COVID-19 may have accelerated the push toward clean technology by way of a green economic recovery. However, in the short term, lockdowns and global tensions have suppressed the world’s economies and slowed the electric vehicles revolution – and with it lithium demand.
Commodity researcher Roskill forecasts lithium prices and demand to recover and grow significantly in 2022 before accelerating upwards from 2023.
Near-term lithium project developer Core Lithium (ASX: CXO) this week told shareholders it would capitalise on this slower-but-stronger market recovery and capture long-term value for its Finniss project near Darwin by updating the definitive feasibility study (DFS) and delaying a final investment decision (FID) until 2021, which would see first spodumene concentrate produced in the second half of 2022.
Core managing director Stephen Biggins said the decision to push back FID had not been taken lightly, but for the right value reasons.
“Core’s management team could not ignore the range of market factors and opportunities that have been presented to us, which will add significant further value to our flagship Finniss lithium project if we revise our schedule,” he said.
“We strongly believe that, in the long run, the benefits that will come with our revised schedule will mean longer-term rewards for our shareholders.”
Given the state of the global lithium markets, Mr Biggins’ logic to make sure Finniss hits its strap perfectly timed for the recovery is hard to argue with.
But it is not just about the timing of the lithium market recovery.
Core’s announcement in June it had increased the Finniss ore reserve by 159% to 5.7Mt has doubled the project’s mine life to seven years, with the possibility of stretching to 10 years based on existing tonnes.
Importantly, the much-larger resource and longer mine life mean there is significant potential to increase output by leveraging the existing crushing and dense media separation plant designs and throughput potential without a major change to the capital budget.
Increased nameplate production would allow Core to considerably boost revenues from Finniss and capture growing interest from new potential offtake partners.
Core is also re-evaluating Finniss’ power requirements. Instead of using diesel, Core is assessing the viability of connecting to the Northern Territory grid – given Finniss lies on Darwin’s doorstep – and in the process also addressing its greenhouse gas emissions.
“We’re excited to be able to add further value to the Finniss Project ahead of release of the updated DFS, while also progressing positive discussions additional binding offtake and customers,” he said.
Chinese lithium player Xinfeng has become Finniss’ latest potential offtake partner, last month signing a memorandum of understanding for 20,000 – 30,000tpa. The Xinfeng MOU complements Core’s offtake deals with Yahua (75,000tpa) and Transamine (50,000tpa) – leaving 85% of Finniss’ 175,000tpa target output covered.
Core’s ascension to membership of the European Battery Alliance EBA250 – the only Australian member with a project in Australia – should help with the offtake marketing.
With offtake interest in Finniss strong and the project fully permitted, the market will await with interest the results of the updated DFS.
Core closed the week at 3.8¢ per share.
