Authier Pre-Feasibility Study Demonstrates Excellent Returns and Significant Upside Potential
- Positive PFS demonstrates opportunity to create substantial long-term shareholder value
- Pre-tax NPV of C$140m (AUD $140m), IRR of 39% and payback 2.2 years
- LOM revenue C$978m (AUD $978m), 1.45Mt of spodumene concentrate sales
- Low start-up capital expenditure of C$66m
- Significant potential to expand resource base
- Further potential to optimise the mine plan and concentrate grade thereby improving returns
- Initial mine life of 13 years based on maiden Ore Reserve
The PFS has confirmed the technical and financial viability of constructing a simple, low-strip ratio, open-cut mining operation and processing facility producing spodumene concentrate. The positive PFS demonstrates the opportunity to create substantial long-term sustainable shareholder value at a low capital cost.
Key findings of the PFS include:
- Pre-tax NPV of C$140 million and pre-tax IRR 39% (real terms at 8% discount rate);
- Annual average concentrate production of 99,000 tonnes at 5.75% Li20;
- Average annual revenue of C$67 million and EBITDA of C$31 million;
- Life of mine strip ratio of 6:1 (waste to ore) and cash costs of C$367 (US $280) FOB Montreal Port;
- Development capital expenditure of C$66 million; and
- Maiden Ore Reserve of 10.2 Mt @ 1.02% Li20 (Proven Reserve 4.9Mt @ 0.97% Li20 and Probable Reserve 5.3Mt @ 1.06% Li20) delivers a mine life of 13 years.
The Company is now looking at a number of optimisation options to significantly enhance the value of the project, including drilling (currently underway) to expand the Mineral Resource and Ore Reserves (the deposit is open along strike and at depth), further metallurgical and geotechnical test-work, and other downstream value-adding opportunities.
Sayona is exploring three separate options for the monetisation of the spodumene concentrates, including:
1. Selling concentrates into the Quebec domestic market. Quebec is the only place in the world outside of China that has an established lithium carbonate production facility. The facility is on care and maintenance but is due to be re-commissioned in 2018. In addition, Nemaska Lithium is also planning to establish a lithium carbonate and hydroxide facility in Quebec and could be a potential purchaser of lithium concentrates;
2. Exporting concentrates through a Quebec Port and selling to a Chinese lithium carbonate processing facility; and
3. Processing and producing a lithium carbonate/hydroxide product through an integrated downstream processing facility at Authier.
Corey Nolan, Chief Executive Officer, commented "The Company is very pleased to demonstrate Authier's potential to create significant shareholder value. A pre-tax NPV of C$140 million has been demonstrated with more upside to come through the phase 2 drilling program and other optimisation programs. The Company plans to progress towards completing a Definitive Feasibility Study, Mining Licence applications, offtake contracts and financing this year".
Authier PFS Key Study Outcomes and Assumptions
The PFS has been completed to an accuracy of +/-25% and has contributions from a number of leading industry service providers including, SGS Canada and Bumigeme Inc. All of the metallurgical testing has been undertaken at SGS Lakefield. The SGS Lakefield facility has been operating for over 70 years in metallurgical testing and design, and employees have considerable experience in the Canadian lithium industry. Bumigeme Inc is a Canadian firm of consulting engineers based in Montreal, working mainly in the mining and metallurgical sector. Dr Gustavo Delendatti was the Competent Person for the Mineral Resource estimate.
Key outcomes of the PFS include a pre-tax Net Present Value ("NPV") of C$140 million over an initial 13-year mine life, based on the current Proven and Probable Ore Reserve estimate of 10.2Mt @ 1.02% Li20 at a 0.45% Li20 cut-off grade (see Table 1 in the link below).
The pre-tax Internal Rate of Return ("IRR") is estimated at 39% and payback on capital is 2.2 years. The life-of-mine ("LOM") cash operating costs are estimated at C$334 per tonne (mine gate basis) or C$367 per tonne FOB Port of Montreal based on a development capital expenditure of C$66 million and a life-of-mine capital cost estimate of C$113 million.
The Company is now looking at a number of optimisation options to significantly enhance the value of the project, including:
- Additional definition and expansion drilling to expand the size of the resource and reserves, and extend the project mine life;
- Further geotechnical test work to assess the potential for a steeper hanging wall pit slope. This would reduce the waste removal requirement and LOM waste to ore ratio;
- The current development approach is to initially construct the project with a planned annual production rate of less than 2,000 tonnes of ore per day. This avoids a lengthy and costly Environmental Impact Assessment. Once in production, the Company will assess the technical and economic viability of expanding the production capacity of the project;
- Further metallurgical test work to improve processing recoveries and concentrate grades. The PFS assumes a metallurgical recovery of 80% and a 5.75% Li20 concentrate grade. However, recovery rates of up to 88% and concentrate grades higher than 6% Li2O have been achieved in historical metallurgical testing; and
- Other downstream value-adding opportunities including the potential to produce lithium hydroxide.
The Authier deposit will be mined by open cut methods enhanced by the shallow and thick nature of the mineralisation, allowing spodumene ore to be processed from the commencement of mining. The PFS demonstrated a LOM strip ratio of 6:1 (waste to ore) providing a low mining cost. The Company believes with further drilling it can expand the size of the resource, provide better definition of the orebody, and lower the overall waste to ore ratio.
Bumigeme have designed a concentrator plant to process 700,000 tpa of ore feed using conventional flotation technology suitable for a pegmatite orebody. The plant will produce a 5.75% Li20 concentrate suitable for feedstock to lithium carbonate conversion plants. Further studies will be undertaken to potentially reduce the iron content of the Authier lithium concentrate for sale to the glass or ceramics industries.
The PFS pricing is based on the May 2016 Deutsche Bank Lithium Industry Study and assumes that concentrates are delivered FOB to an export ship at the Port of Montreal. The LOM average price assumption is US$515/tonne for a 5.75% Li20 concentrate. The modelled price for the PFS is a significant discount to the current market and is considered conservative.
The Company plans to move the project forward with a number of work programs, including:
- Phase 2 resource expansion and definition drilling (in progress);
- Advanced geotechnical and hydro-geological assessments (in progress);
- Metallurgical pilot plant testing;
- Definitive Feasibility Study; and
- Testing of Authier concentrates for the conversion into lithium carbonate.
The Company is also progressing its environmental and Mining Lease permits, and believes the approvals can be achieved within the planned development timetable.
To view the full release with tables and figures, please visit:
About Sayona Mining Ltd
Sayona Mining Limited (ASX:SYA) (OTCMKTS:DMNXF) is an Australian-based, ASX-listed (SYA) company focused on sourcing and developing the raw materials required to construct lithium-ion batteries for use in the rapidly growing new and green technology sectors. Sayona's primary objective is developing the Authier lithium project in Quebec, Canada. Authier is an advanced, development project, construction forecast to commence in early 2019 and first concentrate production in early 2020. Please visit us as at www.sayonamining.com.au
Sayona Mining Ltd