European lithium chemicals focus to benefit Infinity
With European car manufacturers such as Volkswagen pivoting increasingly towards electric vehicles, it is unsurprising that interest in the producing lithium-ion batteries and lithium chemicals within Europe has grown exponentially.
Highlighting this demand, Volkswagen said at a recent European Battery Alliance round-table that it would produce 50 EV and 30 plug-in hybrid electric vehicle models by 2025.
This will in turn require the equivalent of six lithium-ion giga-factories just to meet its own needs.
Both the German car manufacturer and European Investment Bank Vice President Andrew McDowell have also called for the reduced dependency of Europe on Chinese battery manufacturers.
All this is welcome news for ASX listed Infinity Lithium, which is proposing to build an integrated lithium project in Spain that will mine and refine lithium hydroxide for the European market.
Given Mr McDowell said that the European Investment Bank had identified the significant gap in the market for battery chemicals and that it is focused on “raw materials and refining facilities”, it is not a stretch to conclude that the company might find a receptive ear for its San Jose lithium project in western Spain.
European Commission Vice President Maroš Šefčovič also expressed his desire to continue to bring investments and investors to the lithium-ion battery and EV sector with more than €300 billion invested to date.
San Jose has a JORC compliant mineral resource of 111.3 million tonnes grading 0.61% lithium oxide and 206 parts per million tin, the latter metal being a potentially valuable by-product of the operation.
With more than 90% of the current resource base in the confident indicated category, the company could optimise significant ore reserves from the deposit.
In November last year, Infinity said in its scoping study that the proposed mine and hydroxide plant could generate an NPV as high as AUD$1.393 billion if lithium hydroxide prices stabilise at just under USD$18,000 a tonne over the next few decades.
Even if lithium hydroxide prices remained at just under $15,000 a tonne, the project could churn out up to AUD$172m a year in free operating cash flows before tax for the initial project life of 24 years.
Initial upfront capex for San Jose is expected to come in at around AUD$395m and the scoping study anticipates an IRR of 51%, at the lower hydroxide price of just under USD$15,000 a tonne.
The IRR number jumps to an amazing 74% using the higher, long term pricing model at USD$17,733 a tonne.
Production costs of just USD$5,343 per tonne is largely due to the luxury of having an on-site hydroxide plant.
In addition, whilst Infinity’s product is contained within a comparatively lower grade “mica” mineralisation instead of the better known and higher grade “spodumene” mineralisation, a commercial gas pipeline runs straight past its project and provides the company with a ready source of energy to “roast” the ore to make the refined lithium hydroxide product.
Infinity has a 50% interest in the San Jose project though it has an agreement with partner Valoriza Mineria and can move to a 75% interest by completing a more detailed feasibility study.
The company is continuing to advance discussions with strategic financiers, including global offtake companies.
Closing price for the last 90 trading days
Powered by Morningstar ®