Anson Resources assessing debt and equity funding for US$495 million Paradox Lithium Project, Utah

Anson Resources (ASX:ASN) is considering funding the US$495 million capex needed for its Paradox Lithium Project in Utah with 40% equity and 60% debt.

Speaking to on the sidelines of the Brisbane Mining Investor Conference last week, Chief Operating Officer (COO) Tim Murray says with the Definitive Feasibility Study (DFS) published in September 2022, the company remains open to all development options as more work is undertaken at the flagship asset.

“We are looking at all options – we’ll probably have 40% equity, 60% debt, and debt could be from the Department of Energy. It could be a banking syndicate with an export agency as a player in that, and the equity side could be a strategic investor, which may be the same as an offtake partner.”

“We are looking at all options – we’ll probably have 40% equity, 60% debt, and debt could be from the Department of Energy”

Murray notes these additional funding options such as offtake or strategic investments will be considered at length at the time of final investment decision (FID) later this year, based on conditions of equity and debt capital markets at the time.

The COO adds that modelling of the Paradox Lithium Project stage one demonstrates a debt carrying capacity is supportive of project financing.

Anson, which has a $213 million market capitalisation, has engaged independent corporate advisory firm BurnVoir Corporate Finance to undertake a competitive debt funding process with reputable finance lenders.

Murray says Anson is also undertaking further exploration to increase the current JORC resource of 1 million tonnes.

Anson recently announced that all approvals have been received for the company’s Western Strategy Mineral Resource drilling program at the Paradox Lithium Project in the Paradox Basin in south-eastern Utah, US. Released in September last year, the DFS confirms the project’s advanced potential to become a major supplier of ‘high-purity’ battery-grade lithium carbonate into the US electric vehicle market.

The Western Strategy drilling program is designed to convert the existing inferred resource and exploration target in the western region of the project to indicated and inferred resources. Subject to favourable results, the re-entry program is expected to deliver a significant expansion of the Paradox Project’s existing JORC Mineral Resource of 1.04 million tonnes of lithium carbonate equivalent (LCE) and 5.27Mt of bromine.

“So, we’re going to go from 1 to 4 million tonnes in that drill program probably by the end of the year. We are working on offtake agreements; we’re working on the FEED (Front End Engineering Design) documentation so that we can get to a final investment decision at the end of the year. We’re about 3 months out from getting all of our permits, so we’re well and truly on track.”

“We’re about 3 months out from getting all of our permits, so we’re well and truly on track”

According to Murray, Anson has an attractive and unique lithium project in a supportive mining jurisdiction. For example, he says, in the US if an automobile has a battery that uses US lithium, it receives a tax rebate of US$3,750. Therefore, 1 tonne of Anson’s lithium will produce 20-30 batteries, depending on different technology and size, which means a tonne of its lithium will receive a subsidy of more than $100,000, which is a ‘huge’ premium. Second, Anson can also access to Department of Energy loans, particularly as the department has US$20 billion available at 10-year treasury bond rates, which is less than 4%.

Estimated capital expenditure for Paradox is US$495 million, with the lithium carbonate plant to use Sunresin patented Direct Lithium Extraction (DLE) technology. Phase one is poised to deliver a low-cost operation with revenues of US$5.08 billion forecast over 23 years of operations. Paradox will have a pre-tax NPV of US$1.306 billion (phase one only) with the project generating strong margins, with post-commissioning payback period of 2 years and pre-tax IRR of 47%.

Annual production of ‘high purity’ lithium carbonate is expected to be up to 13,074 tonnes per annum. Phase one economics are based solely on existing indicated mineral resource of 239,000 tonnes, as announced 22 August 2022. DFS economics will also be updated based on future mineral resources upgrades.

The COO adds Paradox is as unique as it is financially viable: “It’s a geo-hydro lithium brine project where we use direct lithium extraction to get the lithium out. It’s really fantastic because it’s low carbon and low waste. We create the brine comes from under the earth. It’s leaving the ground at about 600 litres per second, and we create hydropower at the wellhead, but then it has to fall 1,000 feet down to the plant.

We’ve got a lot of alternative energy for our processing. We do not do any polishing of the brine before it goes in, so no nasty chemicals. After we use a resin to extract it, the waste goes back into the ground. We use water from the Colorado River, where we’ve got rights, and most of that water is recycled. And because we’re in the US, we get to get the benefits of the Inflation Reduction Act.”

The Inflation Reduction Act (IRA) seeks to improve electric vehicle penetration and boosting local sourcing of raw materials as well as processing in the EV battery supply chain. The Paradox Lithium Project will produce battery-grade lithium carbonate for use in domestic manufacture of lithium-ion EV batteries. As of 2022, Benchmark estimates 62% of the lithium battery demand to comprise lithium carbonate.

Anson is working with China-based Sunresin New Materials Co to support development of the project.

Sunresin is an established chemicals giant listed on the Shenzhen Stock Exchange with a market capitalisation of A$5.5 billion.

Sunresin began as an adsorption & separation materials research centre in 2001, and today operates multiple facilities across Asia and Europe.

It has commercialised 4 existing DLE plants and is contracted to build another 6, the combined production capacity being greater than 73,000tpa Li2CO3 /OH.

Murray adds: “So we’re talking about massive global industrial capacity compared to research and development sort of scale over here. And Sunresin not only produces resin, but they also produce the equipment for extracting the lithium. All of this stuff here. And that’s really important because the problem of, firstly, you want a resin that lasts a long time, so our resident will last 10 years.”

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Images: Anson Resources Limited
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Written By Adam Orlando Editor-in-Chief Adam Orlando has more than 20 years’ experience in the media having held senior roles at various publications, including as Asia-Pacific Sector Head (Mining) at global newswire Acuris (formerly Mergermarket). Orlando has worked in newsrooms around the world including Hong Kong, Singapore, London, and Sydney.