Infinity tables billion-dollar value for lithium mine
Infinity Lithium Corporation has estimated the net present value of its proposed underground San José lithium mine and hydroxide plant in Spain at US$811.7m, which translates into a whopping $1.094 billion in Australian dollars. The company says the project will spit out US$190m a year for 26 years in net cash flows from the production of 19,500 tonnes of battery grade lithium hydroxide annually.
It estimates an impressive US$7.9 billion in top line revenues over the life of mine at a modelled price of US$17,000 per tonne of battery grade lithium hydroxide.
Notably, management says it should be able to pay down the expected US$532m in capital required to build San José in just 3.2 years.
Located in the Cáceres region in western Spain, San José is the second largest hard rock lithium deposit in the European Union and boasts a mammoth 111 million tonne resource going 0.61 per cent lithium oxide.
The scoping study leverages off a 2019 pre-feasibility study and subsequent mineral processing test work at San José when the company was previously considering open-cut mining at the project.
It launched the scoping study to evaluate the prospects for an underground only mining operation that minimises impact on the environment and community stakeholders.
The company believes the study has shown the potential for an underground San José mine to generate increased quantities of battery grade lithium chemicals, whilst delivering improvements in social, environmental and visual impacts.
Management says the proposed underground operation would reduce the need for surface tailings and prevent any major visible impact from the mining operation.
An increase in direct and indirect employment is also envisaged from the integrated underground lithium mining and processing venture which management says will likely employ about 710 people.
Infinity Lithium Managing Director, Ryan Parkin said:“We are pleased to provide an alternative and viable option to bring this strategically essential project to fruition which provides multiple benefits to the locality of Cáceres whilst meeting the broader critical requirement for battery grade lithium chemicals in the EU. The Integrated Underground Mine and Lithium Hydroxide Scoping Study builds on the extensive test work that has recently resulted in the production of battery grade lithium hydroxide and carbonate. The Company looks forward to working with all stakeholders to deliver an exceptional outcome as we progress San José and provide an alternative resolution for local and regional government.”
Infinity’s proposal is a little different to standard hard rock lithium mining operations that typically mine the lithium on site before sending it in a concentrated form to a lithium hydroxide manufacturer – generally in China.
It is ultimately the lithium hydroxide chemical that battery manufacturers want to make batteries however traditionally these two operations are kept apart – and often on separate continents.
Infinity is planning to locate a lithium hydroxide plant right alongside its mine and do away with all of the intercontinental transport costs.
Recent research by global financial services company, JP Morgan concluded that lithium demand could soar by more than 500 per cent by 2030, driven by appetite from the electric vehicle sector where demand is forecast to surge nearly ten-fold.
Infinity believes San José could play a key role in assisting Spain and the European Union in sourcing battery grade lithium hydroxide to meet the projected future uptake of electric vehicles.
It says Europe is the second largest market for battery grade lithium after China, whilst Spain is the second largest automotive manufacturer in the European Union having produced some 2.8 million vehicles in 2019.
According to the company, 2020 third-quarter electric vehicle registrations in the European Union surpassed diesel internal combustion engine vehicle registrations for the first time. Electric vehicle sales accounted for 15 per cent of all vehicle sales in the European Union in the first quarter of 2021.
With electric vehicle uptake in Europe showing no signs of abating, Infinity appears to be in pole position to meet the surging demand for lithium hydroxide in Europe. With both a lithium mine and a lithium hydroxide plant under its control, Infinity may just end up being a force to be reckoned with in the rising lithium tide.
Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au