Key outcomes of the study include a pre-tax net present value (NPV) of C$140 million over an initial 13-year mine life.
Sayona plans to progress towards completing a definitive feasibility study, mining licence applications, off-take contracts and financing this year.
Corey Nolan, CEO, commented: “The company is very pleased to demonstrate Authier’s potential to create significant shareholder value.
“A pre-tax net present value of C$140 million has been demonstrated with more upside to come through the phase 2 drilling program and other optimisation programs.”
Pre-feasibility study results
Key findings of the PFS include:
- Pre-tax NPV of C$140 million and pre-tax internal rate of return of 39%;
- Annual average concentrate production of 99,000 tonnes at 5.75% lithium oxide;
- Average annual revenue of C$67 million and EBITDA of C$31 million;
- Life of mine strip ratio of 6:1 (waste to ore) and cash costs of C$367 (US $280) FOB Montreal
- Development capital expenditure of C$66 million; and
- Maiden Ore Reserve of 10.2 million tonnes at 1.02% lithium oxide (Proven Reserve: 4.9 million tonnes at 0.97% lithium oxide and Probable Reserve 5.3 million tonnes at 1.06% lithium oxide) delivers a mine life of 13 years.
The company is now looking at a number of optimisation options to significantly enhance the value of the project, including drilling (currently underway) to expand the Mineral Resource and Ore Reserves, further metallurgical and geotechnical test-work, and other downstream value-adding opportunities.
The deposit is open along strike and at depth.
Sayona is exploring three separate options for the monetisation of the spodumene concentrates, including:
1. Selling concentrates into the Quebec domestic market. Quebec is the only place in the world outside of China that has an established lithium carbonate production facility. The facility is on care and maintenance but is due to be re-commissioned in 2018. In addition, Nemaska Lithium Inc (TSE:NMX) is also planning to establish a lithium carbonate and hydroxide facility in Quebec and could be a potential purchaser of lithium concentrates;
2. Exporting concentrates through a Quebec Port and selling to a Chinese lithium carbonate processing facility; and
3. Processing and producing a lithium carbonate/hydroxide product through an integrated downstream processing facility at Authier.
The results from the study have confirmed the technical and financial viability of constructing a simple, low-strip ratio, open-cut mining operation and processing facility producing spodumene concentrate.
The positive study results demonstrate the opportunity to create substantial long-term sustainable shareholder value at a low capital cost and 2.2 year payback period.
With the deposit open along strike and at depth, significant potential exists to expand resource base.
A drilling program has commenced with the aim of significantly expanding the project resource and reserve base, and improving the economic returns of the project.
Further potential also exists to optimise the mine plan and concentrate grade thereby improving returns.
The study recommends advancing the project to the next study phase in conjunction with a number of optimisation programs.
Sayona shares are trading up 30% over the past three months, currently priced $0.035.