viewCore Lithium Ltd

Core Lithium confident Finniss Project well-placed to cater for post-COVID demand for lithium

The company is confident that the project is at the front of the line of new global lithium production and has arguably the best logistics chain to markets of any Australian lithium project.

Core Lithium Ltd - Core Lithium confident its Finnis Project is well-placed to cater for post-COVID demand for lithium
Technical work has increased the ore resources and reserves of the project - extending the mine life to seven years

Core Lithium Ltd (ASX:CXO) has progressed development of the Finniss Lithium Project during 2020 as it prepares to cater for an expected surge in demand for lithium in the post-COVID economy.

During FY20, the company received a non-binding indicative term sheet with the Local Jobs Fund (LJF) from the Northern Territory Government for a $5 million concessional Finance Facility to help fund development of the project.

With project approvals now in place and the mine management plan approved by the Northern Territory Government, the next steps are to finalise the definitive feasibility study (DFS) and project financing.

Offtake agreements secured

During the past six months, the company has signed offtake agreements with its first European Offtake MOU with Geneva-based Transamine for 50,000 tonnes per annum and an MOU for 20,000-30,000 tonnes per annum with Xinfeng, which are in addition to a binding offtake for 75,000 tonnes per annum with Sichuan Yahua.

Core chairman Greg English said: “The three offtake agreements collectively represent approximately 85% of our first three years of annual spodumene production from the Finniss Lithium Project.

“We aim to convert the Xinfeng and Transamine agreements to legally binding offtake agreements with the possibility of project finance.”

World map of Darwin port relative to existing and potential offtake partners.

DFS pending

The company has delivered successive resource upgrades, increasing the Finniss ore resources by more than 50%, ore reserves by in excess of 150% and extended the mine life to seven years.

English said: “Over the past two years, we have completed several technical studies to support the development of the Finniss Lithium Project and to integrate new and expanded mining operations at BP33 and Carlton.

“The inclusion of underground mining at BP33 and Carlton improves the overall economics of the Finniss Lithium project and allows Core to extend the mine life to seven years.”

Test-work to date has confirmed that the project could produce a 6.0% Li2O concentrate at an overall lithium recovery of 71% (6.3 millimetre crush size).

The company is in the process of completing a DFS for the more extensive operation and this is expected to enhance the prospects of the project.

Exploration ongoing

While the company did not experience any material disruption, COVID-19 restrictions hindered its short-term ability to explore the project and other Northern Territory tenements.

However, recent government changes have seen the company recommence fieldwork and exploration activities.

English said: “Our recent exploration activity has been focused on the Finniss Lithium Project, and this work has led to significant discoveries at BP33, Carlton, Sandras and Hang Gong.

“Regional exploration was limited to our newly acquired Adelaide River Gold Project where we have undertaken some reconnaissance rock chip and associated low impact exploration activities.

“While we remain focused on developing the Finniss Lithium Project, we believe that our Adelaide River project, Napperby uranium and Blueys silver project hold considerable value and will look for opportunities to realise value from these projects.”

Spodumene price outlook

English noted that the COVID-19 pandemic had led to adverse economic conditions and a general worldwide economic downturn which had caused softer market conditions in China and weaker customer demand for lithium raw materials.

This not only impacts spodumene prices but prices across the entire lithium raw materials and chemicals product suite.

He said: “Many market analysts expect spodumene prices to recover soon as the demand increases for lithium-ion batteries and green energy products.

“Current modelling shows that the Finniss Lithium Project offers attractive returns for shareholders with the scope and economic potential of this operation will take more precise shape as we complete the DFS.”

Benchmark Mineral intelligence Q2 2020 forecast.

Demand for lithium

The pandemic has temporarily held up growth in electric vehicle sales causing a short term oversupply of lithium that has pushed down lithium prices further this year and forced existing producers to cut production and halt expansion projects.

However, Core managing director Stephen Biggins expects demand to surge in the near-term.

He said: “Core continues to engage with debt and equity capital markets in finalising the balance of the Finniss Lithium Project’s capital funding requirements.

“Demand for lithium batteries for electric vehicles and renewable energy storage is expected to surge in the near future, spurred by government mandates, rising concern about reducing emissions and climate change and a recovering from COVID-19 with a zero-carbon economy.”

Finniss Project well placed

Biggins said that, with project approvals now in place, the project was at the front of the line of new global lithium production and had arguably the best logistics chain to markets of any Australian lithium project.

He said: “Core’s Finniss Lithium Project opens the door for the Northern Territory to be a high-quality supplier of lithium to the growing global electric vehicle (EV) market as it recovers post-COVID-19 and plays a critical role in supporting the world’s response to reducing emissions and managing climate change risk.”

Given its low start-up capital requirements, existing infrastructure and proximity to offshore transport services, the Finniss Lithium Project is well placed to meet the growing demand for lithium batteries for electric vehicles and other renewable energy technologies.

Quick facts: Core Lithium Ltd

Price: 0.37 AUD

Market: ASX
Market Cap: $370.9 m

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