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Investors say ‘Ole’ to Plymouth cap raise for Spanish lithium mine

ASX-listed Plymouth Minerals announced in a market update this week that it had received strong support from new and existing domestic and international institutional investors for its capital raise that was undertaken at $0.18 per share, representing a 12.8% discount to the prior 10-day volume weighted average price of Plymouth securities.

Plymouth said funds raised from the placement would be used to complete a feasibility study by the fourth quarter of next year for the San Jose project in Spain, which is located in the mining region of Extremadura.

The West Perth-based miner said completion of the study would trigger the potential earning of an additional 25% stake for the company in San Jose, expanding Plymouth’s total interest to 75%.

Plymouth Managing Director Adrian Byass, commented: “This quality raising is a key step as Plymouth advances towards lithium production and we are extremely pleased with the level of support from investors. The placement brings the benefit of fully funding by the company for the next phase of growth, and strengthens our institutional shareholder base, raising the profile of the company both domestically and internationally.”

Plymouth is encouraged that the San Jose lithium-tin project is exceptionally well positioned to become a key supplier to the proposed plethora of European battery factroies that are currently on the  drawing board. Plymouth are seeking to manufacture lithium carbonate on site and are blessed with the presence of a gas pipeline running past their front door less than 1km from the project. 

In September, a scoping study delivered impressive results for an operation that will potentially spit out USD$75m a year in free cash.

Europe accounts for about 30% of world lithium demand, however it is only responsible for about 2% of global production.  Plymouth are aiming to remedy that imbalance. 

A maiden JORC resource figure published earlier this year after an in-fill drilling program by Plymouth showed San Jose is a world-class Lithium “mica” deposit.

The global resource for the San Jose project is 92.3 million tonnes grading 0.6% lithium dioxide that is capable of producing 1.3m tonnes of lithium carbonate equivalent. Plymouth has an additional exploration target of at least another 1.3m tonnes of lithium carbonate equivalent.

San Jose also boasts a high-grade core of 16.5 million tonnes grading 0.9% lithium dioxide. 

Leading stockbroker Hartleys recently published a 68-cent price target for Plymouth, which compares favourably to recent highs of around 19.5c a share.

If the current spot price for lithium carbonate holds then Hartleys say Plymouth’s stock could be worth as much as $2.09 a share.

The scoping study was based on a long initial mine life of 24 years, producing an average of 12,000 tonnes of lithium carbonate per annum. The estimated capex was US$273 million, with average C1 costs of less than US$5,000 per tonne of lithium carbonate, ranking it well down the cost curve of global producers.

A highly conservative sales price assumption of US$10,000 per tonne would see the project generate an IRR of 28% and payback its capital of USD$273m in just 2.7 years. Those numbers are expected to improve even further when possible tin and boron credits are factored in.

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