Compass Minerals (NYSE: CMP), a leading global provider of
essential minerals, today announced the achievement of several key
milestones and provided strategic updates regarding development of
its previously identified, approximately 2.4 mMT lithium carbonate
equivalent (LCE) resource on the Great Salt Lake. Phase one of
development is expected to be located on the east side of the Great
Salt Lake where a significant portion of the company’s existing
infrastructure is located.
Highlights
- Selected EnergySource Minerals as DLE technology provider
following three years of extensive testing of multiple DLE
technologies
- Low-cost, long-life brownfield project at Ogden, Utah solar
evaporation facility, leveraging robust existing
infrastructure
- Targeting phase-one production of approximately 11 kMT LCE
annually
- Estimated phase-one development capital of $262M (-30% to
+40%)
- Phase one expected to yield approximately $626 million to $985
million in after-tax NPV and an after-tax IRR between 28% and
36%
- Completed life cycle assessment confirms positive phase-one
sustainability profile
“Over the course of the past several months, we have continued
to make great strides on several strategic fronts driving our
lithium development project forward,” said Kevin S. Crutchfield,
president and CEO. “After significant efforts assembling internal
lithium expertise and successfully testing the conversion potential
of our resource, we are very pleased to today announce the
achievement of additional key milestones including the selection of
our DLE technology provider, disclosure of our initial project
economics and the completion of a third-party assessment of our
project’s sustainability profile. We are confident that the
continued forward momentum achieved through these milestones
further demonstrates the value creation potential, differentiated
positioning and formidable environmental profile of our planned
lithium development, all of which we believe will prove to be
competitive advantages for Compass Minerals.”
Technology Provider Selection
Following three years of extensive evaluation of multiple DLE
technologies and providers, including pilot trials to demonstrate
successful lithium extraction from the company’s Great Salt Lake
brine resource, Compass Minerals has selected EnergySource Minerals
(ESM) as its DLE technology provider. In pilot tests to date, ESM’s
proprietary ILiAD™ adsorption technology has proven successful in
processing Compass Minerals’ brine resource across four key
assessment categories: lithium recovery; magnesium rejection;
minimized environmental impact; and commercial readiness.
Adsorption is a proven DLE technology already in use for commercial
production at several lithium brine operations globally.
Additionally, early conversion testing of Compass Minerals’ brine
across a wide range of operating parameters has provided confidence
in the scalability of the planned DLE facility to be located at
Compass Minerals’ operations in Ogden, Utah.
“Our selection of ESM is the result of a comprehensive,
competitive process, and we are excited to forge ahead on our
lithium development with their team as a trusted provider,” said
Chris Yandell, head of lithium. “Our multi-year assessment was
focused on matching the right technology with our specific lithium
brine resource – and we are confident we’ve done just that with
this provider selection.”
EnergySource Minerals is a privately held company enabling
customers to undergo lithium extraction with low-cost, low-carbon,
safe and efficient operations. The ESM team comprises leaders in
industrial project development, continuous adsorption and ion
exchange processes and battery materials.
As it relates to downstream processing, Compass Minerals
previously engaged Veolia, an established technology solutions
provider, to conduct lithium chloride to lithium hydroxide
conversion testing as the first-known conversion to battery grade
lithium hydroxide of lithium brine originating from the Great Salt
Lake. As disclosed previously, the resulting conversion sample met
established battery-grade specifications for the U.S. domestic
electric vehicle and energy storage markets.
Compass Minerals believes it remains on track to enter the
market with a cost-competitive, battery-grade lithium product by
2025.
Capital Intensity, Cost Competitiveness and Value
Creation
Based on industry data from Benchmark Mineral Intelligence and
the cost estimates included in the company’s updated technical
report summary prepared in accordance with Item 601(b)(96) and
subpart 1300 of Regulation S-K (Updated Compass Minerals Lithium
TRS), excluding royalties, Compass Minerals projects its planned
lithium production to be in the lowest quartile of the cash cost
curve for existing or announced North American lithium operations.
Based on the Updated Compass Minerals Lithium TRS, if phase one of
the project was operational today, it would have generated positive
cash flow at any point in the recent lithium price cycle, having an
initial, phase-one operating cost estimate of just under $4,200 per
MT LCE to produce approximately 11 kMT LCE annually. The company
estimates this per-unit operating cost positions the project near
the bottom of the cost curve among all North American lithium
assets.
"Our initial economic assessment confirms that successfully
developing phase one of our lithium resource has the potential to
generate substantial economic value, reflecting its highly
competitive cost position,” said Lorin Crenshaw, chief financial
officer. “Against the backdrop of increasing lithium demand, we
look forward to advancing our phase-one development by 2025 – and
subsequently, phase two – on our path toward enhancing the
underlying long-run earnings growth rate of our business and
significantly reducing the weather dependency of our earnings
mix.”
