Western Lithium Corporation (TSX-V: WLC) released the results of a National Instrument 43-101 (NI 43-101) compliant Preliminary Assessment and Economic Evaluation (PAEE) on its Kings Valley Lithium Project in Nevada, USA this morning.
Highlights of the PAEE included a pre-tax internal rate of return (IRR) of 28%, based on an 18 year mine life with total capital costs of US$427 million and estimated Stage I average annual revenues of US$263 million. The Stage I development would see production of 27,700 tonnes per year of lithium carbonate equivalent (LCE) and 115,000 tonnes per year of potassium sulphate (SOP). Stage I pre-tax net present values was calculated to be US$714 million using an 8% discount. Cash operating costs were estimated to be 89 cents per pound of lithium carbonate after applying a potassium sulphate by-product credit.
“The proposed project is expected to compete as a low-cost LCE producer with an estimated cash operating cost of US$1,967 per tonne (US$0.89/pound) LCE net of SOP by-product credit, under base case economics (cash operating costs estimated to be US$4,463 per tonne LCE with cash credit of (US$2,496) per tonne LCE derived from the sale of by-product potassium sulphate),” Western Potash reported. “The company notes, however, that no reliance should be placed on its current ability to sell the potassium sulphate by-product, as a result of imprecision in the United States Bureau of Land Management's (BLM) regulatory process for allowing the company's sale of the by-product. The company is proposing to pursue a negotiated contractual or regulatory resolution of this issue with the BLM.”
The PAEE drew upon a NI 43-101 compliant lithium resource and assumed (base case) a price of US$6,614 per tonne of LCE and US$600 per tonne of SOP.
"As we enter this decade, we see considerable momentum behind electric transportation using lithium-ion batteries," said Jay Chmelauskas, Western Lithium's President. "Our company is positioning itself to become a USA-based, major global supplier of high-quality lithium to meet the projected growth in demand from the electric and hybrid vehicle sector."
Western Lithium's Kings Valley property has one of the largest known lithium deposits in the world.
Not surprisingly, the company said it now intended to move ahead with further engineering and pilot plant studies to move the project towards prefeasibility. “These studies are expected to be funded from the existing treasury… Western Lithium has approximately US$20 million in cash and no debt.”