PFS defines exceptional Ewoyaa economics
Atlantic Lithium (A11.ASX) has recently published its robust pre-feasibility study (PFS) for the Ewoyaa Lithium Project, in Ghana, West Africa.
The PFS returned a post-tax NPV8 of US$1.33 billion with a post-tax IRR of 224%, a 68% increase in the NPV and a 15% increased in IRR compared to the economics defined in the December 2021 scoping study (SS), which returned a post-tax NPV8 of US$789 million and a post-tax IRR of 194%.
Over the 12.5-year mine life, defined in the PFS, the operation is expected to generate US$4.84 billion in revenue, up 41% compare to the SS, and free cash flow of US$2 billion with an average life of mine EBITDA US$248 million per annum, up 39% compared to the SS.
The PFS defined an operation that is expected to produce an average of 255,000 tonnes per annum (tpa) of 6% spodumene concentrate (SC6) over 12.5-years, which compares to 300,000 tpa over 11.4-years in the SS.
The PFS capex of US$125 million, is up 80% compared to US$70 million in the SS, partly due to cost inflation and a major design change compared to the SS by bringing the crushing circuit in-house as opposed to relying on contract crushing, which increases the capex by US$27 million. In addition the 42% increase in the resource base between the SS and the PFS increased the stripping and associated capex.
The PFS study includes an integrated 3-stage crushing facility ahead of the DMS processing facility, which reduces the plant OPEX, improves operational control and reduces lithium losses compared to the SS. This is a major improvement on the SS plant design.
The PFS C1 cash operating costs are US$278 per tonne (pt) of SC6, after by-product credits. This is 12% higher than the US$249/pt defined in the SS.
The PFS uses a higher long-term average SC6 price of US$1,359/t FOB, up 51% compared to US$900/t in the SS. However, this remains conservative when comparted to September 2022 sales prices, which have been reported as high as US$7,708/dmt for SC6 equivalent.
Considering that an increase of US$100/t in SC6 price would increase the post-tax NPV8 defined in the PFS by an additional 9%, the economic upside of the project is huge if prices remain high.
As part of the PFS, a maiden reserve estimate of 18.9 million tonnes at 1.24% Li2O has been defined, demonstrating strong resource to reserve conversion and a sound mineral asset base that underpins the projects' economics.
A resource infill and extensional drilling programme underway and is nearing completion, and we anticipate updates on this shortly. The development of Ewoyaa will continue to be supported by the Company's funding agreement with Piedmont Lithium Inc (ASX:PLL, NASDAQ:PLL, XETRA:)., which is earning a 50% interest in the project by investing for US$103 million in funding studies and providing capex.
Atlantic will now continue to advance the Ewoyaa up the value chain and is anticipated to complete a definitive feasibility study (DFS) for the project in 2023.
Assuming the DFS produces a successful result, Piedmont will then contribute US$70 million towards funding the capex of for the Ewoyaa Mine. With the balance of funding expected to be sourced through traditional project funding mechanisms or offtake agreements. Atlantic Lithium is targeting maiden production in Q3 2024.
Figure 1 - Mine Design
Source: Atlantic Lithium
Figure 2 - Geology and Prospects with MRE drilling
Source: Atlantic Lithium