Neo Lithium Corp (CVE:NLC) (OTCQX:NTTHF) (FRA:NE2) said it has hired leading global engineering firm Worley to carry out a definitive feasibility study (DFS) on its flagship 3Q project in Argentina, one of the highest-grade lithium projects in the world, as prices for the commodity have recovered in recent months.
The decision to progress further on the asset was made in conjunction with EV battery giant Contemporary Amperex Technology Co. Ltd. (CATL), which now owns 8% of the company after it invested C$8.6 million, and which will participate on all technical matters.
READ: Neo Lithium closes equity investment from CATL, the world's largest EV battery company
"Worley is a leading global engineering firm and has been involved in all aspects of lithium brine operations which will be invaluable in executing our DFS," noted Gabriel Pindar, chief operating officer (COO) of Neo Lithium in a statement.
Neo Lithium has been operating pilot evaporation ponds at the site for more than three years, while the pilot lithium carbonate plant has been in operation for nearly two years, meaning the firm has increasingly gathered more information on the project.
"As a result of our efforts to maintain steady operations at pilot scale level, we continue to produce our own lithium brine concentrate and lithium carbonate on a regular basis, and believe that we are on track towards our goal of being in production by the later stages of 2023," the company told investors.
A pre-feasibility study (PFS) published in May 2019 showed robust numbers. Output for 3Q was put at 20,000 tonnes of lithium carbonate production a year with an after-tax net present value (8% discount rate) pegged at US$1.143 billion.
The internal rate of return (IRR) was put at an impressive 49.9%, with capex of US$318.9 million, and payback of 20 months using a lithium carbonate price of US$11,882 per tonne over a 35 year mine life.
Notably, the reserve on which the PFS was based, will be updated after two new wells yielding 160 meters with 1,128 milligrams per litre (mg/l) lithium and 178 meters at 1,117 mg/l were reported in June, 2019, the firm added.
These wells are outside the previously considered ore body and are expected to have a positive effect in the previously estimated resource and reserve.
Neo Lithium also noted that due to the resurgence of lithium-iron-phosphate (LFP) batteries and other battery technologies, lithium carbonate prices had "materially recovered" in recent months, a trend which is expected to continue during 2021 and beyond.
The company said this bodes well for its long-term price expectations for its pricing assumptions on the DFS and "more importantly in its continuous financing strategy negotiations".
The 3Q lithium brine project lies in Catamarca Province, the largest lithium producing area in Argentina covering around 35,000 hectares (Ha) including a salar complex of around 16,000 ha.
Contact the author at giles@proactiveinvestors.com
