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Lithium Americas : Announces 40,000 TPA Feasibility Study for the Caucharí-Olaroz L...

09/30/2019 | 06:38pm EST

September 30, 2019

Lithium Americas Announces 40,000 TPA Feasibility Study for

the Caucharí-Olaroz Lithium Project

Vancouver, Canada: Lithium Americas Corp. (TSX: LAC) (NYSE: LAC) ("Lithium Americas" or the "Company") is pleased to provide results of a 40,000 tonnes per annum ("tpa") definitive feasibility study ("40,000 tpa DFS" or "DFS") on the Caucharí-Olarozlithium project ("Caucharí-Olaroz"or the "Project") currently under construction in Jujuy Province, Argentina. Caucharí-Olarozis 100% owned by Minera Exar S.A. ("Minera Exar"), a 50/50 joint venture between Lithium Americas and Ganfeng Lithium Co., Ltd. ("Ganfeng Lithium"). Lithium Americas and Ganfeng Lithium have authorized Minera Exar to proceed with the plan to produce 40,000 tpa of battery-qualitylithium carbonate ("Li2CO3") as outlined in the DFS.

Unless otherwise stated, all figures are quoted in U.S. dollars ("$") and are reported on a 100% equity project basis.

Highlights:

  • 40,000 tpa of Li2CO3 production for 40 years. Updated Mineral Reserve supports annual production in excess of 40,000 tpa of battery-quality Li2CO3 for 40 years.
  • Construction capital cost of $565 million. Construction capital costs include a contingency, over $200 million in capital already committed in contracts and purchase orders of which $105 million in capital spent as of June 30, 2019.
  • Operating costs of $3,576/t for battery-quality lithium carbonate. Operating costs reflect process optimizations designed to consistently achieve more stringent purity specifications currently required by battery material customers.
  • Fully-fundedto production. Lithium Americas 50% share of Minera Exar is expected be fully-funded with $221 million available under the Company's credit and loan facilities and net proceeds from the $160 million Project investment by Ganfeng Lithium.
  • First production targeted by early 2021. Construction on the 40,000 tpa Project is underway and expected to be completed by the end of 2020 with first production expected in early 2021.
  • Conference call and webcast. Conference call and webcast scheduled for Tuesday, October 1, 2019 at 9:00 am EST to discuss the results of the DFS and the Company's recent developments.

The results of the DFS are provided in Table 1 on a 100% equity project basis:

Table 1: Caucharí-Olaroz 40,000 TPA DFS Results

40,000 TPA DFS

Lithium carbonate average long-term price(1)

$12,000/t Li2CO3

Production capacity

40,000 tpa Li2CO3

Project life

40 years

Construction capital costs(2)

$565 million

Operating costs

$3,576/t Li2CO3

Average EBITDA(3)

$307 million

After-tax NPV10% (2)(3)

$1,330 million

  1. Assumes lower price of $8,000/t and $10,000/t in 2021 and 2022, respectively.
  2. Total capital costs of $565 million include $105 million in capital costs sunk as of June 30, 2019 excluded from NPV.
  3. Refers to a non-IFRS financial measure. Please see the discussion included at the end of this press release under "Non-IFRS Financial Measures".

"With construction underway and funding in place, the results of the 40,000 tpa DFS further supports Caucharí-Olaroz as a scalable, high-purity source of lithium carbonate for battery material customers," commented Jon Evans, President and CEO of Lithium Americas. "We are thankful for the hard work from the team at Minera Exar, the support from the government of Jujuy, and our 50/50 joint venture partner, Ganfeng Lithium, for their financial and technical contributions towards optimizing the process design and securing key equipment for the lithium carbonate plant."

"Minera Exar is committed to building Caucharí-Olaroz to be one of the most environmentally responsible lithium projects globally," commented Gabriel Rubacha, CEO of Minera Exar. "The 40,000 tpa DFS represents the first of future potential long-term investments in Caucharí-Olaroz for the benefit of the local communities, employees and Jujuy Province."

Project Details

Caucharí-Olaroz is located in Jujuy Province in north west Argentina. The Project is situated in the Salar de Olaroz and Salar de Caucharí, adjacent to Orocobre Ltd.'s Olaroz facility, which has been in production since 2015. The Project is well serviced by nearby infrastructure including major paved highways which connect to the port of Antofagasta in Chile, a high-voltage transmission line, an adjacent 300MW solar project and a gas pipeline.

In 2012, Minera Exar granted a conditional right to Jujuy Energia y Mineria Sociedad del Estado ("JEMSE"), a mining and energy investment company owned by the government of Jujuy Province in Argentina, to acquire an 8.5% equity interest in Minera Exar and provide management services as required to develop the Project.

