Piedmont Lithium (NASDAQ:PLL) Inc welcomes a positive definitive feasibility study (DFS) produced by its joint venture partner Sayona Mining Ltd (ASX:SYA) that combines its flagship North American Lithium (NAL) operation and nearby Authier Lithium Project in Québec, Canada.
The DFS demonstrates the Abitibi lithium hub’s long-term financial and technical viability by estimating a A$2.2 billion (C$2 billion) pre-tax net present value (NPV) for spodumene concentrate produced from a combined operation.
NAL and Authier are part of Sayona Québec, which is 75% owned by Sayona Mining and 25% by Piedmont Lithium.
Substantial rise in NPV
This estimated NPV at an 8% discount rate represents a substantial rise in project NPV compared with NAL's pre-feasibility study (PFS) from May 2022 with the combined operation expected to generate estimated total net revenue of A$7.6 billion with EBITDA of A$3.7 billion.
Together with higher spodumene concentrate pricing, these improvements have been driven by the accelerated restart program, increased estimated head grade of 1.04% Li2O, high initial recovery rate (70.2%) and expanded LOM average annual concentrate production of around 190,000 tonnes (up 16% compared to the PFS).
Reaffirms confidence
Sayona’s managing director Brett Lynch said the positive DFS reaffirmed the company’s confidence in the long-term value of the NAL operation.
“This DFS demonstrates the benefits of our hub strategy in Abitibi, with NAL proving to be one of the lowest cost and highest returning investments in the lithium industry.
“We are now in the process of successfully de-risking the NAL operation, which will generate long-term, sustainable returns for shareholders together with providing new jobs and investment for Québec.
“Furthermore, we intend to expand upon this strong foundation as we now approach the move towards downstream processing. Sayona aims to become the first and the only, fully integrated, lowest carbon footprint lithium chemical producer for delivery into North America.”
Production target boosted
Sayona’s DFS has increased the production target to a life-of-mine (LOM) average of 190,000 tonnes annual concentrate production, supporting after-tax IRR of 2,545%; total net revenue of around A$7.6 billion and project EBITDA of A$3.7 billion.
The annual production capacity of NAL will comprise 226,000 tonnes for the next four years until the start of downstream operations, subject to joint venture approval.
NAL’s low-risk operation will represent the most significant source of hard rock lithium production in North America, boosting Québec’s plans for the development of a local battery sector, from mining to manufacturing.
Review of resources
A strategic review of mineral resources and ore reserves was undertaken as part of the NAL restart to create opportunities to improve project NPV.
The revised ore reserve estimate of 21.7 million tonnes at 1.098% Li2O for 235,500 tonnes of contained metal has created the opportunity to improve project economics and has allowed Sayona to enhance its understanding of the mine’s block model.
The revised block model has resulted in a reduction in reserves and certain indicated resources have been reclassified as inferred based on new model interpretation.
While ore reserves and indicated resources have been reduced or reclassified in the near term, potential exists to convert current inferred resources to the measured and indicated categories through new drill programs now underway.
Potential for extensions
The current LOM has been estimated at 20 years; however, there is high potential for extension of the mine life with a 50,000-metre drilling campaign scheduled for 2023.
This program's first phase of around 16,000 metres will primarily target conversions of inferred resources to indicated within the current pit shell footprint.
A component for exploration along the northwest and southeast strike extensions of the NAL deposit is also part of the program.
“The growing number of battery and EV investments planned for Québec demonstrate the strategic location of our operation, which benefits from access to sustainable, low-cost hydropower together with world-class infrastructure, skilled labour and proximity to key battery markets,” Lynch said.
Restart on schedule
NAL’s restart is on schedule and within budget, with the operation already having produced more than 3,000 tonnes of saleable spodumene (lithium) concentrate as of March 31, 2023.
The first lithium shipment is expected to occur in July 2023, with Sayona targeting total production between 85,000 and 115,000 tonnes during the first half of fiscal 2024.
“I would like to again congratulate our entire Québec team, together with our joint venture partner Piedmont Lithium for delivering this challenging task on time and within budget,” Lynch added.