Grounded Lithium Announces Robust Investment Metrics in Preliminary Economic Assessment for the Kindersley Lithium Project
- Generates an after-tax internal rate of return ("IRR") of
48.5% using a realized sales price of USD$25,000 $1.0 billion 8% discount rate, on a capital investment of USD$335 million - Payout of initial capital costs is only 3.7 years inclusive of lead time design and construction of 1.5 years. We anticipate future KLP phases will be materially financed via internally generated cash flow;
- Initial capital estimate of USD
$335 million $45 million $30,500 - All-in operating costs are anticipated to be USD
$3,899 $42.9 million - Only 24 of our current 300 sections of lithium rights will be developed in Phase 1 of the KLP. The balance of the sections will support the development of subsequent phases of the KLP; and
- Phase 1 infrastructure investment is expected to underpin capital and operating cost efficiencies for all future phases.
"Grounded is pleased to have achieved another significant milestone in less than three years from incorporation," commented Gregg Smith, President and CEO. "The independent economic results of Phase 1 of the KLP compare favourably within the lithium mining industry from a CAPEX and OPEX perspective and we believe the results of the PEA bode well for critical future steps, including securing strategic partnerships, off-take agreements, and capital formulation for a commercial project. We now focus our corporate attention on the completion of a field pilot with Koch Technologies Solutions' ("KTS") extraction process, while at the same time undertaking certain field activities to provide higher certainty on our resources leading to a pre-feasibility study."
The economic analysis of the PEA is based on the following main assumptions:
- realized sales price of USD
$25,000 - annual production of 11,000 tonnes per year of LHM;
- commerciality of KTS' Li-Pro™ lithium extraction technology;
- minimal prefiltering expenditures due to the absence of hydrocarbons and H2S;
- large diameter wellbores to mitigate pressure loss due to friction and permit installation of large volume electrical submersible pumps; and
- estimated operating and capital costs for the project based on the most current industry data available inclusive of recent strong inflationary pressures on facilities and labour.
The PEA is based on the expected first phase of production at the KLP which is derived from the mineral resource estimate for the KLP set out in Company's NI 43-101 technical report titled, "NI 43-101 Technical Report: Resource Assessment of the Kindersley Lithium Project in
All values reported are in USD unless otherwise noted. The Company will file the PEA on SEDAR (www.sedarplus.com) within 45 days of this press release. The PEA presents data provided by several leading experts in their respective fields, namely Sproule Associates Limited, Grey Owl Engineering, Codeco - Vanoco Engineering Inc., Tundra Engineering Inc. and Fracture Modeling Inc.
Table 1 – Summary Economics
Description | Value | Units | Value | Units | |||
Average Annual Production (LHM) | 11,000 | tonnes/year | 12,125 | tons/year | |||
Average Annual Production (LCE) | 9,685 | tonnes/year | 10,676 | tons/year | |||
Project Life | 20 | years | 20 | years | |||
Foreign Exchange (FX) | 0.75 | ratio | 1.33 | ratio | |||
Total Capital Cost (CAPEX) | 447,323 | CAD$M | 335,492 | USD$M | |||
Annual Operating Expenditure (OPEX) | 57,188 | CAD$M | 42,891 | USD$M | |||
OPEX per tonne LHM | 5,199 | CAD/tonne | 3,899 | USD/tonne | |||
LHM Commodity Price | 33,333 | CAD/tonne | 25,000 | USD/tonne | |||
Average Annual Revenue | 366,592 | CAD$M | 274,944 | USD$M | |||
Economic Indicators | Before-Tax | Units | After-Tax | Units | |||
Net Present Value (NPV@ | 1,819,507 | CAD$M | 1,309,860 | CAD$M | |||
Net Present Value (NPV@ | 1,364,630 | USD$M | 982,395 | USD$M | |||
Internal Rate of Return (IRR) | 58.2 | % | 48.5 | % | |||
Payout (PO) | 3.5 | years | 3.7 | years | |||
Profitability Index (PI@ | 5.1 | ratio | 3.9 | ratio | |||
Note 1: The PEA is a preliminary cost estimate and includes inferred mineral resources that are considered too geologically speculative to have the economic considerations applied to them that would enable them to be categorized as mineral reserves under National Instrument 43-101 – Standards of Disclosure for Mineral Projects ("NI 43-101"). There is no certainty the results of the KLP outlined by the PEA will be realized. |
