Piedmont Lithium Ltd (Piedmont) has reported the results of the company’s Scoping Study for its vertically-integrated Piedmont Lithium project located within the Carolina Tin-Spodumene Belt in North Carolina, USA (TSB). The project comprises a 22 700 tpy lithium hydroxide chemical plant supplied with spodumene concentrate from an opencast mine and concentrator.
According to Piedmont, the project has strong projected economics due to low initial capital, early spodumene concentrate sales, attractive capital and operating costs, short transportation distances, minimal royalties and low corporate income taxes. The project meets an important strategic need for domestic US lithium production and will confer substantial economic benefits on the local region.
The Scoping Study contemplates a staged development approach to minimise start-up risk and up-front capital requirements, with revenue from open-market spodumene concentrate sales in the project’s initial years helping defray capital requirements for the chemical plant. The Scoping Study demonstrates the compelling economics of the prospective integrated project, highlighted by low operating costs, high after-tax margins and strong free cash flow.
Staged development approach minimises equity dilution
The Scoping Study proposes a staged development approach to minimise start-up risk and upfront capital requirements, with revenue from open-market sales of spodumene concentrate in the project’s initial years helping defray capital requirements for the chemical plant. After tax-free cash flow of approximately US$128 million is expected to be generated prior to the construction of the chemical plant, and an additional US$108 million of operating cash flow from concentrate sales is expected to be generated during the chemical plant’s ramp-up. The establishment of positive cash flow from spodumene concentrate sales will position Piedmont to attract financing on terms not available to greenfield developments, including access to the US corporate bond market. This is expected to lead to lower costs of capital when financing the chemical plant, and to allow Piedmont to minimise equity dilution to the company’s shareholders.
Conclusions and next steps
The Scoping Study highlights the integrated project’s strong commercial potential, centred on very low operating and capital costs, and its staged development puts Piedmont in a strong position to engage in discussions around future financing of the project, including with prospective strategic and off-take partners. Piedmont plans to conduct a pre-feasibility study (PFS) targeted for completion early in 2019.
The company is to undertake the following work in developing the PFS:
- A previously announced byproduct study to examine the potential to enhance project economics through the recovery and monetisation of by-product quartz, feldspar and mica.
- Additional drilling on the Core property to potentially extend mine and project life by converting the previously announced current Exploration Target into a Mineral Resource.
- Metallurgical studies including the evaluation of the potential for a Dense Medium Separation (DMS) before the flotation circuit to further enhance operating costs in the Concentrator.
- Continued expansion of the company’s land position in the TSB with a focus on areas of high mineral prospectivity.
President and CEO of Piedmont Lithium Ltd, Keith D. Phillips, said: “We are very pleased with the results of the Scoping Study. The economic benefit of developing an integrated lithium chemical business in North Carolina, USA is now clear, driven by the exceptional infrastructure and human resource advantages of our location, as well as the competitive royalty and tax regime offered in the United States. We look forward to an exciting period ahead as we work to enhance the project even further through continued growth in our resource base and project life, and the evaluation of potential byproduct credits.”
Read the article online at: https://www.globalminingreview.com/exploration-development/19072018/piedmont-shares-results-of-scoping-study/