Century Lithium Corp. (TSX-V:LCE, OTCQX:CYDVF) has taken another step towards enhancing the economics of its Angel Island lithium project, a move welcomed by analysts at Noble Capital Markets.
The initial internal optimization study identified cost reductions of up to 25% or $395.2 million from Phase 1 capital expenditures which total $1.58 billion.
“If confirmed by an updated feasibility study, the cost savings could enhance the economics of the Angel Island project, which is currently projected to generate a net present value of $3.16 billion based on an 8% discount rate,” analysts wrote in a note to clients.
“The company will initiate work on an updated feasibility study, and management is optimistic that optimization of Angel Island’s mining plan and processing, along with the sale of surplus sodium hydroxide generated in the production process, could lead to both lower estimated capital and operating costs.”
Analysts highlighted that among other potential cost savings, the study identified opportunities to reduce capital costs via changes in the flow sheet, equipment selection, and updated vendor quotes in the processing areas of filtration, direct lithium extraction, and the chlor-alkali plant.
Noble also highlighted opportunities to improve site facilities and eliminate inefficiencies, enhancing the process from mining to battery-grade lithium production.
“We expect that some of these efficiencies may extend to Phases 2 and 3 [of construction] thus offering the potential for additional savings,” the analysts wrote.
Analysts repeated their ‘Outperform’ rating on Century Lithium and awarded it a target price of C$3.25.
Shares of Century Lithium traded up 11% at C$0.26 late morning on Wednesday.
“Angel Island is one of a few advanced lithium projects being developed in the United States to provide an end-to-end process to produce battery grade lithium,” Noble wrote.
“While low lithium prices and a more tempered near-term growth outlook for electric vehicles has had an impact on the share price, we believe Century Lithium's Angel Island Mine project is well-positioned to benefit from battery grade lithium demand growth and efforts to secure North American lithium supply chains.”