Strategically located with developed infrastructure means project can be fast-tracked
A bankable feasibility study underway, expected in July
Strong team with experience of lithium
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 and Orocobre (ASX:ORE), and has some of the best infrastructure. It is 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 at 4.12 million tonnes of lithium carbonate equivalent (LCE) and inferred resources of 798,000 tonnes.
Earlier this month, the firm filed a key environmental impact assessment (EIA) for the site, part of the bankable feasibility study (BFS) from WorleyParsons which is earmarked for July this year. The firm will then use this study to obtain the funding needed to build the project.
A preliminary economic assessment showed potentially robust numbers based on a 25,000 tonne per year operation (25 year mine life) after a three- year ramp up. Capital expenditure (capex) was put at US$410 million, while operational expenditure was put at US$3,218 per tonne of LCE (putting it at one of the lowest-cost producers), and NPV (net present value) of $824 million and IRR (internal rate of return) of 23.4%.
The group 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, started in 4Q last year, is in progress. Millennial says the infrastructure already in place in the area offers the potential for lowered Capex and Opex at the property.
The lithium sector, as has been well documented, is booming via the rise of electric cars (lithium is used in the batteries) and energy storage. Global demand for lithium carbonate is expected to rise to more than 500,000 tonnes by 2025 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 charge 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.
Technical studies to support the BFS are progressing well, including pilot plant design for 3-tonne-per-month facility and pumping tests completed.
There have also been supporting infrastructure upgrades, 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.
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.
What the chairman said
"What's different about us is our technical team. We have excellent people in the lithium space. It's a relatively new business," Graham Harris told Proactive in March.
"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 deliver the bankable feasibility, we are going to be able to deliver."