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Piedmont Lithium’s scoping study delivers compelling economics for integrated lithium project

Published: 02:54 19 Jul 2018 BST

Aerial view of Piedmont project area in North Carolina
The components of the integrated Piedmont project are close to infrastructure

Piedmont Lithium Ltd (ASX:PLL) (NASDAQ:PLLL) has been buoyed by a scoping study which has delivered compelling projected economics for its vertically-integrated Piedmont Lithium Project in the USA.

Positive economics are supported by low initial capital, early spodumene concentrate sales, attractive capital and operating costs, short transportation distances, minimal royalties and low corporate income taxes.

Piedmont, which is in the Carolina Tin-Spodumene Belt in North Carolina, will meet an important strategic need for domestic US lithium production.

The study says it will also confer substantial economic benefits on the local region.

READ: Piedmont Lithium tests produce consistent high-grade concentrate from US lithium project

President and CEO Keith Phillips said, “We are very pleased with the results of the scoping study.

“The economic benefit of developing an integrated lithium chemical business in North Carolina, USA, is now clear.

“This is driven by the exceptional infrastructure and human resource advantages of our location, as well as the competitive royalty and tax regime offered in the United States.”

Shares up 11%

Investors also responded positively with shares up more than 11% intra-day to 19.5 cents.

The scoping study utilises the maiden resource estimate of 16.2 million tonnes grading 1.12% lithium oxide.

It is based on a lithium hydroxide chemical plant with annual capacity of 22,700 tonnes.

This would be supported by an open pit mine and concentrator producing 170,000 tonnes per year of 6% lithium oxide low-iron spodumene concentrate.

The study contemplates a staged development approach to minimise start-up risk and up-front capital requirements.

It states that revenue from open-market spodumene concentrate sales in the project’s initial years will help defray capital requirements for the chemical plant.

The average life of project cash operating cost of about US$3,960 per tonne, positions Piedmont as the industry’s lowest-cost producer.

Low operating costs, low royalties and low corporate tax rates potentially allow Piedmont to achieve after-tax margins approaching US$8,900 per tonne, or around 64%.

The project generates an estimated US$8,650 per tonne of free cash flow during life-of-mine operations after construction of the chemical plant.

READ: Piedmont Lithium acquires site for planned US lithium chemical plant

Piedmont said that the commercial potential and staged development placed it in a strong position to engage in discussions around future financing, including with prospective strategic and offtake partners.

Phillips said: “We look forward to an exciting period ahead as we work to enhance the project even further through continued growth in our resource base and project life, and the evaluation of potential by-product credits.”

READ: Piedmont Lithium sees added value from by-products in future mining operation

The company will now proceed with a pre-feasibility study targeted for completion early in 2019.

This will incorporate a by-product study, additional drilling on the Core property, metallurgical studies and continued expansion of the company’s land position.

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