Nevada Lithium Resources Inc (CSE:NVLH, OTCQB:NVLHF) has now completed its acquisition of 100% ownership of the highly valuable Bonnie Claire lithium project, situated in Nevada (Figure 1). The completion of the transaction with Iconic Minerals Ltd was announced July 10, 2023. This acquisition will grant Nevada Lithium complete control over one of North America's most extensive lithium deposits.
Concurrent with the acquisition, Nevada Lithium also completed a second financing which brought in several new groups of lithium-experienced investors led by Marcel Boekhoorn, a tremendously successful Dutch entrepreneur and billionaire.
PEA highlights
Presently, Bonnie Claire boasts an impressive Inferred NI 43-101 compliant mineral resource estimate of approximately 18.4 million tonnes, with an average lithium grade of 1,013 parts per million. To put the footprint of this land package into perspective, the project is about 1.25 times the size of Manhattan.
Fig. 1
Source: Nevada Lithium
A preliminary economic assessment (PEA) conducted on Bonnie Claire, although not optimized, has revealed promising results. At a lithium carbonate equivalent (LCE) price of US$13,400 per tonne (/t), the project demonstrates a post-tax net present value (NPV8) of US$1.5 billion (bn) and a post-tax internal rate of return (IRR) of 23.8%. Nevada Lithium, with 100% asset ownership post transaction, now has a market value of just C$60 million.
It is worth noting that recent spot prices for LCE have witnessed a significant rebound, reaching around US$41,000/t after hitting a low of US$21,500/t in late April 2023.
Blue sky potential
The PEA further highlighted the immense potential of Bonnie Claire under these higher lithium price market scenarios. At an LCE price of US$20,000/t, the project's post-tax NPV8 stands at an impressive US$3.2 billion, accompanied by a post-tax IRR of 39.5%. Moreover, at a higher LCE price of US$30,000/t, the PEA indicates a post-tax NPV8 of US$5.9 bn and a post-tax IRR of 60.3%.
The consolidation of ownership of the Bonnie Claire project is expected to bolster Nevada Lithium's position in the market significantly. With 100% control over the asset, the company will gain a competitive edge in negotiations with strategic investors and lithium end-users, who typically prefer working with entities holding majority ownership over a project.
Sector developments
Recent developments in the lithium sector have witnessed notable strategic deals. For instance,
- Ford Motor Company (NYSE:F) secured supply agreements with industry giants Albemarle Corporation, Sociedad Química y Minera de Chile S.A. (SQM), and developers, EnergySource Minerals, Compass Minerals, and Nemaska Lithium Inc (TSX-V:NMX)
- General Motors Company (NYSE:GM) invested $650 million in Lithium Americas Corp (TSX:LAC, NYSE:LAC), a US-based project developer, and initiated a $200 million prepayment agreement with producer Livent
- Tesla Inc (NASDAQ:TSLA) also secured a supply deal with US-based developer Piedmont Lithium Inc (ASX:PLL, NASDAQ:PLL, XETRA:)
- Mercedes-Benz AG entered a supply agreement with Canadian-based Rock Tech Lithium Inc (TSX-V:RCK)
Investment outlook
Nevada Lithium has several significant milestones in sight for this year. These include obtaining additional metallurgical results (the company has already announced the ability to produce battery grade lithium carbonate) and commencing the 2023 resource upgrade drill programme. The outcomes of these efforts will contribute to the prefeasibility study, which aims to conclude by mid-2024.
Following the consolidation, there is potential for Nevada Lithium to achieve its objective of securing a strategic partner for the project, which would further enhance the company's position and open doors to new opportunities and growth within the industry.