Capital Costs
Table 2 – KLP Capital Cost Summary
($ thousands) | Total | Total | |||
Wellfield | |||||
Drilling | $ 31,051 | $ 23,289 | |||
Completion | 17,280 | 12,960 | |||
Pipelines | 55,782 | 41,836 | |||
Subtotal | $ 104,113 | $ 78,085 | |||
Central Processing Facility | |||||
Infrastructure | $ 238,754 | $ 179,066 | |||
Planning, Engineering, Legal & Administration | 14,922 | 11,192 | |||
Construction & Commissioning | 29,844 | 22,383 | |||
Subtotal | $ 283,520 | $ 212,640 | |||
Contingency | $ 59,689 | $ 44,766 | |||
TOTAL | $ 447,322 | $ 335,492 | |||
Given the operating conditions, the capital intensity for the KLP is forecasted to be materially lower than some of the other operations in the industry. Capital efficiency is vitally important in projects of this size and the leverage that accrues to project stakeholders due to industry leading capital efficiency ratios directly impact rates of return. These capital estimates will be further refined as the Company moves toward the pre-feasibility and bankable feasibility milestones. These estimates represent a Class 5 engineering cost estimate. We do expect modifications to these estimates with the completion of more precise and detailed engineering.
Operating Costs
Table 3 – KLP Operating Cost Summary
Annual OPEX in $ thousands per year | Annual OPEX | Annual OPEX | OPEX | OPEX | |
Personnel | $ 6,250 | $ 4,688 | $ 568 | $ 426 | |
Electric Power | 13,626 | 10,220 | 1,239 | 929 | |
Reagents and Consumables | 21,218 | 15,914 | 1,929 | 1,447 | |
Maintenance and Servicing | 7,839 | 5,879 | 713 | 534 | |
Product Transport & Disposal | 2,555 | 1,916 | 232 | 174 | |
Direct Operational Expenditures | $ 51,489 | $ 38,617 | |||
Indirect Operational Expenditures | $ 2,528 | $ 1,896 | |||
Land Fess, Taxes, Other | $ 3,172 | $ 2,379 | |||
TOTAL | $ 57,188 | $ 42,891 | |||
Total operating costs of USD
Sensitivity Analysis
Table 4 – Economic Sensitivity Summary (USD)
OFAT Sensitivity Analysis - CAPEX | |||||
($ thousands) | Low Case | Low Case | Base Case | High Case | High Case |
CAPEX | $ 201,295 | $ 268,394 | $ 335,492 | $ 402,590 | $ 469,689 |
NPV@ | $ 1,473,192 | $ 1,418,999 | $ 1,364,630 | $ 1,310,615 | $ 1,256,423 |
NPV@ | $ 1,067,559 | $ 1,025,042 | $ 982,395 | $ 940,007 | $ 897,328 |
IRR (%) - Btax | 92 | 71 | 58 | 49 | 42 |
IRR (%) - Atax | 76 | 59 | 49 | 41 | 36 |
OFAT Sensitivity Analysis - OPEX | |||||
($ thousands) | Low Case | Low Case | Base Case | High Case | High Case |
OPEX | $ 25,735 | $ 34,313 | $ 42,891 | $ 51,469 | $ 60,047 |
NPV@ | $ 1,498,577 | $ 1,431,692 | $ 1,364,630 | $ 1,297,922 | $ 1,231,037 |
NPV@ | $ 1,080,176 | $ 1,031,350 | $ 982,395 | $ 933,698 | $ 884,872 |
IRR (%) - Btax | 62 | 60 | 58 | 56 | 54 |
IRR (%) - Atax | 52 | 50 | 49 | 47 | 45 |
OFAT Sensitivity Analysis - LHM Price | |||||
($ thousands) | Low Case | Low Case | Base Case | High Case | High Case |
LHM Price per tonne | $ 15 | $ 20 | $ 25 | $ 30 | $ 35 |
NPV@ | $ 576,730 | $ 970,769 | $ 1,364,630 | $ 1,758,846 | $ 2,152,885 |
NPV@ | $ 406,465 | $ 694,876 | $ 982,395 | $ 1,270,172 | $ 1,557,821 |
IRR (%) - Btax | 31 | 45 | 58 | 71 | 83 |
IRR (%) - Atax | 27 | 38 | 49 | 59 | 68 |
A table similar to Table 4 expressed in Canadian dollars can be found on the Company's website. A detailed future pricing study for lithium chemicals was not completed for the PEA. The average price used for future sales of battery-quality LHM was developed by reviewing pricing data generated from reliable sources as reported in publicly disclosed data collected from peer companies. The future average selling price of USD
Sensitivities demonstrate that the KLP is expected to provide torque to the upside upon any potential future increase in underlying commodity prices. With the demand for critical minerals expected to exceed world supply, the low-cost structure of the KLP is expected to provide elastic returns to the upside. The low-cost structure of the KLP was a key determinant in the Company focusing on the KLP area, since during downturns in commodity cycles, low-cost operations provide projects with improved price resilience.
