The report indicates a US$827-million after-tax NPV at an 8-percent discount and an IRR of 24.3 percent for 20,000 tonnes of lithium carbonate production per year.
Vancouver-based Advantage Lithium (TSXV:AAL) has published a positive preliminary economic assessment (PEA) for its Cauchari joint venture (JV) project in Jujuy, Argentina, the company announced on Tuesday (August 14).
The company’s flagship project, which Advantage Lithium is developing in partnership with lithium producer Orocobre (ASX:ORE,TSX:ORE), has a mine life of 25 years, including a three-year ramp up for 20,000 tonnes per year of lithium carbonate production.
The report indicates a US$827-million after-tax net present value at an 8-percent discount rate and an internal rate of return of 24.3 percent for 20,000 tonnes per year of lithium carbonate production.
Pre-production capital costs are estimated at US$401 million, with operating costs averaging US$3,667 per tonne of lithium carbonate after production ramp up.
“This clearly demonstrates the potential of Cauchari JV as a robust project with operating costs expected to be in the lower quartile of the industry cost curve,” said David Sidoo, CEO and founder.
Looking ahead, Advantage intends to advance rapidly through phase 3 drilling and well-testing programs to measured and indicated resources as an input to its dynamic production model.
“The results from this work are required to support resource to reserve conversion and to achieve our target definitive feasibility study completion by Q2 2019,” Sidoo added.
In May, Advantage published an updated resource estimate that increased Cauchari’s inferred resource to 3 million tonnes of lithium carbonate equivalent at 450 mg/L lithium. These results together with the PEA form the basis to advance to a feasibility study.
According to the company, production is planned to start in 2021, with the plant ramping up over three years to a steady state of 20,000 tonnes per year of lithium carbonate.
Aside from Cauchari, the company also owns a 100-percent interest in three additional lithium exploration properties in Argentina: Antofalla, Incahuasi and Guayatayoc.
After the announcement, shares of Advantage Lithium increased 2.3 percent in Toronto. As of 2:00 p.m. EST on Wednesday (August 15), Advantage Lithium’s share price sat at C$0.80.
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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: Advantage Lithium is a client of the Investing News Network. This article is not paid-for content.