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Global Geoscience PFS estimates Rhyolite Ridge value at US$1.8 billion

The company is forecast to become one of the world’s lowest cost lithium carbonate producers.
At work in Nevada
Global Geoscience's latest field campaign began in July

Global Geoscience Limited (ASX:GSC) has published a pre-feasibility (PFS) study for its wholly-owned Rhyolite Ridge Lithium-Boron Project in the US state of Nevada, tipping a 30-plus-year mine life with a 4.1-year payback.

The study prepared by Wood plc independent engineering firm Amec Foster Wheeler is being shared with investors today at 11am market time, as Global Geoscience managing director Bernard Rowe conducted a live webcast.

READ: Global Geoscience set to reveal major pre-feasibility study results

Global Geoscience managing director Bernard Rowe highlighted the benefits of the project’s location in an interview with Proactive Investors, saying the large, stable market had low sovereign risk and “a desire to have their own sources of critical metals” such as battery minerals.

“Our experienced technical team and management … have built and operated lithium-boron mines previously, so we have an experienced team that’s capable of building a project like this, which I think is very important as not many companies can say actually that.”

Earlier today Rowe told the market: “We are delighted by the outcomes of the PFS that clearly show Rhyolite Ridge will be a structurally-low-cost and very long-life mine supplying two critical materials necessary for urbanisation and energy efficiency.”

The company’s PFS estimates a $1.82 billion after-tax net present value (NPV) for the project at a 7% real discount rate.

The after-tax internal rate of return (IRR) is 27.7%, making the payback period a short 4.1 years.

Rowe reported: “Rhyolite Ridge is ideally positioned to become a major, low-cost and long-term supplier of both lithium and boron products to major markets within the USA and Asia.

“The boron co-product will generate sufficient revenue to cover nearly all operating costs and thereby enable Rhyolite Ridge to be the lowest cost producer of lithium in the world.”

Acknowledging the company’s forecast for very-low-cost lithium production, Rowe explained the reason why the reason why the project was so low cost.

Rowe told Proactive Investors: “When we produce a tonne of carbonate we also produce 10 tonnes of boric acid and that boric acid is quite valuable, so that’s why this project can have the claim of being potentially the lowest cost lithium producer in the world.”

READ: Global Geoscience’s PFS confirms Nevada lithium-boron resource can support a 30-year mine life

The company plans to process 79 tonnes over the life of the mine in the mature mining jurisdiction at an average processing rate of 2.6 million tonnes a year.

Global Geoscience has planned a conservative approach to start-up with Wheeler’s help and will adopt conventional processing technologies while maintaining optionality and scalability.

The company believes its low operating costs and dual revenues of lithium and boron sales would help protect it against supply-and-demand product cycles for the two products which are currently in short supply in the increasingly domestically-focused US minerals market.

Global Geoscience’s lithium carbonate grade would be 0.95%, at 81.8% recovery rate, for total production of about 20,200 tonnes a year over the life of the mine.

The company’s boric acid grade would be 7.81%, with 83.5% recoveries, for life-of-mine annual production of 173,000 tonnes.

READ: Global Geoscience raises $53 million in fully underwritten placement

Global Geoscience emphasised the “strong project economics” laid out in its PFS market announcement and executive summary.

These included annual steady-state revenues of US$450 million a year over the life of mine, with annual steady-state earnings before interest, tax, depreciation and amortisation of US$297 million a year.

The annual steady-state after-tax cash flow would be US$240 million while its total after-tax cash flow would be US$240 million a year.

The sums result in a $1.82 billion after-tax net present value (NPV) at a 7% real discount rate.

The resulting after-tax internal rate of return (IRR) is 27.7%, making the payback period a short 4.1 years.

All the figures were calculated with a June 2018 financial quarter US dollar and were based on lithium carbonate sale prices ranging from US$12,693 to US$16,862 a tonne (CIF China) and a constant boric acid sale price of US$700 a tonne (CIF Asia).

Next steps

The company will release its full PFS in November 2018.

Global Geoscience is currently selecting a partner to help it produce a definitive feasibility study for the Rhyolite Ridge project.

Rowe told Proactive Investors three large engineering firms had submitted tend bids to work on the company’s definitive feasibility study (DFS) and engineering design and procurement management contract and Global Geoscience was expecting to make its decision in the next couple of weeks and get started in the next few weeks.

Late last month, US-based Global Geoscience chairman James Calaway confirmed the company’s agenda for the next 12 months was to complete a definitive feasibility study, operate a pilot plant, drill and extend is resource, build its team and negotiate capital and business arrangements.

Rowe said today the company will start holding discussions with potential lithium and boron offtake partner, financial partners and plant builders.

He said Global Geoscience had held off holding detailed discussions with these parties to date and expected these discussions would continue as it worked towards producing a DFS by early in the September quarter and its board making a final investment decision (FID) by the end of 2019.

The latest update to the company's Rhyolite Ridge resource statement was also released today.

The company’s drill campaign began in July and field workers are now testing for extensions to the south of the project area.

Global Geoscience is likely to release some results before Christmas and expects to release an updated resource in the June half of calendar year 2019.

Rowe reported today: “With approximately A$75 million cash, we are able to undertake the work required to rapidly progress Rhyolite Ridge into production.

“With the in-depth knowledge provided by the PFS, the company is well positioned to commence serious discussions with a diverse range of potential market and finance partners.”

Rowe expected the company would make a number of “low-risk” long lead-time orders in the second half of next calendar year that pre-empt the year-end FID.

Global Geoscience shareholder will consider a name change to ion-pioneer name Ioneer Ltd (ASX:INR) on October 31, with rebranding efforts to kick off the week afterwards if the new name is given the all-clear.

Global Geoscience’s AGM will be held in Sydney on October 31 at 10am in the Beaumont Room of the Sheraton Grand Sydney Hyde Park  hotel at 161 Elizabeth Street. 

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