Compass Minerals expects phase one of the project, once
operational, to yield approximately $626 million to $985 million in
after-tax, net-present-value and an internal rate of return of
between 28% and 36%, based on a life-of-project projection period
of 34 years and assuming a baseline average lithium carbonate
selling price of $15,881 per MT.
The company currently estimates approximately $262 million in
capital investment will be required for phase one of development,
implying a capital intensity per unit of production at
approximately the mean for all global brine projects.
The company’s current cost, NPV and IRR estimates are based on a
front-end-loaded (FEL-1) level of accuracy, which is within a range
of minus 30% to plus 40% and comparable to a preliminary economic
assessment. Compass Minerals is progressing with the next stage of
its engineering estimating process at an FEL-2 level of accuracy,
comparable to a pre-feasibility study, with an accuracy range of
minus 20% to plus 25%. This FEL-2 assessment is currently expected
to be completed by first quarter, calendar year 2023.
With the previously announced strategic equity investment by
Koch Minerals & Trading LLC (KM&T), approximately 75% of
total phase-one funding needs are secured, according to the
company’s FEL-1 level project cost estimates, including the full
funding required through calendar year 2024.
Compass Minerals also filed today the Updated Compass Minerals
Lithium TRS with the Securities and Exchange Commission (SEC). The
Updated Compass Minerals Lithium TRS is also available on the
company’s website.
Environmental Stewardship
Compass Minerals will be leveraging existing operational
infrastructure, permits, water rights and pond processes to extract
lithium as a co-product of its long-standing sulfate of potash,
salt and magnesium chloride production at the company’s Ogden
facility, thereby reducing the incremental environmental footprint
of the project.
To better assess the environmental impact of its lithium
development project, Compass Minerals contracted Minviro Ltd. to
conduct a formal life cycle assessment (LCA) of its various lithium
development scenarios. The results of the LCA have been completed
for phase one of the project.
As anticipated, due to the relatively low greenhouse gas
emissions profile of the company’s solar evaporation process, the
LCA assessed the global warming potential (GWP) of phase one of
Compass Minerals’ lithium development project at a significantly
lower level compared to the average GWP for lithium spodumene
mining or lithium clay development as cited in public
disclosures.
“Minimizing the environmental impact of our lithium extraction
and conversion plans has been a key priority of this project since
we first began assessing our development options,” said Rick
Axthelm, chief public affairs and sustainability officer. “We are
pleased with the confirming results of the LCA for phase one, and
we will continue to prioritize sustainable operations as we advance
toward commercial production.”
The company expects to have a supplemental LCA conducted on
phase two of its lithium development project once the engineering
and development plan for that portion of the project has
matured.
Conference Call
As previously announced, Compass Minerals will hold an
informational call on Thursday, Sept. 15, 2022, from 8:30 a.m. to
10:00 a.m. ET to discuss today’s announcement and provide an update
on the results of the company’s ongoing evaluation of development
options and strategic path forward to maximize the long-term value
of the lithium resource. Participants from Compass Minerals will
include: president and CEO, Kevin Crutchfield; head of lithium,
Chris Yandell; senior vice president, lithium commercial and
technology, Ryan Bartlett; and CFO, Lorin Crenshaw.
Access to the conference call will be available via webcast at
investors.compassminerals.com or by dialing 1-888-550-5768. Callers
must provide the conference ID number 3632674. Outside of the U.S.
and Canada, callers may dial 1-646-960-0469. An audio replay of the
conference call will be available on the company’s website.
About Compass Minerals
Compass Minerals (NYSE: CMP) is a leading global provider of
essential minerals focused on safely delivering where and when it
matters to help solve nature’s challenges for customers and
communities. The company’s salt products help keep roadways safe
during winter weather and are used in numerous other consumer,
industrial, chemical and agricultural applications. Its plant
nutrition products help improve the quality and yield of crops,
while supporting sustainable agriculture. Additionally, the company
is pursuing development of a sustainable lithium brine resource to
support the North American battery market and is a minority owner
of Fortress North America, a next-generation fire retardant
company. Compass Minerals operates 12 production and packaging
facilities with nearly 2,000 employees throughout the U.S., Canada
and the U.K. Visit compassminerals.com for more information about
the company and its products.
