Infinity Lithium Corporation Ltd (ASX:INF) (FRA:3PM) (STU:3PM) is advancing discussions with financiers, potential strategic partners and prospective offtake parties after the company produced battery-grade lithium hydroxide from its San Jose project in Spain at relatively-low net direct (c1) cash costs.
The tri-listed company is holding discussions with potential strategic partners to prepare either a pre-feasibility study for lithium hydroxide production or a feasibility study for lithium carbonate production at the lithium-tin project.
Infinity Lithium’s November 2018 lithium hydroxide scoping study valued a future operation at the San Jose project at up to US$1.017 billion, using a before-tax net present value calculated at a 10% discount.
The study’s corresponding internal rate of return was 51% while its operating expense was toward the bottom of the cost curve at US$5,343 a tonne.
Considered the second largest lithium JORC resource in Europe, San Jose features 111.2 million tonnes grading 0.28% lithium, 0.61% lithium oxide and 206ppm tin.
The deposit’s extensive strike, width and surface outcrop make it amenable to bulk, open pit-style mining methods.
Infinity Lithium’s preliminary technical and economic investigation of the potential viability of a San Jose hydroxide project envisioned a fully-integrated hard-rock lithium project where all activity is undertaken at the project, from mining through to the production of battery-grade lithium hydroxide.
The company earned a 50% joint venture stake in its flagship project after producing a lithium carbonate scoping study and submitting a mining licence application.
This study was undertaken more than a year ago, with results reported in October 2017.
Infinity Lithium said today the carbonate study had “demonstrated the potential for a robust lithium chemicals development project strategically located in the Extremadura region of Spain”.
Lithium hydroxide versus lithium carbonate
Lithium hydroxide attracts a price premium to lithium carbonate products and is an attractive option for development.
Acknowledging the change in its focus, Infinity Lithium wrote today in its quarterly activities report: “The decision by the company to examine lithium hydroxide production is consistent with the evolving battery market and the JV is now formally considering a shift from carbonate to hydroxide production.
“Lithium hydroxide is a higher value battery chemical product due to it offering more energy capacity, longer life cycle and safety when compared to lithium carbonate cathodes, whilst it is also projected to have greater growth projections in direct response to evolving battery technologies required for electric vehicles.”
Infinity Lithium executive director and European corporate strategy and business development vice-president Vincent Ledoux-Pedailles spoke to Proactive Investors’ Stocktube video channel about the change in development route last month.
Speaking to Stocktube while he was in Australia for a roadshow, Ledoux-Pedailles said: “We are now moving onto the hydroxide route and that’s because we understand how the battery technology is evolving — and that’s towards cathodes containing more nickel.
“Those cathodes are becoming more nickel-rich because people want to move away from using cobalt and they want to increase the energy density in those cathodes.
“That also means we are moving away from using carbonates and moving towards using more lithium hydroxides, so the lithium hydroxide road is growing twice faster than carbonate.”
In the past month, the spot price out of China for battery-grade 99.5% lithium carbonate was 75,000-83,000 yuan (US$11,087.63-$12,270.31) a tonne.
The spot price for battery grade 56.5% lithium hydroxide was 99,000-109,000 yuan (US$14,635.66-$16,114.01).
One US dollar had been changing hands for about 6.76 Chinese yuan, 2 cents higher than current levels.
Infinity Lithium managing director & CEO Ryan Parkin had spoken to Stocktube video channel about the San Jose hydroxide scoping study in November, saying it was a response to “the movement towards high-nickel content, greater energy range and greater energy-density cathodes.”
“We’ve had a great result with our scoping study — an NPV in excess of US$715 million and an IRR of 51%.
“It’s a long-life, robust and exciting project for us there in Europe.”
Other December quarter achievements
Infinity Lithium broadened its investor base with listings on the Frankfurt and Stuttgart exchanges in December quarter 2018, increasing its exposure to the European lithium investment community.
Europe is set to become a major electric vehicle market.
European electric and ICE (internal combustion engine) vehicle targets
Infinity Lithium made a key European appointment early on in the quarter, making Ledoux-Pedailles its vice-president of European corporate strategy and business development.
The former leader of the lithium and battery materials research team at the US$20 billion global data and information service group IHS Markit (NASADAQ:INFO) has been sharing his expertise with investors and the lithium industry over the past quarter at key events.
READ: Infinity Lithium Corporation strengthens board by appointing experienced industry executive
This quarter, the company has brought Ledoux-Pedailles’ influence closer to home, pulling up a seat for the valued executive at its boardroom table.
Speaking on the company’s events after December quarter end, the company used its quarterly activities report to acknowledge the importance of Ledoux-Pedailles’ role and the European lithium market.
“The (Ledoux-Pedailles) appointment continues to reflect the corporate requirements and core focus of Infinity with regards to advancing the San Jose Lithium Project.
“The rapid evolution in cathode technologies and the lithium chemicals market has resulted in increasing focus on opportunities for lithium hydroxide and in particular the availability of product from non-Chinese based converters.
“The proximity of San Jose to growing European markets provides significant strategic value to European cathode producers and lithium-ion battery cell manufacturers, as Europe addresses surety of supply to support what is projected to be the second-largest electric vehicle market.”
Last quarter the company also unveiled a 1.67 billion tonne maiden resource for its Banio Potash Project in southern Gabon, Central Africa.
Investor and director Adrian Byass spoke to Stocktube about Banio and San Jose, indicating the company’s Spanish project iwould come first in its priority list.
The Banio inferred mineral resource at a 12% KCl cut-off
Byass outlined options for monetising Banio and said: “The company’s quite clear in its focus; it’s very rare that you have a curse of riches, in that we have two excellent projects which both could be advanced.
“But the returns and the market growth and the real appetite for the San Jose project within Europe means that we can’t do anything but advance that as fast and as hard as we can.”
Banio was put on care and maintenance in 2017 amid weakened global potash pricing in 2016-17.
The global potash price is now at US$226 a tonne.
Infinity Lithium directed $751,000 to its operating activities in the December quarter, including $429,000 spent on exploration and evaluation.
A small $1,000 was spent on financing activities, related to securities-issuing costs.
The company had $2.54 million at the end of the quarter, a $753,000 reduction on the September quarter.
Infinity Lithium has estimated its cash outflows in March quarter 2019 will be $700,000 with expected expenditure on exploration and evaluation of $400,000.
The company had 69,772,677 shares on issue on September 17.
Morgan Stanley Australia Securities (Nominee) Pty Limited <No 1 Account> was Infinity Lithium’s largest and only major shareholding, with the institutional investor having 5.84% of shares on issue.
Infinity Lithium’s top five shareholder list was rounded out by: Adman Lanes Pty Ltd, with a 3.69% stake; Valiant Equity Management Pty Ltd, a company linked to director Adrian Byass’ family, which had 2.62%; Nicholas Simon Draper and Melinda Jane Draper, through the Draper Super Fund A/C, with 1.84%; and Peking Pty Ltd <Dial a Dump STF S/F No 2 A/C> with 1.71%.
The top five shareholders had 15.7% of Infinity Lithium, while the company’s top 20 shareholders had a collective 36.74% stake.
— with Danielle Doporto