US$1.5 billion (CDN$2.0 billion ) after tax NPV8 with an IRR of 25.1%US$5.3 billion (CDN$7.1 billion ) of cumulative free cash flow over a 25-year mine life- 3.8-year after-tax payback period from start of production
- Significant upside potential remains from recently drilled wells not yet included in this PEA
The PEA evaluated a 25,000 tonnes per annum (“tpa”) commercial-scale operation to produce battery-grade lithium carbonate chemicals. Importantly, the study does not include contribution from wells drilled since mid-2022, which management believes represent meaningful, unquantified, upside potential. Alpha intends to soon incorporate drilling completed since mid-2022, and anticipates an expanded resource could potentially support a longer mine life and a second 25,000 tpa phase, for an aggregate 50,000 tpa operation.
PEA Highlights:
US$1.5 billion (C$2.0 billion ) after tax NPV with an 8% discount rate and IRR of 25.1%- Average Li2CO3 price of
$22,990 per tonne, over 25 years of production - After tax payback period of 3.8 years from start of production
- After tax, cumulative free cash flow of
US$5.3 billion ($C7.1 billion ) over a 25-year production life - Initial capital cost (“CAPEX”) of
$777 million (includes contingency of$179 million ) - Brine mining and processing cost, excluding Li2CO3 transport (“OPEX”) of
$5,150 per tonne - Cash cost of
$6,301 per tonne (includes mining, processing, transportation, and royalties)
The PEA was prepared by Ausenco Chile Limitada (“Ausenco”), a global engineering firm, experienced in the lithium industry. Ausenco has prepared multiple economic assessments and feasibility studies, specifically for, but not limited to, South American lithium brine extraction companies over the past several years. In addition to being DLE and production process experts, Ausenco’s knowledge was invaluable for assessing current and conservative operating and capital costs, which incorporated the latest global cost estimates. All values are reported in US dollars, unless otherwise noted. References to CDN$ have been converted at 1.35 x US$.
Economic Analysis and Summary:
Lithium chemicals produced from brines are almost universally less expensive than those produced from hard rock, giving brine operations a significant competitive advantage. Specifically, the Tolillar project benefits meaningfully from the following:
- Immediate proximity to (10-15 km from) Livent’s
Fenix Project , which has produced approximately 20,000 tpa of lithium carbonate chemicals for over two decades. Tolillar will dramatically benefit from the existence of a national high-grade highway (6 km away) connecting the project to supplies and services, a nearby (6 km) high-pressure natural gas pipeline with existing capacity, nearby (90 km) 3-phase power, and nearby (90 km) international rail lines. - A significant freshwater discovery on the north, south and west sides of the Tolillar salar, with the western discovery being capable of supporting a major lithium chemicals plant, on its own.
- A proven DLE-based production process, built upon a process that has been tested and utilized for over two decades in
Argentina . Alpha’s production technology has been developed by an expert team with unmatched, hands-on, DLE and production experience. - Being the sole owner of the Tolillar salar eliminates potential conflicts or competition for production, fresh water, equipment, and personnel.
The Discounted Cash Flow Model, generated independently by Ausenco, with an outside consultant providing tax estimate advice, demonstrates an attractive economic result from the potential production of lithium carbonate chemicals from the Tolillar project. As a result, the Company expects to continue construction of its 120 tpa pilot plant, which will provide the necessary data to support the design and feasibility study for the 50,000 tpa lithium carbonate chemicals plant envisioned by Alpha.
Discount Rate | NPV (after tax) US$ million | IRR (after tax) | NPV (pre-tax) US$ million | IRR (pre-tax) | ||
6% | 25.1% | 30.1% | ||||
8% | 25.1% | 30.1% | ||||
10% | 25.1% | 30.1% |
(NPV) Net present value – (IRR) Internal rate of return
The PEA NPV results take into account royalties that are specifically applicable to the Tolillar project.
