Technical team with operation, projects andproduction experience.
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Initial production water aquifer identified andpermitting underway.
QUALIFIED PERSON, QA/QCSTATEMENTS:
Leandro Sastre is a geology professional with over 20years of experience in the international mining sector. He has workedextensively throughout Latin America with a focus on Argentina, Chileand Peru. Mr. Sastre has reviewed and approved the scientific andtechnical content of this news release.
ABOUT AUSENCO:
Ausenco Chile Limitada (“ Ausenco ”) is aglobal engineering firm, experienced in the lithium industry. Ausencohas prepared multiple economic assessments and feasibility studies,specifically for, but not limited to, South American lithium brineextraction companies over the past several years. In addition to beingDLE and production process experts, Ausenco’s knowledge wasinvaluable for assessing current and conservative operating andcapital costs, which incorporated the latest global cost estimates.All values are reported in US dollars, unless otherwise noted.References to CDN$ have been converted at 1.35 x US$.
ABOUT LITHIUM CHILE:
Lithium Chile is an exploration and lithium resourcecompany with a property portfolio consisting of 111,978 hectares inChile and 20,800 hectares in Argentina.
The Company will be filing an updated NI 43-101 reportwith an indicated resource of 1,737,000 metric tonnes of LCE andinferred resource of 1,583,000 metric tonnes of LCE from its Salar deArizaro, Argentina project. The Phase 2 development program on theSalar de Arizaro is underway with results to be included in an updatedNI 43-101 report which will be filed on SEDAR when completed.
Lithium Chile also owns 4 properties, totaling 21,329hectares, that are prospective for gold, silver and copper.Exploration efforts are continuing on Lithium Chile’s Carmonagold/silver/copper property which lies in the heart of the Chileanmega porphyry gold/ silver/copper belt.
Lithium Chile’s common shares are listed on the TSX-Vunder the symbol “LITH” and on the OTC-QB under the symbol“LTMCF”.
To find out more about Lithium Chile Inc., pleasecontact Steven Cochrane, President and CEO via email:steve@lithiumchile.ca or Michelle DeCecco, Vice President and COO, viaemail michelle@lithiumchile.ca.
NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATIONSERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSXVENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACYOF THIS RELEASE.
This news release may contain certain forward-lookinginformation and forward-looking statements within the meaning ofapplicable securities legislation (collectively "forward-lookingstatements"). Generally, forward-looking statements can beidentified using forward-looking terminology such as "expected", "anticipated", "aimsto", "plans to" or "intends to" or variationsof such words and phrases or statements that certain actions, eventsor results "will" occur. Such forward-looking statements arebased on various assumptions and factors that may prove to beincorrect, including, but not limited to, factors and assumptions withrespect to the general stability of the economic and politicalenvironment in which the Company operates and the timely receipt ofrequired regulatory approvals. You are cautioned that the foregoinglist of material factors and assumptions is not exhaustive. AlthoughLithium Chile believes that the assumptions and factors on which suchforward-looking statements are based upon reasonable assumptions,undue reliance should not be placed on the forward-looking statementsbecause Lithium Chile can give no assurance that they will prove to becorrect or that any of the events anticipated by such forward-lookingstatements will transpire or occur, or if any of them do, whatbenefits Lithium Chile will derive therefrom. Lithium Chile does notundertake to update any forward-looking statements herein, except asrequired by applicable securities laws. All forward-looking statementscontained in this news release are expressly qualified by thiscautionary statement.
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