The new FS extends Whabouchi’s expected mine life by 27 percent from the previous 2016 FS, raising it from 26 years to 33 years. It also increases the hydromet plant’s production capacity by 20 percent. Both Whabouchi and the hydromet plant are located in Quebec.
“With more than a year of experience in building, commissioning and operating the hydromet phase 1 plant in Shawinigan and the production of over 1,050 t of above 6 percent spodumene concentrate from a bulk sample at the Whabouchi Mine, our confidence in the process at both the mine and hydromet plant has increased and we believe our project is significantly de-risked,” said Nemaska President and CEO Guy Bourassa on Tuesday (January 9).
Bourassa explained that the 2018 FS considers the company’s current offtake contracts, operational experience, ongoing discussions with potential customers and assessment of the lithium market. It builds on an updated resource block model completed after a 2016 and 2017 drill campaign.
“Accordingly, we have increased the overall capacity of the commercial project by 20 percent and added flexibility to the hydromet plant, increased the lithium carbonate production capacity up to 16,000 tonnes per year while maintaining the flexibility to produce up to 100 percent of lithium hydroxide,” he said, adding, “both products are in high demand and the known lithium carbonate sales price is now very similar to that of lithium hydroxide.”
In December, Nemaska delivered its first shipment of battery-grade lithium hydroxide made from Whabouchi mine concentrate. The concentrate was derived from a 6.3 percent Li2O spodumene concentrate produced during a bulk sample last year, and was converted into battery-grade lithium hydroxide at the company’s Phase 1 plant. Nemaska delivered its second shipment of battery-grade lithium hydroxide earlier this week.
Other FS highlights include an after-tax IRR of 31 percent, and an improved after-tax NPV of C$2.4 billion at a discount of 8-percent; previously Whabouchi’s after-tax NPV stood at C$1.2 billion, also at an 8-percent discount. Life-of-mine revenue has increased 108 percent, rising from C$9.2 billion to C$19.2 billion, or an average of C$582 million per year.
Nemaska used an average sales price of US$14,000 per tonne for lithium hydroxide throughout Whabouchi’s mine life. For lithium carbonate it used an average sales price of US$9,500 per tonne for the first five years and US$12,000 thereafter over the remaining life of mine. The company notes that there has been a “considerable strengthening” in the lithium salts market, and that has been reflected in both lithium hydroxide and lithium carbonate prices.
CAPEX for the mine, concentrator and hydromet plant is set at C$801 million in the new FS, including contingency and excluding already invested CAPEX of C$74 million. Bourassa said the company is confident that project financing will be completed this quarter, while CFO Steve Nadeau said that he sees the new study “positively impact[ing] the ongoing financing discussions.”
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Securities Disclosure: I, Melissa Shaw, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: Nemaska Lithium is a client of the Investing News Network. This article is not paid-for content.