Lithium Power International Ltd (ASX:LPI) has delivered a positive updated definitive feasibility study (DFS) for its Maricunga Stage One Lithium Brine Project in northern Chile, along with joint venture partner Minera Salar Blanco.
The plant is expected to produce 15,200 tonnes of lithium per annum over 20 years, with an operating cost of US$3,718 per tonne.
“We are extremely pleased with the results of the updated DFS for the Maricunga Stage One lithium brine project,” LPI CEO Cristobal Garcia-Huidobro said.
“The strong economics, as well as the exceptional sustainability profile, confirms the high standard and attractiveness of the project.”
Strong financials
The project is estimated to deliver an annual EBITDA of US$324 million – that's US$1.4 billion net present value at an 8% discount rate, with an internal rate of return of 39.6% and a two-year payback period.
Operating expenditure is low, at US$3,718 per tonne of lithium carbonate produced, not including credit from potassium chloride (KCl) by-product, which was not considered in the DFS.
Direct development cost is US$419 million, with an indirect cost of US$145 million and US$62 million in contingencies for a total project capex of US$626 million.
The project has received preliminary indications of interest from international and Chilean financial institutions and private funds for the debt financing and future equity financing.
Exceptional ESG profile
The project aims to achieve carbon neutrality once operations are up and running, setting new standards for corporate social responsibility. A certification process, led by Deloitte, will run in parallel as the project matures.
Project infrastructure and water rights have been secured by long-term contracts. Access to the National Power Grid has been granted, ensuring future power supply and including an important component of renewable energy.
The revised DFS was completed by Tier-1 engineering consultancy Worley to international standards, with cost inputs from engineering, procurement and construction (EPC) contractors providing greater certainty on cost estimates. The resource and reserve estimates were prepared by Atacama Water.
Timeframes for 2022
“The priority for 2022 is to finalise project finance for the Stage One project,” Garcia-Huidobro said.
“We are actively working with both international and Chilean financial institutions on different structures for debt financing, as well as with potential strategic partners for equity investments.
"Update of the EPC proposals will soon commence, with the expectation of a Final Investment Decision (FID) by the end of the year. Construction should start immediately after the FID.”
“We are continuing to work on the development of a subsequent Stage Two at Maricunga, considering the current significant forecast growth in lithium demand and Stage One being in its final phase of pre-production.”
“This will also benefit from the maturation of new production technologies in the lithium industry, realising the significant value of all our assets.”