Strategically located with infrastructure, which means project can be fast-tracked
Bankable feasibility study shows robust producer with low costs
Strong team with lithium experience
What Millennial Lithium does:
The project lies in the heart of the "Lithium triangle" - home of other well-known producers such as SQM (NYSE:SQM), Abermarle (NYSE:ALB), FMC Lithium, and Orocobre (ASX:ORE) - and has some of the best infrastructure, being accessible all year round.
In April this year, the company reported a near doubling of the previous tonnage in the measured and indicated category of the resource to 4.12 million tonnes of lithium carbonate equivalent (LCE) and inferred resources of 798,000 tonnes.
In June, the firm then filed a key environmental impact assessment (EIA) for the site, part of the bankable feasibility study (BFS) from WorleyParsons. That milestone feasibility study, which will be used to obtain development funding, was published on July 29 and showed the asset has the potential to be a 'robust' lithium carbonate producer with low costs.
The company also has the Cauchari East brine project, also in the 'Triangle', adjacent to Orocobre’s Olaroz mine and Lithium America’s in-development Cauchari project. The site covers 11,000 hectares and drilling - which started in the fourth quarter of last year - is in progress.
Millennial Lithium says the infrastructure already in place in the area offers the potential for lowered capital and operating expenditure at the property.
The lithium sector, as has been well documented, is booming via the rise of electric cars - lithium is used in the car batteries - and energy storage. Global demand for lithium carbonate is expected to rise to more than 500,000 tonnes by 2025, up from 163,000 tonnes in 2015.
A whopping 2.1 million electric vehicles were sold last year and 5.4 million are expected to be in use by the end of 2018. There are more than 630,000 plus charging stations in place and commitments to roll out multi-million location networks by 2030. The firm believes there will be a sustained period of strong lithium prices.
Pastos Grandes brine also benefits from favorable chemistry, with low magnesium levels and reasonable sulphate levels, which means that a conventional processing model can be used to exploit the lithium, rather than the firm trying, like others in the sector do, to introduce a new technology.
How it is doing:
Millennial is well financed to complete the work and has a strong technical team with extensive lithium experience leading its efforts in Argentina.
"We are very pleased that we have been able to advance our Pastos Grandes project from exploration through to a completed feasibility study in just over two years," Farhad Abasov, Millenial Lithium's CEO said as he unveiled details of the study, which envisages production of 24,000 tonnes per year of battery grade lithium carbonate - over 99.5% lithium carbonate equivalent.
The total initial capital expenditure required was put at US$448.2 million, including direct and indirect costs. The net present value (NPV) was put at US$ 1,030 million after-tax at an 8% discount rate and an internal rate of return (IRR) of 24.2%. The projected mine life is 40 years.
The feasibility study's production model is divided into two stages: A start-up stage from years one to six; and the main mining stage from years seven to 40, or the remaining 34 years of production.
Currently, Millenial Lithium is constructing a pilot plant at Pastos Grandes, which is supported by around 32,500 square meters of pilot evaporation ponds together with a liming plant amd is projected to produce up to 3 tonnes of battery grade lithium carbonate per month. The idea is this plant will provide early studies to support detailed engineering estimates and product sample material for potential customers.
There were supporting infrastructure upgrades earlier this year, including a new project centre commissioned in March, which will be run with renewable energy. This also included a camp expansion and hybrid solar-diesel power system - the first of its type in the Puna region of Northern Argentina.
What the boss says:
Millenial Lithium's chairman, Graham Harris told Proactive in March this year: "We have managed to gather some of the top technical people that have been involved in lithium projects and actually put them into production which is very rare and I think that given we are in a good jurisdiction, we've been successful in raising the capital to date, and I think with the line of sight we have right now, once we've delivered the bankable feasibility, we are going to be able to deliver."
What the broker says:
On July 30, London broker Liberum Capital raised its target price for Millennial Lithium to $2.40 from $2.20 and reiterated a Buy rating on the Toronto-listed stock following the publication of the feasibility study for the Pastos Grandes project. Millennial Lithium shares were trading at $1.60 on the day.
Liberum analyst Ben Davies pointed out that the feasibility study confirmed “robust economics, lower than those used in our company valuation.”
The analyst noted that the next step for the company is gaining the relevant environmental approvals before the end of the year and finalising the targeted financing structure.
He concluded: “We believe that we are at a cyclical low for the commodity and that the current share price is an attractive entry point”.