With over
Initial Capital Costs:
Description | US$ millions | |
Direct Costs: | ||
Brine Extraction Wells | ||
DLE Plant | ||
Reverse Osmosis | ||
Chemical Plant | ||
Purification | ||
Dry Product Handling | ||
Infrastructure | ||
Direct Costs Subtotal | $399.8 | |
Indirect Costs | $197.6 | |
Contingency | $179.2 | |
Total Initial Capital Costs | $776.6 |
Total estimated initial capital costs are
Operating Costs:
Description | US$/year | US$/tonne Li2CO3 | ||
DIRECT Operating Costs: | ||||
Chemical Reactives and Reagents | ||||
Energy | ||||
Manpower | ||||
Catering and | ||||
Maintenance | ||||
Site Vehicle Costs | ||||
Bus-in/Bus-out Transportation | ||||
Consumables | ||||
Li2CO3Transportation | ||||
Resin and Membrane Replacement | ||||
Sub Total DIRECT Costs* | ||||
Sub Total INDIRECT Costs | ||||
TOTAL Processing Cost (excluding Transportation)* | $128,783,323 | |||
TOTAL Production Cost (including Transportation)* | $131,658,323 | $5,266.56 |
*Numbers may not add up due to rounding.
The estimated operating costs are current as of Q1 2023 and reflect 100% year-on-year cost increases in some cases, such as for chemical reagents, which dramatically increased due to ongoing COVID-19 related global supply chain constraints. Management supports the use of potentially temporarily inflated costs and believes the cost estimates are appropriately conservative in light of many reported cost overruns in the industry. Finally, the second largest cost center is “Energy,” accounting for 18% of the total operating cost. Alpha management has previously investigated and utilized solar power to provide energy to similar and larger projects in the past; however, solar power was not incorporated into the PEA at this time. Utilization of solar power should dramatically decrease the estimated operating cost.
Lithium Markets and Price:
Alpha consulted industry experts at
For estimating future cash flows from new projects,
Year | Li2CO3Price (US$/tonne) | |
2025 | ||
2026 | ||
2027 | ||
2028 | ||
2029 | ||
2030 – 2035 | ||
2036 – beyond | ||
Average price for 25-year production life of Tolillar project | $22,990 |
The PEA is based upon brine grades across the company’s Measured, Indicated and Inferred Mineral Resources only. Mineral resources that are not mineral reserves do not have demonstrated economic viability. There is no certainty that the Tolillar project envisioned by the PEA will be realized. The PEA is preliminary in nature and includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves.
Qualified Person:
A Technical Report prepared in accordance with NI 43-101* in support of the PEA will be filed on SEDAR (www.sedar.com) and on the Company’s website (www.alphalithium.com) within 45 days. The PEA Technical Report is intended to be read as a whole, and sections should not be read or relied upon out of context. Scientific and technical information related to the PEA contained in this news release has been reviewed and verified by:
James Millard ,P. Geo ,Ausenco Engineering Canada Inc. , Environmental Studies and PermittingPatricio Pinto, RM , Ausenco Chile Ltda., Principal Process Engineer
These persons, above, have the ability and authority to verify the authenticity and validity of this data and are independent from the Company.
Mr.
All operations and assets of the Company are in
ON BEHALF OF THE BOARD OF ALPHA LITHIUM CORPORATION
“Brad Nichol”
President, CEO and Director
For more information:
Alpha Lithium Investor Relations
Tel: +1 844 592 6337
relations@alphalithium.com
www.alphalithium.com
www.protectalphalithium.com
About
Forward-Looking Statements
This news release contains forward-looking statements and other statements that are not historical facts. Forward-looking statements are often identified by terms such as "will", "may", "should", "anticipate", "expects" and similar expressions. All statements other than statements of historical fact, included in this news release are forward-looking statements that involve risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from the Company's expectations include the results of further brine process testing and exploration and other risks detailed from time to time in the filings made by the Company with securities regulators. The reader is cautioned that assumptions used in the preparation of any forward-looking information may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted, as a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of the Company. The reader is cautioned not to place undue reliance on any forward-looking information. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement. The forward-looking statements contained in this news release are made as of the date of this news release and the Company will update or revise publicly any of the included forward-looking statements as expressly required by applicable law.
No securities regulatory authority has reviewed nor accepts responsibility for the adequacy or accuracy of the content of this news release.
* National Instrument 43-101 Standards of Disclosure for Mineral Projects of the Canadian Securities Administrators (“NI 43-101”)
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