GLC is a publicly traded lithium brine exploration and development company that controls approximately 4.2 million metric tons of lithium carbonate equivalent of inferred resource over our focused land holdings in
Scientific and technical information contained in this press release has been prepared under the supervision of Doug Ashton, P.Eng., Suryanarayana Karri, P. Geoph., Alexey Romanov, P. Geo. and Meghan Klein, P. Eng., Dean Quirk, P.Eng., Jeffrey Weiss, P.Eng., Chad Hitchings., P.L. Eng., and Michael Munteanu, P.Eng., each of whom is a qualified person within the meaning of NI 43-101.
Certain data verification, exploration information and other disclosure regarding the mineral resources data contained in this press release is included in the Technical Report.
The Company has transitioned its market making services to Red Cloud Securities Inc. ("Red Cloud"). Red Cloud will provide these services for trading on the TSX Venture Exchange ("TSXV") in accordance with the TSXV policies, for the purpose of maintaining an orderly market. The Company will engage Red Cloud on a month-to-month basis for a fee of
The disclosure in this news release uses mineral resources and mineral reserves classification terms that comply with reporting standards in
In this news release, the following abbreviations have the meanings set forth below:
bbls | barrels |
bbls/d | barrels per day |
km | kilometres |
m | metres |
m3 | cubic metres |
mi | miles |
mg/L | milligram per litre |
ppm | parts per million |
This press release may contain forward-looking statements and forward-looking information within the meaning of applicable Canadian securities laws. The opinions, forecasts, projections and statements about future events of results, are forward looking information, forward-looking statements or financial outlooks (collectively, "forward-looking statements") under the meaning of applicable Canadian securities laws. These statements are made as of the date of this press release and the fact that this press release remains available does not constitute a representation by GLC that the Company believes these forward-looking statements continue to be true as of any subsequent date. Although GLC believes that the assumptions underlying, and expectations reflected in, these forward-looking statements are reasonable, it can give no assurance that these assumptions and expectations will prove to be correct. Such statements include, but are not limited to, statements regarding the NPV of the first phase of production at the KLP, the expected realized sales price of LHM, the capital intensity of the first phase of production at the KLP, the operating cost and capital cost of the first phase of production at the KLP, the expectation the Company will implement multiple 10,000 tonnes/year phases of production of LCE on the KLP, the completion of the Company's field pilot, obtaining higher certainty on GLC's resources leading to a pre-feasibility study, obtaining funding under government programs, securing strategic partnerships, off-take agreements and capital formulation, supply in the battery mineral market, creating shareholder value, the amount of annual production at the KLP, the commerciality of KTS' Li-ProTM lithium extraction technology, re-injection of brine in the reservoir, the number of production wells and injector wells on the KLP, the average brine production from each production well, the drilling of additional production wells and the impact of same on project economics, the project life of the KLP, the pre-treatment required for KLP brine, the timing of the construction of the field pilot, obtaining power from the grid, constructing owner secured power such as a co-generation unit, the use of contractors in the process of commercializing the KLP, and GLC's vision of becoming a best-in-class, environmentally responsible, Canadian lithium producer supporting the global energy transition.
Among the important factors, risks, uncertainties and assumptions that could cause actual results to differ materially from those indicated by such forward-looking statements are: those assumptions listed under "Project Summary" above, GLC's expectation that our operations will be in
This news release shall not constitute an offer to sell or the solicitation of an offer to buy any securities in any jurisdiction.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.
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SOURCE Grounded Lithium Corp