Forward Looking Statements and Other Disclaimers
This press release may contain forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995, including, without limitation, statements about the company’s
lithium resource development, including its expected production,
required permitting, environmental impact, growth potential,
ability to reduce the company’s weather dependency, value, costs,
cash flow, synergies with existing operations, ability to leverage
existing infrastructure, ability to produce high-quality,
battery-grade lithium, lithium demand and pricing, emissions
footprint, resource life, development timing and phases, operating
costs, NPV, IRR, capital intensity, global warming potential,
finalization of definitive agreements with partners, timeline of
project milestones, funding considerations, capital requirements,
and upside for share valuation. Forward-looking statements are
those that predict or describe future events or trends and that do
not relate solely to historical matters. The Company uses words
such as “may,” “would,” “could,” “should,” “will,” “likely,”
“expect,” “anticipate,” “believe,” “intend,” “plan,” “forecast,”
“outlook,” “project,” “estimate” and similar expressions suggesting
future outcomes or events to identify forward-looking statements or
forward-looking information. These statements are based on the
company’s current expectations and involve risks and uncertainties
that could cause the company’s actual results to differ materially.
The differences could be caused by a number of factors, including,
without limitation: (i) uncertainties in estimating the company’s
lithium resource; (ii) assumptions underlying the estimates of NPV
and IRR in the economic model used to demonstrate economic
potential of the lithium resource, including expected production
rates, estimates of capital and operating costs, and anticipated
synergies with the existing operations at the GSL/Ogden site, may
prove inaccurate; (iii) the timing of obtaining necessary
governmental authorizations; (iv) the company’s ability to convert
all or any part of the lithium mineral resource identified by the
initial assessment into an economically extractable mineral
reserve, including the availability and cost of capital for related
capital expenditures and the development of applicable processing
technologies; (v) the company’s ability to replicate the results of
pilot testing of the selected DLE technology at scale; (vi) weather
conditions; (vii) foreign exchange rates and the cost and
availability of transportation for the distribution of the
company’s products; (viii) changes in market demand, pressure on
prices and impact from competitive products; (ix) any inability by
the company to successfully implement its strategic priorities or
its cost-saving or enterprise optimization initiatives; (x) the
risk that the company may not realize the expected financial or
other benefits from the proposed development of its lithium mineral
resource or its investment in Fortress North America; (xi)
inflation; (xii) impacts of the COVID-19 pandemic, or other
outbreaks of infectious disease or similar public health threats;
(xiii) changes in laws, industry standards and regulatory
requirements; and (xiv) other risks referenced from time to time in
the company’s filings with the Securities and Exchange Commission
(SEC), including in Part I, Item 1A, “Risk Factors” of the
company’s Transition Report on Form 10-KT for the transition period
ended September 30, 2021 and Part II, Item 1A, “Risk Factors” of
the company’s Quarterly Reports on Form 10-Q for the quarterly
periods ended December 31, 2021, March 31, 2022 and June 30, 2022.
The company undertakes no obligation to update any forward-looking
statements made in this press release to reflect future events or
developments, except as required by law. Because it is not possible
to predict or identify all such factors, this list cannot be
considered a complete set of all potential risks or
uncertainties.
Certain information in this press release concerning the
proposed lithium development project, including expected
production, projected life-of-project, operating costs and mineral
resource estimates, has been derived from the Updated Compass
Minerals Lithium TRS. The Updated Compass Minerals Lithium TRS,
which updates the company’s previous technical report summary with
respect to lithium and LCE mineral resource estimates filed with
the SEC in 2021, was prepared by qualified persons and summarizes
the results of an initial assessment to define the lithium resource
at Compass Minerals’ existing operations in accordance with
applicable SEC regulations, including Subpart 1300. Pursuant to
Subpart 1300, mineral resources are not mineral reserves and do not
have demonstrated economic viability. The company’s mineral
resource estimates, including estimates of the lithium resource,
are based on many factors, including assumptions regarding
extraction rates and duration of mining operations, and the quality
of in-place resources. For example, the process technology for
commercial extraction of lithium from brines with low lithium and
high impurity (primarily magnesium) is still developing.
Accordingly, there is no certainty that all or any part of the
lithium mineral resource identified by the company’s initial
assessment will be converted into an economically extractable
mineral reserve. Reference should be made to the full text of the
Updated Compass Minerals Lithium TRS for further information
regarding the assumptions, qualifications and procedures relating
to the estimates of mineral resources as defined in Subpart
1300.
Certain other information in this press release concerning the
proposed lithium development project, including estimated phase-one
development capital, expected after-tax NPV and IRR and assumed
average lithium carbonate selling price, are based on estimates
that management used for corporate planning purposes.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220914005956/en/
Media Contact Rick Axthelm Chief Public Affairs and
Sustainability Officer +1.913.344.9198
MediaRelations@compassminerals.com
Investor Contact Valerie Tymosko Interim Senior Director
of Investor Relations +1.913.344.9496
InvestorRelations@compassminerals.com
Compass Minerals (NYSE:CMP)
Historical Stock Chart
From May 2024 to Jun 2024
Compass Minerals (NYSE:CMP)
Historical Stock Chart
From Jun 2023 to Jun 2024