European Lithium Ltd (ASX:EUR, OTCQB:EULIF) is striding towards becoming a leading producer of battery-grade lithium hydroxide in Europe supported by a robust definitive feasibility study (DFS) for the Wolfsberg Lithium Project in Austria that outlines an NPV of US$1.5 billion and IRR of 33.3%.
The DFS demonstrates that the project is set to deliver high returns, leveraging low operating costs and benefiting from a lithium market anticipated to be in structural undersupply during most of the life of mine.
“Confidence in commercialisation”
It strongly supports European Lithium’s aim to be Europe’s first and largest local supplier of critical LHM in the region and chairman Tony Sage said: “The robust DFS provided by DRA provides confidence in the commercialisation of the Wolfsberg Project.
“This positive news has come during a buoyant market for lithium and an increased urgency for decisive action to accelerate the green energy transition, especially in Europe.”
Well-placed to serve Europe
Wolfsberg is at the heart of Europe’s burgeoning electric vehicle industry and is very well-placed to serve the continent’s accelerating decarbonization drive and energy transition.
Delivered by DRA Projects (Pty) Ltd, a diversified global engineering, project delivery and operations management group, the DFS outlines the annual production of around 8,800 tonnes of lithium hydroxide monohydrate (LHM) for 14.6 years.
Financial results of the DFS.
Firm foundation
The DFS provides a firm foundation to support the company’s critical metals commercialisation strategy.
It is also a strong vote of confidence as EUR looks to complete the business combination and Nasdaq listing, complete the project financing stage and capitalise on the opportunities that come from progressing the hydroxide plant plans with its Saudi partner.
Construction of downstream project facilities is expected to commence in the fourth quarter of 2023.
Towards Nasdaq listing
“Our next steps include finalisation of the listing of Critical Metals Corp. on Nasdaq and continuing our discussions with our financiers,” a buoyant Sage said.
“Through the business combination with Sizzle, Critical Metals expects to access substantial opportunities available in the US market.”
After completing the pre-feasibility study (PFS) for the project in April 2018, the company has completed an extensive work program that paved the way for a DFS which provides an accurate and detailed analysis of the compelling economics.
This work included extensive infill geological drilling, mineral processing and metallurgical test work, a pilot test facility which produced 1.7 tonnes of bulk spodumene concentrate, updated its marketing studies and completed environmental mitigation studies.
Wolfsberg Lithium Project location.
DFS details
The DFS plans an average (steady state) mine production rate of 780,000 tonnes per annum, peaking at 840,000 tonnes over the Life of Mine (LOM) of about 15 years and this is based on an ore reserve of 11.5 million tonnes.
Wolfsberg will comprise two integrated operations, a mining and processing operation to produce a lithium concentrate (spodumene), and a hydrometallurgical plant to convert the spodumene into battery-grade LHM.
The hydrometallurgical plant is planned to annually produce around 8,800 tonnes of LHM with a total production of about 129,000 tonnes of LHM over the LOM.
Pricing outcomes
Key pricing outcomes of the DFS are:
- LHM OPEX (after by-products) is US$17,016/tonne LHM on average compared to reported spot prices for LHM in February 2023 of US$79,500 DDP Antwerp;
- LHM prices modelled in the DFS are projected to be at a 39% discount to current spot prices in 2025 and then escalate by 2% per annum;
- Estimated CAPEX is US$866 million which supports a post-tax NPV of US$1.5 billion at WACC 6%.
Forecast pricing assumptions for LHM are based on a 39% discount to current spot prices in Europe (~ US$48,600/tonne) in 2025 which then escalate with United States Consumer Price Index (CPI) from 2026 onwards.
Committed to sustainability
European Lithium is committed to the sustainable development of its Wolfsberg Project, utilising the most advanced mining and processing technologies to become a reliable low-carbon producer of LHM and be a key part of the emerging lithium supply chain in Europe.
On this front, field surveys for fauna and flora have been completed at the planned mine and concentrator site location while the DFS demonstrates that a mining fleet of battery electric vehicles (BEVs) can be economically viable for the project.
The study confirms that the underground portal, concentrator and all the required surface infrastructure can be within an area of less than 10 hectares, which has significantly reduced the project’s environmental footprint.
Well-located
The planned Wolfsberg Project mine and concentrator site is just 20 kilometres east of Wolfsberg, Austria, and the planned hydrometallurgical plant is just to the south of Wolfsberg close to the A2 motorway and the natural gas transmission pipeline that follows the motorway.
The project comprises 54 exploration licences and 11 mining licences that were granted on March 22, 2011.
EUR believes the Wolfsberg Project will be well located with good access to Europe's motorway and rail infrastructure to distribute LHM to the lithium battery plants in construction or planning in northern Europe and by-products to regional industry.