Neometals Ltd (ASX:NMT) with its joint venture partner Mineral Resources Ltd (ASX:MIN) have progressed the commercialisation of their ELi Process after positive feasibility study results.
The study has confirmed the proposed production project to be technically and economically feasible.
Neometals owns 70% of the ELi Process which converts spodumene concentrate into high value battery grade lithium hydroxide and lithium carbonate.
The study demonstrates an internal rate of return (IRR) of 51% and a pre-tax net present value (NPV) of US$48 million.
The next step in the project’s development plan is to complete an integrated pilot plant test program.
Chris Reed, managing director, commented: “We are pleased to have completed another step towards commercialising our patented ELi process and building a globally competitive, high purity battery grade lithium compound facility.”
Feasibility study details
The study sees potential for low cost battery grade lithium products to be produced from spodumene concentrate sourced from the 27% owned Mt Marion lithium project.
The study has been completed using a location in Peninsular Malaysia as the base for operations.
Feasibility study highlights include:
Average annual production - 14,000t lithium hydroxide, 5,600 tonnes lithium carbonate
Life of plant (LOP) - 20 years
LOP revenue - US$4,042 million
Pre‐tax net cash flow - US$82.39 million
Pre‐tax NPV (12% discount rate) - US$481.7 million
Pre‐tax IRR - 51%
Cash operating cost per tonne of lithium hydroxide - US$4,630
Cash operating cost per tonne of lithium carbonate - US$5,345
Pre‐production capital cost (including EPCM and contingency) - US$158 million
Payback of capital costs - 2.6 years
The next step in the project’s development plan is to complete an integrated pilot plant test program using run-of-mine concentrates from Mt Marion before committing to the detailed design and construction of a full scale plant.
In parallel, a formal partner selection process will commence to commercialise this globally significant project.
Mt Marion Lithium Project
Mt Marion is a globally significant lithium deposit, containing total Indicated and Inferred Mineral Resources of 60.5 million tonnes at 1.36% Li2O and 1.09% Fe2O3.
The project operator, Mineral Resources, is continuing the construction phase of the project.
All site preparation work, installation of site offices and amenities, detailed engineering design work and construction of concrete civil works for the dry plant have been completed.
Overburden stripping is well progressed and the haul road to pit 1 is close to completion and on schedule according to mine start up plan.
Analysis
The feasibility study confirmed the potential for a viable, profitable new business using the patented ELi Process.
Results indicate that the project has the potential to support a robust business in a high growth market sector.
The ELi Process has the potential to provide a key competitive advantage with lower capital and unit
operating costs when compared to current industry averages using conventional technology.
The current market for battery grade lithium hydroxide and lithium carbonate is in tight supply due to high demand growth and constrained supply.
The market demand is forecast to grow significantly for the next 5 years through to 2020.
This is fortuitous timing as this is the timeframe in which Neometals and Mineral Resources are aiming to commence production at the project.
The company's share price is up circa 150% year to date, trading around $0.43.
Neometals is positioned as a near term producer coming online in a strong lithium market.
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