Neometals shifts focus downstream as Mt Marion enters production
THE INSIDE STORY: Trailblazing lithium company Neometals (ASX: NMT) and partner Mineral Resources (ASX: MIN) have taken large steps towards downstream lithium production from concentrates produced at the Mt Marion lithium mine.
Neometals is in Joint Venture with and China’s Ganfeng Lithium Company developing the Mt Marion project near Kalgoorlie in Western Australia.
Neometals and Mineral Resources have the option to offtake 51 per cent of production after the third year of production (2019/20).
Neometals and Mineral Resources separately own the patented ELi Process, which converts spodumene concentrate into firstly, a high purity lithium chloride solution, then to high-purity lithium hydroxide through the conventional electrolysis process.
In essence a variant of the Chlor-alkali process which turns sodium chloride into sodium hydroxide (caustic soda).
The technology is owned and being developed by Reed Advanced Materials Pty Ltd (RAM), which is 70 per cent-owned by Neometals and 30 per cent-owned by MIN.
A recently-completed Feasibility Study determined using the ELi Process can produce low cost battery grade lithium products from spodumene concentrate sourced from the Mt Marion project.
The FS confirmed the project is technically feasible and economically viable with an evaluation of the operation determining its ability to produce 20,000 tonnes per annum of lithium carbonate equivalent (LCE) battery grade lithium hydroxide and lithium carbonate by conversion of spodumene concentrates.
Neometals and MIN believe the ELi Process provides a key competitive advantage with lower capital and unit operating costs when compared to current industry averages using conventional technology.
Key numbers to emerge from the FS include:
Average Annual Production of 14,000 tonnes Lithium hydroxide monohydrate (LiOH.H2O) and 5,600 tonnes lithium carbonate (Li2CO3);
Life of Plant (LOP) of 20 years;
Life of Plant Revenue of US$ 4,042 million;
Pre‐tax Net Cash flow of US$ 82.39 million;
Pre‐tax NPV (12% discount rate) of US$481.7 million;
Pre‐tax Internal Rate of Return 51 per cent;
Cash Operating Cost per tonne of LiOH.H2O – US$ 4,630;
Cash Operating Cost per tonne of Li2CO3 – US$ 5,345;
Pre‐production Capital cost (including EPCM and Contingency) US$ 158 million; and
Payback of capital costs in 2.6 years
“In terms of capital cost advantages – we will operate at around half of the capital cost arrangements of existing brine operations and around one third of what a new brine operation would cost,” Neometals managing director Chris Reed told The Resources Roadhouse.
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Based on the FS results, RAM indicated its supports the project entering a full, integrated pilot plant study to refine the process design and confirm operating parameters through to a detailed design phase for a full scale plant.
The Mt Marion lithium mine was galvanised by the release of an increased Mineral Resource Estimate for the project taking it to Indicated and Inferred Mineral Resources of 60.5 million tonnes at 1.36 per cent lithium oxide (Li2O) and 1.09 per cent iron (Fe), at a cut-off grade of 0.3 per cent Li2O.
This represents a substantial increase in the size of the mineral resource of 160 per cent in the total contained lithium at the project from the previous Resource of 23.24 million tonnes at 1.39 per cent Li2O, at a cut-off grade of zero per cent Li2O.
“The next stage for us, after releasing the 160 per cent Resource increase, is to follow that up with a new Resource in late August, after which we anticipate declaring our maiden Reserve for the project just as we expect to be commissioning the plant,” Reed said.
The emergence of lithium as a share market favourite has produced a great deal of debate in recent times as to whether the commodity should be categorised as fad or fact.
To get some bearing, it makes sense to check out the implementations and current market trends for the product.
Lithium’s most obvious use is across the battery market for modern-day necessities such as computer, mobile phones, and televisions and, the growing electric car industry.
Meeting these current demands has not been as straightforward as most people would expect with the reality being a low base of production capacity in the high purity product sector responsible for a tightness in the current market for battery grade lithium hydroxide and lithium carbonate due to high demand growth and constrained supply.
Lithium market watchers have predicted market demand will grow substantially for the next five years through to 2020.
It is within this timeframe that the JV partners Neometals and MIN are aiming to commence production of lithium battery materials sources from conversion of Mt Marion concentrates.
“The present reality is that spodumene converters in China dominate the current battery market supply capacity for lithium hydroxide,” Reed said.
“The result of this domination of the market has been a geographic concentration of production.
“We believe the Mt Marion project has the potential to bring new supply capacity at competitive operating and capital costs to the market.”
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Neometals continues to advance its Barrambie titanium project in Western Australia.
Barrambie rings in as one of the world’s highest grade titanium deposits, containing total Indicated and Inferred Mineral Resources of 47.2 million tonnes at 22.2 per cent titanium dioxide (TiO2), 0.63 per cent vanadium pentoxide oxide (V2O5), and 46.7 per cent iron oxide (Fe2O3), at a cut‐off grade of 15 per cent TiO2.
Neometals plans to undertake a full pilot plant evaluation of the proprietary hydrometallurgical technology in the first half of 2017 following mini‐pilot plant optimisation testwork, which has been scheduled to start in the September Quarter 2016.
Should the full pilot scale test work do what it should, Neometals’ proposes to proceed to a Feasibility Study in 2017.
The company has stated its preferred project development strategy would be to advance the project to attract a titanium industry partner who would fund and operate the development of the Barrambie project on a shared equity or joint‐venture basis.
Neometals holds an exclusive licence of proprietary technology currently being evaluated for the Barrambie project.
“Neometals would be responsible for managing the commercialisation and development of the ‘Neomet Process’ technology, while all revenue received from the commercialisation of the technology will be split 25:75 between NMT and the owners of the technology,” Reed said.
Neometals struck a Strategic Alliance with Sedgman Limited, a wholly owned subsidiary of CIMIC Group (ASX: CIM), to provide the platform for the commercialisation of the technology, at no up‐front cost to NMT.
From there Neometals hopes to develop and hold a portfolio of royalty interests from sub‐licencing the technology in addition to deploying the technology for the Barrambie project.
Neometals Ltd (ASX: NMT)
…The Short Story
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