Lithium Power releases strong Maricunga project study — now it needs $787m to build the thing
The Maricunga lithium project will cost $US563m ($787m) to build and boasts really low operating costs — but Lithium Power has a couple of big hurdles to leap before construction can begin.
A Definitive Feasibility Study (DFS) released today showed low operating costs (opex) puts the 20,000-tonne-per-year Maricunga project in Chile among the world’s best, Lithium Power told investors.
Lithium Power’s (ASX:LPI) share price – which has ranged between 20.5c and 51c over the past 12 months – was up a marginal 3.2 per cent to 24c on the news.
The company estimated project opex of $US3772 per tonne – and that’s without credits from selling a potassium chloride (KCl) by-product.
The average price for battery grade lithium carbonate will be $US14,400 per tonne over the life of the project, according to Roskill Consulting Group forecasts.
The project’s pre-tax net present value (NPV) of $US1.302 billion would provide an internal rate of return (IRR) of 29.8 per cent and a payback of just three and a half years, the company says.
IRR and NPV are used to estimate the profitability of a potential operation – the higher they are above 0, the better they are.
Priorities will now shift to secure finance for the project and off-take agreements for the high purity lithium carbonate product.
Lithium Power has kicked off discussions with “major Chilean and international financial institutions” to finance the project.
These are expected to be finalised during 2019, the company told investors.
Lithium Power has also been approached by international companies “regarding off-take agreements and future participation”.
The company also needs final environmental authorisation, which was submitted in the final quarter of 2018 and is progressing through the approvals process.
Lithium Power reckons it can start construction on the mine and lithium production plant in 2020, with first production in 2023.
Stockhead approached the company for further comment.