Surge Battery Metals (TSXV: NILI) has released a preliminary economic assessment for their flagship Nevada North Lithium Project. The study outlines a massive after tax net present value of US$9.21 billion for the project, alongside an IRR of 22.8% using an 8% discount rate.
That figure however is based on a long term lithium price of US$24,000 per tonne of lithium carbonate equivalent, whereas current pricing on battery-grade lithium carbonate is approximately US$7,395.60 per tonne as per metal.com.
The assessment is based on an open pit operation that would see a mine life of 42 years, with average annual production of 86,300 tonnes of LCE, with peak production of 109,100 tonnes, which is expected to occur in year six. Over the life of mine, 3.6 million tonnes of battery-grade LCE is expected to be pulled out of the ground, assuming recovery rates of 82.8%.
The associated lithium plant is expected to built over two phases. The first phase, which comes with a capital cost of US$2.97 billion, and would see 2.58 million tonnes of ore processed per annum. The second phase, at a cost of US$2.35 billion, would see that processing capability increased to 5.15 million tonnes per annum, which would come online in year 4 of production.
Total initial capital costs are estimated at $5.3 billion, alongside sustaining capital costs of $1.5 billion. On a per tonne basis, operating costs are expected to average $5,097 per tonne of LCE produced over the life of mine.
This operating cost, again based on $24,000 a tonne LCE, is expected to generate average annual cash flow of $1.1 billion over the life of mine. Payback on the project meanwhile is estimated at 4.7 years.
Sensitivity tables included within the analysis suggest that at $15,000 per tonne LCE, which is the lowest figure provided within the table, the after-tax net present value declines to $2.8 billion, while the IRR falls to 13.0%.
“We are ecstatic to present the results of this PEA for the Nevada North Lithium Project. Our goal was to demonstrate that even using best in class environmental practices, NNLP could potentially be a major low-cost producer of battery-grade lithium carbonate for the United States battery industry, and we have taken a major step in achieving that with today’s results. The NNLP will benefit the local community with a long and stable 42-year mine life, with significant extension potential, that will bring thousands of high paying jobs to northeastern Nevada. Additionally, all of this is possible with a design that doesn’t produce a tailings pond,” commented Greg Reimer, CEO of Surge Battery Metals.
Surge Battery Metals last traded at $0.33 on the TSX Venture.
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