The 40,000 tpa DFS includes a conventional, commercially-proven brine processing technology optimized from the salar in partnership with Ganfeng Lithium to produce battery-quality Li2CO3 that can be used to meet the specifications of battery material producers in manufacturing cathode and electrolyte for lithium- ion batteries. The DFS follows the 2017 feasibility study on a 25,000 tpa Li2CO3 project ("25,000 tpa DFS").

Minera Exar has more than 250 employees and approximately 500 contractors at the Project. Construction is scheduled to be completed by the end of 2020.

Construction of the evaporation ponds commenced in Q1 2018 and is approximately 60% completed. Brine from production wells started filling ponds in Q4 2018. The liming purification process at the ponds is expected to commence in Q2 2020.

A significant amount of long-lead time equipment purchases and construction contracts have been awarded. Contractors for the production wells, ponds and liners, civil works (roads and well platforms), permanent camp, concrete works and structural steel (buildings) are engaged at the Project site. Equipment components for the lithium carbonate plant are expected to begin arriving to the site later this year.

Permitting

An update to the "Environmental Impacts Report for Exploitation" for Caucharí-Olaroz was approved by Jujuy Province in 2017 providing all necessary permits to support the 25,000 tpa DFS. In accordance with the provincial requirements, an update was submitted in August 2019 and is currently being evaluated by the Jujuy Province to expand the initial production capacity to 40,000 tpa of Li2CO3. This update includes supplementary environmental studies and information collected during the previous two years as well as changes to the Project description to reflect the current development plan and increased production capacity.

Brine Process

The process presented in the 40,000 tpa DFS follows industry standards: pumping brine from the salar, concentrating the brine through evaporation ponds, and bringing the brine concentrate through an extractive hydrometallurgical and purification process to produce battery-quality Li2CO3. The updated process has been refined and optimized using the results of lab and pilot scale testing by Minera Exar, Ganfeng Lithium and equipment suppliers with experience in manufacturing the industrial equipment that Ganfeng Lithium uses for the production of high-purity products.

An average evaporation rate of 6.05 mm per day (2,157 mm per year) was used as criterion to design the pond system. The rate corresponds to measured evaporation rates observed at the site where the ponds are located. At the demonstrated evaporation rate, the total evaporation area required to produce 40,000 tpa of Li2CO3 is 1,200 ha (12 km2) and includes allowances for salt harvesting and maintenance work. The ponds are designed with multi-layer liners consisting of a polymer-based material and engineered granular bedding. The evaporation ponds have been designed with a flat bottom for efficient harvesting and a shallow brine depth to improve evaporation and with the aim to allow for efficient salt harvesting using commercially proven equipment employed in Chilean operations.

The Li2CO3 recovery process from brine has been designed to achieve customer quality requirements. This system is robust and has been engineered to produce a consistent quality product regardless of seasonal changes in brine composition in the ponds.

The process removes key impurities from the concentrated brine in the ponds before producing high-purity Li2CO3 in the plant. The process uses a combination of industry standard processes that have been adjusted for the specific chemistry of the brine in the salar. These steps extract contaminants in a low-impact, cost- effective order while recovering fresh water from the brine for use in the process. The Li2CO3 precipitation is controlled carefully to form a high-purity crystal of Li2CO3 that can then be washed, dried and micronized to meet the required particle sizes from the energy storage space.

The process has been engineered to minimize the use of energy and fresh water. All brine and water used is recycled multiple times and is cleaned throughout the process. Energy is recovered internally between multiple process streams and utilities ensuring efficient and optimized consumption. This is expected to result in environmentally responsible production of high-purity lithium chemicals.

Operating Costs

The operating and construction capital cost estimates have been reviewed and confirmed by Andeburg Consulting Services Inc. ("ACSI") in accordance with NI 43-101 Standards of Disclosure for Mineral Projects. The Project cost estimates are based on an exchange rate of 45:1 Argentine pesos to the U.S. dollar. Despite the recent depreciation in Argentine pesos, Minera Exar does not expect a material impact to the operating and capital cost estimates as presented in U.S. dollars.

The operating cost estimates in the 40,000 tpa DFS have increased in comparison to the 25,000 tpa DFS primarily as a result of an $824/t increase in reagent costs. The increased reagent use reflects process changes designed to consistently achieve more stringent low impurity specifications of battery material customers.

The average operating costs were calculated for a facility with production of 40,000 tpa of battery-quality Li2CO3 and are presented in Table 2 below.

