Atlantic Lithium (ASX:A11) has completed the Prefeasibility Study (PFS) on the Ewoyaa Lithium Project in Ghana, West Africa, demonstrating the significant profitability potential of the project.
The African-focussed lithium exploration and development company, which targeting to deliver Ghana’s first lithium mine, reports the PFS was managed directly by the company, engaging experienced internationally recognised consultants, and incorporates the increased JORC resource of 30.1Mt at 1.26% Li2O, as announced on 24 March 2022.
The PFS shows the project is expected to have post-tax NPV of US$1.33 billion with free cash flow of US$2 billion from life of mine (LOM) revenues of US$4.84 billion. The internal rate of return is 224% and payback less than five months, with average LOM EBITDA of $248 million per annum.The project has a Maiden Ore Reserve of 18.9Mt at 1.24% Li2O declared, demonstrating sound resource to reserve conversion.
C1 cash operating costs are expected to be US$278 per tonne of SC6 free-on-board (FOB) Ghana Port, after by-product credits. In addition to SC6 production, the PFS incorporates 2 additional revenue streams from by-products – a saleable direct shipping ore fines product and a saleable Feldspar by-product.
The capital cost estimate is US$125 million, including integrated 3-stage crushing facility ahead of the DMS processing facility; a major design change to the Scoping Study concept of contract crushing, reducing plant OPEX, improving operational control and reducing lithium losses.
Atlantic Lithium reports that the project is within close proximity to excellent logistics and infrastructure – 110km by road from the deep-sea port of Takoradi, adjacent to highway and high voltage powerlines, including hydroelectric sources.
Commenting on the PFS, Lennard Kolff, Interim Chief Executive Officer of Atlantic Lithium, said: “We are delighted to release our Prefeasibility Study for the Ewoyaa Lithium Project in Ghana, which further illustrates Ewoyaa as an industry-leading lithium asset, generating in excess of US$4.84bn in revenues over a 12.5-year mine life.
“The study outlines a robust 2Mtpa operation which can deliver excellent cash flows”
The study outlines a robust 2Mtpa operation which can deliver excellent cash flows, an exceptional 20-week payback and a post-tax NPV8 of US$1.33bn producing a coarse, premium DMS SC6 product including credits from DSO fines and feldspar by-products.
The study used a long-term average SC6 price of US$1,359/t FOB Ghana, with recent equivalent grade prices as high as US$7,708/t being achieved on Pilbara Minerals Limited BMX platform and representing a mid-range forecast when compared to other commentators.
Every US$100/t increase in SC6 price forecast results in an additional 9% increase to the post-tax NPV8, highlighting the significant potential value uplift to the Project.
We are also pleased to declare a maiden Ore Reserve of 18.9Mt at 1.24% Li2O, presenting sound resource to reserve conversion and confirming the robust project fundamentals.
Operating costs of US$278/t SC6, which include a discount of US$165/t for by-products, further demonstrate the attractive fundamentals of the Project. Ewoyaa benefits from simple mineralogy, low power and water consumption, a DMS-only process flow-sheet design, skilled workforce and proximity to operational infrastructure, including grid power, sealed road and deep-sea port. These fundamentals are arguably among the best in the world and enable a low carbon footprint project.
CAPEX has increased from US$70 million to US$125 million in the PFS, primarily due to bringing the crushing circuit in-house as opposed to contract crushing. Additionally, the increased resource footprint resulted in increased costs, including the extended high-voltage power line re-alignment and inflationary cost pressures in line with the current market. The financial model, however, shows that the Project is currently not sensitive to inflationary and capital cost increases.
Against the backdrop of buoyant global lithium demand, driven particularly by electric vehicle demand, we believe Ewoyaa will play a significant role in the role of sustainable lithium production. This PFS moves the Project another step closer to becoming Ghana’s first lithium-producing mine.
Supported by our funding agreement with Piedmont Lithium Inc., we are excited to continue advancing the Ewoyaa Lithium Project through the next stages of studies and permitting towards production. The resource infill and extensional drilling programme underway is nearing completion and we look forward to sharing updates on this and further Project developments shortly.”
With projects located in West Africa and the company’s shares also listed on AIM of the London Stock Exchange and on the OTC in the US, the company obtained its name from the three corners of the Atlantic ocean that it covers, while representing the worldwide demand for lithium.
Write to Adam Orlando at Mining.com.au
