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Nemaska Lithium Inc. (TSXV:NMX) Feasibility Study results on the Whabouchi Mine and Concentrator to be located in the lower James Bay Region of Quebec and the Hydromet Plant to be located in Salaberry-de-Valleyfield, Quebec: NPV of $924M and IRR of 25.2%, with an expected mine life of 26 years and a 3.7 year payback of capital costs .
As quoted in the press release:
The Feasibility Study positively compares to the Preliminary Economic Assessment filed on Sedar on November 16, 2012 on a number of fronts:
Feasibility Study Highlights
(All calculations assume a 6% Li2O spodumene concentrate)
(All figures are quoted in Canadian Dollars (C$), unless otherwise specified)
| Expected Mine Life | 26 years | 18 years |
|---|---|---|
| Life of Mine Revenue | $6.9 Billion | $4.1 Billion |
| (average of $267M/yr for 26 yr) | (average of $228M/yr for 18 yr) | |
| Pre-Tax Net Cash Flow | $3.4 Billion | $1.8 Billion |
| (average of $151M/yr before initial CAPEX) | (average of $123M/yr before initial CAPEX) | |
| Pre-Tax NPV 8% Discount (base case) | $924 Million | $567 Million |
| Pre-Tax Internal Rate of Return (IRR) | 25.20% | 23.30% |
| Total Initial Capital Costs | $448 Million in CAPEX | $389 Million in CAPEX |
| $52 Million in Contingency | $50 Million in Contingency | |
| $21 Million in Working Capital | $15 Million in Working Capital | |
| Pay Back of Capital Costs | 3.7 years | 3.8 years |
| Selling Price Lithium Hydroxide | US $8,000/t FOB Valleyfield | US $8,000/t FOB Valleyfield |
| Selling Price Lithium Carbonate | US $5,000/t FOB Valleyfield | US $6,500/t FOB Valleyfield |
| Average Cost Per Tonne Spodumene Concentrate | $189/t FOB Whabouchi Mine | $203/t FOB Whabouchi Mine |
| Average Cost Per Tonne Lithium Hydroxide | $3,450/t (US $ 3,105/t) | $3,400/t (US $ 3,400/t) |
| FOB Valleyfield | FOB Valleyfield | |
| Average Cost Per Tonne Lithium Carbonate | $4,190/t (US $ 3,771/t) | $3,500/t (US $ 3,500/t) |
| FOB Valleyfield | FOB Valleyfield | |
| Life of Mine Production | 5.5 million tonnes spodumene concentrate converted into ≈728,000 tonnes battery grade lithium hydroxide and ≈85,000 tonnes of battery grade lithium carbonate. | 3.8 million tonnes spodumene concentrate converted into ≈366,000 tonnes battery grade lithium hydroxide and ≈177,000 tonnes of battery grade lithium carbonate. |
| (average per year of ≈213,000 tonnes of concentrate to produce ≈28,000 tonnes of lithium hydroxide and ≈3,250 tonnes of lithium carbonate) | (average per year of ≈213,000 tonnes of concentrate to produce ≈20,700 tonnes of lithium hydroxide and ≈10,000 tonnes of lithium carbonate) | |
| Exchange Rate $C to $US | 01:00.9 | 1:01 |
To complete the Feasibility Study, Nemaska commissioned signumBOX Inteligencia de Mercados, an independent market analysis group based in Chile, to produce a Lithium Carbonate and Lithium Hydroxide Market Study. The market study contemplates existing lithium compound suppliers, their planned growth and new suppliers to market as well as anticipated demand forecast into 2025. The study showed that unlike lithium carbonate, the lithium hydroxide market is expected to tighten as growth in demand, driven largely by batteries, will not be satisfied by the increases in current installed capacity. The study concludes the situation will be aggravated towards the end of the decade when the growth in demand will be greater than the growth in supply. Newcomers to the market, such as Nemaska, will fill this gap in supply and demand. The study also shows the price of lithium hydroxide will increase from US $7,100/t in 2013 to US $8,000/t in 2017 to US $11,100/t by 2025. By contrast, Lithium carbonate prices will range from US $5,700/t in 2013 to US $5,000/t in 2017 to US $8,400/t by 2025.
Lithium hydroxide is emerging as the chemical compound of choice for the growing lithium-ion battery market due to several factors including: a longer life cycle; better power density (last longer between charges) and enhanced safety features (more tolerant to temperature changes, especially high heat).
Nemaska Lithium President and CEO, Guy Bourassa, said:
We are very pleased with the significant improvements in the NPV and IRR for this project. We extended the mine life by 8 years while keeping the CAPEX on the project to within 15% of the figures reported in 2012 when one takes exchange rate changes and inflation into consideration. We were able to achieve this while significantly reducing the overall footprint of the project and reducing the environmental impact of the mine site.
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Conference Call
Nemaska will host a conference call on the Feasibility Study on Wednesday, May 14, 2014 at 10 am Eastern Standard Time. To participate in the call, dial 1-877-223-4471 or +1-647-788-4922 internationally. A playback will be made available two hours after completion of the call for 10 days. To access this playback dial 1-800-585-8367 or +1 416-621-4642 with the conference ID code 343 190 37. The conference call will also be available via live webcast for French https://www.gowebcasting.com/5464 and for English: https://www.gowebcasting.com/5465
Click here to read the Nemaska Lithium Inc. (TSXV:NMX) press release