European focussed lithium development company, Infinity Lithium, has delivered outstanding pre-feasibility study, or “PFS”, results for its fully integrated San José project in Spain, revealing that the operation will produce a pre-tax net present value of USD$860m and an internal rate of return of 42%.
With an initial life of mine of 30 years, the company will mine lithium mineralisation from an open-pit operation at San José and then process the ores into battery-grade lithium hydroxide at significant margins to the forecast price of the sought-after commodity.
Average earnings before interest, taxes, depreciation and amortisation, or “EBITDA”, are estimated to be USD$157m per annum for the first 10 years of lithium hydroxide production from San José using the forecast average long-term price of just over USD$16,000 tonne for the battery chemical.
The average cost of production over those first 10 years is only USD$5,434 per tonne of lithium hydroxide produced, placing the project near the bottom of the global production cost curve.
With an exponential increase in European electric vehicle production estimated over the coming decade and the continent looking to sustain its automotive industry, domestic supply of raw materials is critical.
In that sense, the company looks to be sitting pretty in western Spain, with excellent infrastructure, a local workforce and easy transportation routes into the European car manufacturing hubs.
San José has an enviable strip ratio of 0.43 to 1 – which effectively means Infinity mines 2.3 tonnes of ore for every tonne of waste – and hence, the payback on the operation from the start of production is a measly 2.5 years.
Pre-production capital costs are estimated to be USD$268m, with most of that required to build the processing plant.
The company is aiming to produce 15,000 tonnes per annum of lithium hydroxide, which is just over 6% of the estimated lithium demand equivalent required by the European lithium-ion battery supply sector by 2030.
According to management, the PFS offers several improvements over last November’s scoping study, including an extended production life and reduced social, environmental and visual impacts of the proposed operation.
This includes a significant decrease in waste and tailings from the project, which will now be dry-stacked and therefore result in a simplified and cost-effective rehabilitation of the site at the end of the project’s life.
Infinity also recently confirmed the recycling and successful reuse of potassium sulphate reagents for leaching ores during the processing route, which further reduces the costs of production.
The company has declared its maiden ore reserve at San José to be 37.2 million tonnes grading 0.63% lithium oxide and 217 part per million, or “ppm”, tin, from a global mineral resource of 111.2 million tonnes grading 0.61% lithium oxide and 206 ppm tin.
With half of that mineral resource tonnage reporting in the lower-confidence inferred category, there is also ample opportunity to expand the ore reserve position down the track with more drilling.
Infinity has also advanced its discussions and negotiations with potential offtake partners, equity investors and several institutional groups at continental, national and local levels.
Managing Director Ryan Parkin said: “The PFS has confirmed San José as a long life, low-cost project that is essential to meet the European Commission’s goal to secure critical lithium chemicals that are imperative for the economic survival of their automotive industry.”
“The value of the project is significant with a pre-tax NPV of USD$860m and an attractive IRR of 42% over an extended project life, which, when coupled with the potential support of major European institutions such as the European Investment Bank, provides confidence for the development of the flagship lithium chemicals project within Europe.”
“The project presents the potential for exceptional multi-decade employment positions and tax revenues that are largely retained within the region of Extremadura, while also providing a world-class beacon for complementary activities in lithium-ion battery production and technologies in the region and throughout Spain.”
“San José retains unique sustainability characteristics that further complement Europe’s aggressive carbon emissions compliance requirements through the implementation of an environmentally advantageous process flowsheet and superior carbon emissions profile for European end markets.”
By Matt Birney
