IronRidge Resources secures full funding for Ewoyaa Lithium Project

Highlights

• Conditional binding and definitive agreements entered into with Piedmont to fully fund and fast track development of the industry standout Ewoyaa Lithium Project in Ghana for US$102 million.
• Piedmont is a US integrated supplier of raw materials and minerals supporting the electric vehicles (EV) and industrial markets.
• Piedmont to subscribe for £10.8 million (approximately US$15 million) IronRidge shares at 20p per share.
• Piedmont to fund additional regional exploration and advancing the Ewoyaa Lithium Project to definitive feasibility study (DFS) for US$17 million.
• Piedmont to fund the Ewoyaa Lithium Project to production with full CAPEX spend of US$70 million.
• Offtake agreement for 50% of spodumene concentrate SC6% product across the life of mine (LOM).
• IronRidge to benefit from Piedmont's technical, operational, and corporate experience and expertise and its accelerated development timelines to production.
• Ghana to benefit from becoming the first West African lithium-producing country.
• IronRidge increases net cash position to approximately US$30 million for future growth initiatives.

The Board believes that this conditional agreement represents a unique opportunity to fast track the development of its industry-leading asset and fund its pathway to production, all whilst providing the opportunity for Ghana to become the first lithium producer in Western Africa.

The company has defined a JORC compliant mineral resource estimate at Ewoyaa of 14.5 million t at 1.31% lithium oxide (Li₂O) in the inferred and indicated category, including 4.5 million t at 1.39% Li₂O in the indicated category. A Scoping Study at Ewoyaa, announced in January 2021, supports a business case for 2 million tpy production operation with LOM revenues exceeding US$1.55 billion, with significant potential to extend LOM.

Vincent Mascolo, CEO of IronRidge, said: "With Piedmont's established relationships with US based automakers, this is an outstanding opportunity for IronRidge to fully fund its industry-leading Ewoyaa Lithium Project through to production. With the support and investment of Piedmont, along with the African mining expertise of IronRidge's major shareholder Assore Limited, we look forward with great excitement to developing this industry leading asset.

“Piedmont is developing a world-class integrated lithium business in the US and will bring vast experience and expertise to the partnership as we prepare to fast-track Ewoyaa to production.

"This pathway to production transaction removes funding risks for IronRidge and its shareholders at a time where surety of supply to the enormous and rapidly growing North American EV and stored energy industry sectors is paramount.

"This funding agreement is also a testament to the strategic direction that we have taken as a company in recognising Ewoyaa's potential, and the dedication and focus on bringing this asset into the production and commercialisation stages.

"I would like to thank our team on the ground in Ghana and all of our supportive stakeholders for their efforts and ongoing support in commercialising the project. We will continue to update the market on this exciting new phase in due course."

Keith Phillips, President and CEO of Piedmont, added: "Piedmont is delighted to be partnering with IronRidge to develop its outstanding Ewoyaa Lithium Project in Ghana.

"We consider Ewoyaa to be among one of the world's most promising spodumene projects, leveraging existing world class infrastructure including directly adjacent HV power, a major highway within 1 km of the site, and the major port of Takoradi less than 2 hours' drive away.

"Few hard-rock lithium projects worldwide can boast the proximity to existing operational infrastructure, lithium grade and a simple Dense Media Separation-only process route that will require very low upfront capital expenditure.

"As a company seeking to support the production of lithium and accelerate the transition to a sustainable future, we look forward to providing a pathway to production at this industry-leading project."

Project overview

Under IronRidge ownership, the Ewoyaa Lithium Project, part of the Cape Coast Lithium Portfolio, has been positioned as an industry standout project, ready for advancement through the development stages to production.

The scoping study confirmed Ewoyaa as a long-life, large-scale, low-cost opencast project, delivering excellent returns, as outlined below:

• Scoping study supports a business case for 2 million toy production operation with LOM revenues exceeding US$1.55 billion.
• 8-year LOM operation, producing an average 295 000 tpy of 6% Li₂O spodumene concentrate, with significant potential to extend LOM.
• Study delivers exceptional financial outcomes:
• LOM revenues exceeding US$1.55 billion, post-tax NPV₈ of US$345 million, IRR of 125% over 8 years.
• US$68 million capital cost with industry-leading payback period of <1 year.
• C1 cash operating costs of US$247/t of 6% lithium spodumene concentrate Free on Board (FOB) Ghana Port.
• Pre-tax NPV₈ of US$539 million and EBITDA of US$854 million for LOM.
• Average EBITDA of US$105 million/y.
• Significant exploration upside potential from the historic Egyasimanku Hill deposit (1.5 million t at 1.66% Li₂O) and surrounding 684 km² portfolio.

Summary of commercial terms

Piedmont to earn 50% of IronRidge's CCPL in Ghana inclusive of Ewoyaa in the following stages.

Stage 1: Investment into IRR (approximately US$15 million)

• Piedmont Lithium to subscribe for 54 million ordinary shares in the company at a price of 20p per share (£10.8 million [approximately US$15 million]) with a lock in provision preventing the sale of the shares for 12 months.

Stage 2: Regional exploration and DFS funding (US$17 million)

Piedmont Lithium to earn up to an initial 22.5% of CCLP at completion of sole funding of:

• US$5 million towards an accelerated regional exploration programme to enhance the current Ewoyaa resource.
• US$12 million towards completing the DFS for the project.
• The minimum DFS criteria is to deliver a 1.5 – 2 million tpy run-of-mine (ROM) operation for a 10 – 8 year LOM respectively.
• Any cost overruns and/or savings will be shared equally.

Stage 3: CAPEX funding (US$70 million)

Piedmont to earn a further 27.5% of CCLP via the sole funding of:

• CAPEX of US$70 million for the project.
• To deliver a 1.5 – 2 million tpy ROM operation for a 10 – 8 year LOM respectively.
• Any cost overruns and/or savings will be shared equally.

Read the article online at: https://www.globalminingreview.com/finance-business/01072021/ironridge-resources-secures-full-funding-for-ewoyaa-lithium-project/