Emerging Northern Territory lithium producer Core Lithium (ASX: CXO) has released the Definitive Feasibility Study for its Finniss Lithium Project, located near Darwin in the Northern Territory. The DFS confirms that Core is well positioned to be the next lithium producer in Australia, with a low-risk, open pit mining operation and DMS processing up to 180,000tpa of high-quality lithium concentrate with robust margins.
Emerging Northern Territory lithium producer Core Lithium (ASX: CXO) has released the Definitive Feasibility Study for its Finniss Lithium Project, located near Darwin in the Northern Territory. The DFS confirms that Core is well positioned to be the next lithium producer in Australia.
· Finniss Lithium Project DFS confirms that Core is well positioned to be the next lithium producer in Australia
· DFS focused on the development of Ore Reserves within the first two orebodies at Finniss (Grants and BP33) over an initial 3.5 year period
· Mining high-grade Ore Reserves of 1.4% Li2O combined with exceptional spodumene metallurgy enable Core to produce high quality, coarse concentrate using simple gravity DMS processing
· Project comprises a low risk, open pit mining operation and DMS processing up to 180,000 tpa of high-quality lithium concentrate with robust margins
· Excellent DFS economics are reflected in the high Pre-Tax Nominal IRR of 80%, NPV of A$114 million and free cash flows of A$158 million from revenue of A$501 million
· Low start-up capital costs of A$73 million (including pre-production mining costs for Grants) and strong cash flows enable quick payback of 1.5 years and confirms Finniss as one of Australia’s lowest capital intensity projects
· C1 FOB Operating Costs of US$300/t concentrate (A$429/t) generates a robust operating margin of more than US$300/t on low case pricing assumptions
· Significant potential upside to economics remains through conversion of more Mineral Resources into Ore Reserves (including BP33) and through Core’s ongoing exploration in the broader Finniss Project
· Further Project expansion and increase of Mineral Resource category confidence and integration of the nearby Mineral Resources including Carlton, Hang Gong, Booths-Lees and regional exploration planned in 2019
· Financing discussions advancing with debt markets and strategic financiers
· Over one third of Project Capex can be met with US$20 million pre-payment (A$29 million) commitment by Core’s largest shareholder – and major Chinese lithium producer – Yahua Group
· Regulatory approvals, Offtake and Finance discussions progressing to support rapid construction timetable commencing 2H 2019 toward ramping up commercial production 1H 2020
Core has taken a major step forward in its goal toward becoming Australia’s next lithium producer in producing high quality lithium spodumene concentrate through the mining and processing of high grade spodumene pegmatites located within one hour’s drive of the capital city of Darwin and Darwin Port – Australia’s closest port to Asia.
Mining high-grade Ore Reserves of 1.4% Li2O combined with exceptional spodumene metallurgy enable Core to produce high quality, coarse concentrate using gravity only DMS processing. Core’s development of the Finniss Lithium Project is initially based on the development of the Ore Reserves within the high-grade Grants and BP33 deposits as standard open pit mining operations and the construction of a simple 1Mtpa DMS process plant to produce up to 180,000 tpa of high-quality lithium concentrate with robust operating margins.
A modest Pre-Production or Start-Up Capex of $73 million and strong cash flows enable quick capital payback of less than 1.5 years and confirms that the Finniss Lithium Project is one of Australia’s lowest capital intensity lithium projects.
Excellent Reserve Case DFS economics are further reflected in the high pre-tax nominal IRR of 80%, NPV of $114 million and strong free cash flows of $A158 million from revenue of A$501 million. C1 Operating Costs of US$300/t FOB (Free on Board) concentrate (A$429/t) generates a robust operating margin of more than US$300/t on low case pricing assumptions.
Mining of the high grade 1.4% Li2O Grants and BP33 open pits, when coupled with the relatively low initial capital cost, results in a project capable of delivering over A$158 million in free cash generation over a period of three and a half years. This strong cash surplus to capital cost ratio of 2.2:1 generated from Grants and BP33 will ensure Core is well placed for a first-mover advantage in this exciting new lithium province and lays solid foundations for the building of a long-term lithium production hub.
The DFS focuses on the development of the Ore Reserves within the first two ore bodies at Grants and BP33 over an initial 3.5 year period, however, those Ore Reserves and the larger Finniss Lithium Project have significant upside to increase in scale and life through the addition of more resources and conversion to reserves.
Core has, through dedicated exploration, increased the aggregate Mineral Resource and Ore Reserves for the entire Finniss Lithium Project by over 400% since the start of 2018 and plans to add further Mineral Resources and Ore Reserves to extend the life and increase the strong positive life-of-mine cash flows of the Project.
The larger Finniss Lithium Project area comprises 500km2 of tenements covering the Bynoe Pegmatite Field comprising hundreds of pegmatites near Darwin in the Northern Territory.
Core’s Managing Director, Stephen Biggins, commented: “The Definitive Feasibility Study for Finniss once again highlights the significant potential of the Project and puts Core on track to become the Northern Territory’s first lithium producer.
“The DFS confirms Finniss as a simple but high value operation, in part due to the minimal spend required on infrastructure thanks to high grade spodumene reserves in close proximity to Darwin Port.
“With the DFS now completed, we are aiming to finalise funding over the coming months so that construction can commence as soon as practicable. We are also maintaining our exploration momentum, with the aim of materially increasing the potential mine life of Finniss before we commence first production.
“On behalf of the Core Board, I would like to thank our project team and valued partners who have been involved in preparing the DFS. We look forward to the Final Investment Decision for Finniss in the coming months.”