Kodal Minerals PLC (AIM:KOD) released an updated feasibility study for its flagship Bougouni lithium project in Mali to reflect a 20% increase in capital costs and a 43% jump in the price of its lithium spodumene concentrate (SC6) product.
The project’s post tax net present value jumped to US$567mln, from US$201mln in the original January 2020 feasibility study.
The internal rate of return soared to 91% (post tax) from 51% originally, the lithium focused development and exploration company said.
It estimates annual average production of 238,000 tonnes, up from 218,000 tonnes previously, at a cash cost of US$362 per tonne.
Revenue is expected to exceed US$2.145bn over the mine’s 8.5-year life based on an average SC6 selling price of US$1,060 per tonne, up from US$738/tonne originally.
This is due to increased demand for battery minerals and a shortage of supply. The original study estimated life-of-mine revenues of more than US$1.4bn.
"This feasibility study update continues to utilise conservative pricing for the sale price of spodumene concentrate when compared with current prices achieved by producers, including Pilbara Minerals Ltd (ASX:PLS), reporting an average spodumene price reference for sales in the first quarter of this year of US$2,650 per tonne of concentrate,” said chief executive Bernard Aylward.
However, a number of key capital and operating costs inputs have also increased in the 2.5 years since the original study.
Capital costs have grown about 20% to US$154.3mln due to higher raw material and shipping costs, while mining costs have increased about 15% to US$3.03 per tonne as a result of higher fuel costs and contractor demand.
A separate study to assess the capital development cost, including a review of the process plant, has been undertaken, which indicates an estimated 20% capital cost saving for the process plant and associated facilities compared to the feasibility study update figures, said AIM-traded Kodal.
Kodal said the updated study highlighted the development of the project as a robust, economically viable proposition.
"The lithium market continues to be very strong and our Bougouni project continues to attract significant interest,” said Aylward.
“The company is continuing to review and discuss potential opportunities for collaboration with third parties, including major mining groups, to support the development of the project and more updates will be provided in due course."