Core Lithium Ltd (ASX:CXO) plans to update the definitive feasibility study for its Finnis Lithium Project, recognising several opportunities to add value to the project after recently announced increases to resources, reserves and the life of mine (LOM).
The updates include:
- Increasing Finniss’ production capacity, based on growing offtake interest and expanded LOM, with only minor change to start-up capex;
- Assessing the growth potential of the Grants prospect;
- Optimising the balance between initial Grants open pit and new Grants underground mining operation to minimise strip ratio and start-up capex;
- Assessing grid connection for the Finniss Project to reduce power cost and emissions footprint; and
- Further increases to resource, reserve and LOM.
Core will update the June 2020 PFS to DFS level in quarter one 2021 to include these opportunities.
“Adding significant value to Finniss”
Core managing director Stephen Biggins said: “Whilst we could have made the decision to proceed with the updated feasibility study and retain our target FID date, Core’s management team could not ignore the range of market factors and opportunities that have been presented to us, which will add significant further value to our flagship Finniss Lithium Project if we revise our schedule.
“This decision was not taken lightly but we strongly believe that, in the long run, the benefits that will come with our revised schedule will mean longer-term rewards for our shareholders.
“We’re excited to be able to add further value to the Finniss Project ahead of release of the updated feasibility study, whilst also progressing positive discussions additional binding offtake and customers.”
Preliminary grants open-pit and underground mine design and resource is open at depth
Offtake and production capacity
As evidenced by the recent placement and letter of intent for Finniss offtake tonnes with leading lithium group Xinfeng, Core continues to receive growing interest from new parties and is close to completing additional binding offtake and customer project finance agreements.
Combined with the recently announced much larger Finniss mineral resource and longer LOM, the company is also assessing the Finniss Project’s potential to increase production capacity.
Based on the existing crushing and DMS process plant design and throughput potential, an increase in capacity may be achieved without substantially increasing start-up capex with the company aiming to capture the potential benefit of increasing project revenues by increasing production and sales of high-quality concentrate.
Grants open-pit and underground
The recently completed underground mining PFS has highlighted a new opportunity to extend mining of the high-grade Grants resource, which is open beneath the current open pit design.
Optimising open pit and underground mining has the potential to minimise the pre-strip start-up capex and overall stripping ratio.
Extending mining of the Grants orebody also has the potential to push back development capex needed to develop the BP33 orebody.
Grants and BP33 drilling program
The mine planning and resource assessment studies completed in the June 2020 quarter have highlighted valuable opportunities to further extend resources and reserves at Grants and BP33, particularly in light of efficient underground mining methods verified in the PFS.
A focused resource drilling campaign is expected to commence next month, including at BP33 where the mineralisation remains open along strike and at depth.
Roskill average annual price forecast for chemical-grade spodumene concentrate, 2000-2030 (US$/t 6.0% Li2O CIF China)
Lithium price forecasts
COVID-19 has influenced a positive world-wide pivot toward EVs as part of the global green economic recovery, but lockdown also has delayed EV sales volumes and slowed lithium demand
New Lithium price forecasts predict increasing lithium prices in 2022 and accelerating upward in 2023.
To maximise the value of the Finniss Project to shareholders, Core is targeting final investment decision (FID) in 2021 to enable a production start date in the second half of 2022 – timed to take advantage of forecast higher lithium demand and prices.
The revised timing of the optimised Feasibility Study update in Q1 2021 has been carefully considered, with the aim of maximising the best possible outcome for the Finniss Project without delaying the company’s capability to achieve target FID by mid-2021.
Core has approvals in place to build and operate the Finniss Lithium Project as soon as global COVID-19 economy and lithium sector recovers and can be ready if the world economy recovers sooner than expected