The newly completed scoping study shows the company has much to gain from its flagship Piedmont lithium asset in North Carolina.
The Piedmont project, which is set to have an initial 13-year mine life, will be developed in two stages to minimize upfront capital requirements and start-up risk.
According to the company, stage one will feature a capital investment of US$91 million for the mine and concentrator. Meanwhile, stage two, devoted to the chemical plant, will come with a US$252.6-million price tag and will be funded by internal cashflow.
The 22,700 tonnes of lithium hydroxide will be produced at Piedmont’s chemical plant, which will be supported by a mine/concentrator putting out 170,000 tonnes per year of 6-percent lithium oxide low-iron spodumene concentrate. The asset is estimated to have average life-of-project cash operating costs of about US$3,960 per tonne.
The study sets the project’s annual EBITDA at US$220 million, with steady after-tax cash flow of US$170 to US$180 million. Its estimated after-tax IRR comes in at 56 percent, with its after-tax NPV sitting at US$777 million at a discount rate of 8 percent.
Piedmont’s president and CEO, Keith D. Phillips, said in a statement that the company is happy with the results of the scoping study, and emphasized that it will economically benefit North Carolina.
“The economic benefit of developing an integrated lithium chemical business in North Carolina, USA is now clear, driven by the exceptional infrastructure and human resource advantages of our location, as well as the competitive royalty and tax regime offered in the United States,” he said.
Phillips added, “[w]e look forward to an exciting period ahead as we work to enhance the Project even further through continued growth in our resource base and project life, and the evaluation of potential by-product credits.”
The company will now move forward with a prefeasibility study for the Piedmont project, targeted for completion in early 2019. The study will work on developing a by-product study, additional drilling on the core property and metallurgical studies.
As of 2:25 p.m. EST on Thursday (July 19), Piedmont’s share price was sitting at AU$0.185, up 5.71 percent. The company’s share price has increased 105.56 percent in the last year.
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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.