Neo Lithium Corp (CVE:NLC) (OTCQX:NTTHF) has unveiled a positive pre-feasibility study for its Tres Quebradas lithium brine project (3Q project) in Argentina, which showed significant cash flows and a US$1.14 billion net present value (NPV).
The report also showed low pre-production capital cost of US$319 million and low operating costs of US$2,914 per tonne of LCE (lithium carbonate equivalent).
The mine life is put at 35 years, with a rapid payback of just one year and eight months, which allows for a variety of financing options, the company said.
READ THE DEEP DIVE: Neo Lithium Corp is making rapid progress at the 3Q lithium project in Argentina
The project has maiden (first) proven and probable reserves of 1.3Mt (million tonnes) of LCE with 790 mg/l (milligram per liter) of lithium.
Over the life of mine (LOM), the average annual production was put at 20,000t LCE (battery grade) with significant potential to expand with reserves representing only 32% of the entire resource.
"With the discovery of a high-grade core, we optimized the 3Q Project development plan with respect to our Preliminary Economic Assessment," said Waldo Perez, the president and CEO of Neo Lithium.
"The new capex and opex, together with a long life of mine and high-grade brine, allow us to present a superior IRR (internal rate of return) of 50%. Furthermore, we currently continue drilling the high grade core and we are now able to validate that the 3Q project still has further significant high-grade resource upside potential."
The report states the preferred development option for the project is a conventional evaporation pond operation followed by purification and precipitation of lithium carbonate.
Potential to improve economics
Toronto-based Neo Lithium said there was also further potential to improve the project economics, such as increasing higher-grade zone reserve, include by-products and phased expansions.
“We are delighted with the results of the PFS. We have improved the PEA results on all fronts, requiring a smaller capital investment for a similar NPV. The 3Q project is now easier to build, easier to finance, and its larger size allows us to think in terms of potential phased expansions. The final value of this project will be realized over time,” added Carlos Vicens, the chief financial officer of Neo Lithium.
The company says it now has a strong foundation to discuss various financial options for 3Q, following strategic discussions with multiple partners in 2018.
"The robust project economics generated from the PFS further validates our view that the 3Q Project is an exceptional project, particularly when our industry faces unprecedented growth and it needs predictable, long term, low cost producers,” noted Constantine Karayannopoulos, Chairman of Neo Lithium Corp.
The resource group says it will now go on to complete a full feasibility study to further validate and detail the elements in the pre-feasibility study.
The pilot plant operation, currently in the commissioning and testing phase, is critical to complete the feasibility study and to prove the concept of the plant facility to yield battery grade lithium carbonate. The recommended feasibility study is expected to be completed in the first half of 2020.
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