Core Lithium Ltd’s (ASX:CXO) definitive feasibility study for the Finniss Lithium Project in the Northern Territory confirms that the company is well positioned to be Australia's next lithium producer.
The DFS focused on ore reserves within the high-grade Grants and Bp33 deposits at Finnis over an initial 3.5-year period and confirmed the project comprises a low-risk, open pit mining operation.
It outlines mining of a high-grade ore reserve of 2.2 million tonnes at 1.4% lithium oxide which when combined with exceptional spodumene metallurgy will enable Core to produce high-quality, coarse concentrate using simple gravity DMS processing.
The DFS also reveals that construction of a 1 million tonne per annum Dense Media Separation (DMS) process plant will produce up to 180,000 tonnes per annum of high-quality lithium concentrate with robust margins.
Core managing director Stephen Biggins said: “The definitive feasibility study for Finniss once again highlights the significant potential of the project and puts Core on track to become the Northern Territory’s first lithium producer.
“The DFS confirms Finniss as a simple but high-value operation, in part due to the minimal spend required on infrastructure thanks to high-grade spodumene reserves in close proximity to Darwin port.
“With the DFS now complete, we are aiming to finalise funding over the coming months so that construction can commence as soon as practicable.
"We are also maintaining our exploration momentum, with the aim of materially increasing the potential mine life of Finniss before we commence first production.”
A pre-production or start-up capex of $73 million and strong cash flows would enable quick capital payback of less than 1.5 years, which confirms that Finniss will be one of Australia’s lowest capital intensity lithium projects.
Economics are reflected in the high pre-tax nominal internal rate of return (IRR) of 80%, net present value (NPV) of $114 million and free cash flows of $158 million from revenue of $501 million.
Between the preparation of the pre-feasibility study (PFS) and the DFS there have been several changes to inputs and assumptions that have had an impact on the project economics.
Revenue has increased by about 45% resulting from additional ore from Grants and the added development of the BP33 deposit.
As a result of the additional ore tonnage, the mine life has increased from two years to four years.
On the capital front, an additional $22 million has been included with the majority of this dedicated to the installation of a three-stage DMS plant rather than the single stage DMS.
This flowsheet improvement will enable the production of high value 5.5% lithium oxide concentrate, rather than 5.0% and about $6 million of the increase is due to a combination of larger pre-strip at Grants and slightly higher mining costs.
Overall there are now more than 2.5 times more tonnes being moved, which affected the operating costs with mining rates having increased 15% to reflect commercial contracted scheduled mining rates.
Completion of the DFS paves the way for the company to advance offtake and financing discussions as well as project permitting to ensure Core is positioned to begin development and construction in 2019.
In addition, the company will maintain an aggressive exploration campaign focused on growing the resource base of the Finniss project to support a long-life mining operation and is expecting to ramp-up commercial production of spodumene concentrate to customers in the first half of 2020.