Pure Energy Minerals (TSXV:PE) kicked off the week with the release of a preliminary economic assessment (PEA) for the production of lithium hydroxide monohydrate at its Nevada-based Clayton Valley lithium project.
According to the PEA, Clayton Valley will produce about 10,300 tonnes of lithium hydroxide (9,100 tonnes of lithium carbonate equivalent) annually for 20 years. The project has estimated an after-tax NPV of $264 million at an 8-percent discount, and its after-tax IRR is expected to clock in at 21 percent.
The project will have an average steady state operating cost of $3,217 per tonne of lithium hydroxide monohydrate, with product sale pricing ranging from $9,000 to $16,500 per tonne. Initial CAPEX is pegged at $297 million, and Clayton Valley’s payback period should be just over four years.
Pure Energy notes that the PEA incorporates Tenova Advanced Technologies’ proprietary lithium recovery flow sheet. It says that based on mini pilot plant testing and subsequent engineering studies, the process should allow Clayton Valley to achieve lithium recoveries of over 91 percent; that’s compared to about 50 percent for traditional lithium brine processing using evaporation ponds.
“The potential reduction in operating costs for lithium hydroxide through the innovative application of cleaner, more efficient technology is exciting,” said Patrick Highsmith, CEO of Pure Energy, in a release. “As outlined in the PEA, the Clayton Valley Project is expected to nearly double lithium recoveries when compared to conventional operations while at the same time returning in an environmentally responsible manner more than 90% of the brine to the basin after lithium recovery.”
Walter Weinig, vice president of projects and permitting at Pure Energy, added that the company’s next steps will include completing a feasibility study for Clayton Valley, as well as constructing and operating a “robust pilot plant.” Planning and design work for the pilot plant is reportedly already underway.
As its name suggests, the Clayton Valley project is located in the Clayton Valley, a hotspot for lithium exploration, development and mining in Nevada. The area is home to Albemarle’s (NYSE:ALB) Silver Peak mine, the only producing lithium brine operation in the US, as well as a huge number of companies that are hoping to become producers in the future.
Nevada is also known for being the site of Tesla’s (NASDAQ:TSLA) lithium-ion battery gigafactory. The company just began producing lithium-ion batteries for electric vehicles at the site, and many lithium companies in the state hope to become Tesla suppliers. To date, only Pure Energy Minerals and partners Bacanora Minerals (TSXV:BCN) and Rare Earth Minerals have signed supply deals with Tesla; their arrangements are conditional on a variety of factors.
Pure Energy was down 1.69 percent at close of day Monday, with shares changing hands at $0.58. Year-to-date the company’s share price has gained 1.75 percent, and it’s down 9.38 percent from this time last year.
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.