- Production - 20,000 tpa of lithium carbonate (LCE) and 74,000 tpa of potassium chloride (KCl) fertiliser.
- Operating costs - US$2,938/t LCE (US$2,635/t post KCl credit).
- Project NPV - US$731 million after tax at 8% discount rate (US$1.049 billion before tax
- IRR of 23.4% (ungeared).
- Capital costs - US$527 million (US$389 million direct costs, including KCl plant).
- Short payback - 2 years and 11 months (based on 2-year ramp-up period).
- Mine life - 20 years (initial).
Analyst comment: this excellent achievement for Lithium Power positions Maricunga to become the next producing lithium asset in Chile and, in our opinion, the standout lithium brine development project globally, due to its forecast exceptionally low operating costs.
While most of the assumptions were in line with our previous estimates, capital costs are higher. We believe there may be scope to reduce these costs in future studies, given that US$137 million of the total capital outlay was for contingencies and indirect costs.
Also boding well for the development of Maricunga is the election of Sebastián Piñera, a conservative billionaire, as the country's president. Piñera is reportedly pro-business and foreign investment, and there is a high degree of expectation that the new government will enact numerous policies to encourage and improve the lithium industry in Chile.
Valuation: we have decreased our valuation of Lithium Power to $1.13/share (previously $1.24). The driver for this reduction was higher capital costs than our previous estimate.
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About Lithium Power International Ltd
Lithium Power International Limited (ASX:LPI) (FRA:24L) is a pure-play lithium explorer and developer, focusing on developing and fast-tracking to production the high-grade Maricunga lithium brine project in Chile.
LPI has a well known performing technical team with the experience to take the Maricunga project all the way through the development stages to production.
The regions that LPI is currently focussed on are:
1. Maricunga JV (Chile) – On 13th September 2016, Lithium Power announced the creation of a new JV to develop the world-class Maricunga lithium brine deposit in northern Chile.
2. Pilbara (Western Australia) – LPI has one granted exploration tenement and two pending exploration applications covering 203km2 in the Pilbara region of northern Western Australia. The largest granted exploration tenement is at Pilgangoora-Houston Creek is 2-3km west of the Pilbara Minerals (ASX:PLS) and Altura Mining (ASX:AJM) lithium deposits.
3. Greenbushes (Western Australia) – LPI has two granted exploration tenements covering 400km2 in the Greenbushes area of southern Western Australia. The tenements are adjacent to the world’s largest hard rock lithium mine owned & operated by Tianqi/Talison.
4. Centenario (Argentina) –Through its Argentinian subsidiary, Lithium Power holds a total of 6 granted tenements in the Centenario lithium brine salar within the Salta province of the Puna Plateau. In total, the 6 granted tenements cover an area of 61.52km2. In addition, there is 1 further tenement in the grant review stage.
With the exception of the Maricunga JV, all tenements are 100% owned by LPI or LPSA (including rights to the Centenario tenement which is the subject of review by the Argentinian mining authorities).
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