Lithium Energy Ltd (ASX:LEL) has unveiled the results of its scoping study for the Solaroz Lithium Project in Argentina’s Jujuy Province, which showcases its potential as a large-scale, long-life, high-margin venture with excellent ESG metrics.
The study recognises the soaring demand for lithium driven by the global transition to electric vehicles (EVs).
The lithium market is currently in a deficit, with EV demand projected to require 5.3 million tons of lithium carbonate equivalent (LCE) by 2030, compared to the current production of just 0.9 million tons.
With these growth figures in mind, LEL is confident that the study will cement its position as a key player in the global lithium industry.
"We are extremely pleased with the results of the scoping study, confirming the Solaroz Lithium Brine Project as a high-margin project with significant upside, positioned to become a material producer of battery-grade lithium into the accelerating demand curve of the net zero energy transition," LEL executive chair William Johnson said.
"As the global economy decarbonises, the supply of lithium remains of great importance to fulfil electrification demand. We are proud to demonstrate such a strong project at Solaroz and are excited to move forward with its next stage of development.
"Lithium Energy is committed to building a project with world class environmental credentials, to satisfy increasing global scrutiny on sustainable supply chains.”
Substantial lithium resource
Solarez benefits from a substantial lithium resource, with a projected production capacity of up to 40,000 tons per annum (tpa) of battery-grade LCE, achieved through conventional evaporation pond processing.
The total JORC indicated and inferred mineral resource estimate (MRE) stands at 3.3 million tons of LCE, including a high-grade core of 1.3 million tons of LCE.
This core alone can support 36 years of LCE production at 20,000 tons per annum (tpa), or 19 years at 40,000 tpa, using solar evaporation.
The MRE is based on the company’s initial drilling program, and there is potential for size and grade expansion if it conducts further drilling.
Strong financial metrics
The scoping study delivers compelling financial figures. The pre-tax net present value (NPV10) stands at around $6.2 billion (US$3.9 billion), supported by an internal rate of return (IRR) of 44%.
What's more, the payback period is just two years, underlining the project's financial robustness. LEL anticipates an average life of mine EBITDA of US$730 million per year.
Production costs are predicted to be competitive. A forecast cash operating cost of US$4,611 per ton of LCE positions Solaroz in the lowest quartile of the global industry LCE cost curve.
Low risk profile
Solaroz's development strategy leans on the tried-and-tested method of conventional evaporation ponds for processing brines from the Salar de Olaroz, similar to the successful operations of Allkem and Lithium Argentina.
The use of this brine processing method of lithium extraction gives LEL the advantage of lower carbon emissions and reduced water usage compared to hard rock lithium sources, boosting its environmental credentials.
The brine grade and chemistry found at Solaroz make it an ideal candidate for this processing approach.
Access is another bonus. Jujuy Province is a well-established lithium-producing region, and Solaroz benefits from its proximity to major lithium producers, existing utilities and strategic infrastructure.
Solaroz is also exploring direct lithium extraction (DLE) production methods, which could further enhance capacity, economics and sustainability.