Table 2: Caucharí-Olaroz - Operating Costs

25,000 TPA DFS

40,000 TPA DFS

Operating Cost

% of

Operating Cost

% of

Category

($/t Li2CO3)

Total

($/t Li2CO3)

Total

Reagents

$991

40%

$1,815

51%

Pond harvesting & tailings management

$345

14%

$369

10%

Maintenance

$210

8%

$302

8%

Labor

$166

7%

$283

8%

Electric power

$187

7%

$222

6%

Natural gas

$85

3%

$145

4%

G&A

$86

3%

$141

4%

Product transportation

$170

7%

$127

4%

Catering, security & third-party services

$97

4%

$61

2%

Consumables

$51

2%

$53

1%

Water treatment system

$38

2%

$41

1%

Diesel

$69

3%

$17

<1%

Total Operating Costs

$2,495

100%

$3,576

100%

Capital Costs

The total construction capital cost is estimated at $565 million inclusive of a $39 million contingency and inclusive of $105 million in capital costs incurred before June 30, 2019. Considering that the Project construction is well under way, with many key contracts and purchase orders already awarded and under execution including the process equipment, the level of confidence is expected to be approximately ±10%. Minera Exar does not expect any material impact on the capital costs as a result of the recent foreign exchange regulations and controls enacted by the Argentine Government.

With a 33% increase in capital costs from the 25,000 tpa DFS published in 2017, the 40,000 tpa DFS supports a 60% increase in production capacity. Much of the increased capital cost estimate is the result of an increase in the size of equipment, infrastructure, wells and piping without any major change in the pond layout under construction. The cost increase in the ponds corresponds to additional electromechanical work not previously included in the 25,000 tpa DFS.

Detailed capital cost estimates are presented on a 100% project equity basis in Table 3 and are exclusive of value added taxes ("VAT"), other taxes, working capital and pre-production costs.

Table 3: Caucharí-Olaroz - Construction Capital Costs

25,000 TPA DFS

40,000 TPA DFS(1)(2)

Category

($ millions)(2)

($ millions)

Lithium carbonate plant

$122

$155

Evaporation ponds

$129

$146

Infrastructure

$68

$96

Wells and piping

$15

$61

Indirect Cost

$37

$67

Contingency

$55

$39

Total Construction Capital Costs

$425

$565

  1. Total capital costs of $565 million include $105 million of sunk capital costs as of June 30, 2019. Sunk costs are excluded from financial analysis in the DFS.
  2. Totals do not add due to rounding.

The sustaining capital requirement is estimated at an average of $7.2 million per year (approximately $180/t Li2CO3 produced).

Project Economics

The financial results are derived from inputs based on an annual production schedule included in the 40,000 tpa DFS as of June 30, 2019. The analysis contained in the DFS exclude $105 million in sunk capital costs as of June 30, 2019 which are included in the total construction cost estimate of $565 million.

A Li2CO3 price of $8,000/t and $10,000/t is assumed for 2021 and 2022, respectively, to reflect short-term market conditions. A production ramp up schedule of 15,250 t and 36,000 t was assumed in 2021 and 2022, respectively. Caucharí-Olaroz is expected to achieve a production rate of 40,000 tpa of Li2CO3 before the end of 2022 with production of 40,000 tpa in 2023 to 2060.

Sensitivity analysis on the unlevered economic results for the 40,000 tpa of Li2CO3 over a 40-year operating period are summarized in Tables 4 and 5 and reported on a 100% equity project basis.

Table 4: Caucharí-Olaroz - After-Tax NPV Sensitivity Analysis

Discount Rate

Low Case NPV(1)

Base Case NPV(1)

High Case NPV(1)

(%)

$10,000/t Li2CO3

$12,000/t Li2CO3

$14,000/t Li2CO3

($ millions)

($ millions)

($ millions)

6%

$1,803

$2,446

$3,075

8%

$1,297

$1,781

$2,252

10%

$953

$1,330

$1,693

1. Total capital costs of $565 million include $105 million in capital costs sunk as of June 30, 2019 excluded from NPV. Refers to a non-IFRS financial measure. Please see the discussion included at the end of this press release under "Non-IFRS Financial Measures".

Table 5: Caucharí-Olaroz - EBITDA Sensitivity Analysis

Lithium Carbonate Price

Average EBITDA(1)

($/t Li2CO3)

($ millions)

$10,000

$235

$12,000

$307

$14,000

$379

1. Refers to a non-IFRS financial measure. Please see the discussion included at the end of this press release under "Non-IFRS Financial Measures".

Mineral Reserve Estimation

Montgomery & Associates Inc. ("Montgomery") was engaged to update the Mineral Reserves in brine for various areas within the Salar de Caucharí and Salar de Olaroz in accordance with the guidelines for lithium brines set forth by the Canadian Institute of Mining, Metallurgy and Petroleum (CIM 2012). The authors of the DFS believe the Mineral Reserve Estimate has been conservatively modeled and represents a Proven Reserve for Year 1 through 5 of full-scale extraction wellfield pumping and a Probable Reserve for Years 6 to 40 of full-scale extraction wellfield pumping.

This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

Lithium Americas Corp. published this content on 30 September 2019 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 30 September 2019 22:37:01 UTC


© Publicnow 2019
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