Allkem Limited (ASX|TSX: AKE) (“
Allkem” or
“
the Company”) is pleased to
provide a project update to its wholly owned Sal de Vida Project
located in Catamarca Province in Argentina. Allkem has reviewed and
updated the project Mineral Resources and Ore Reserves, project
cost and schedule estimates, and project economics from the
previous technical report dated March 2022 Technical Report
(
“previous study”) released shortly after the
merger of Orocobre Limited and Galaxy Resources to form Allkem.
HIGHLIGHTS
Stage 1 and 2 (45,000 lithium carbonate
equivalent tonnes per annum)Financial
Metrics
- Material ~82% increase in Pre-tax
Net Present Value (“NPV”) to US$5.51 billion from
US$3.04 billion in the previous study at a 10% discount rate. The
Post-tax NPV10 is US$3.18 billion
- Operating cost increased from
US$3,280 per tonne lithium carbonate equivalent
(“LCE”) to US$4,003 per tonne LCE due to increases
in the price of soda ash, lime and labour costs since the previous
study
Mineral Resource and Ore
Reserve
- Total Mineral Resource Estimate of
7.17 million tonnes (“Mt”) lithium carbonate
equivalent (“LCE”), a 5% increase from the
previous estimate in 2022, with a 41% increase in Measured Mineral
Resources
- Total Ore Reserve Estimate of 2.49
Mt LCE supporting a 40-year project life based on Ore Reserves
only, a 43% increase from the previous statement due to a revised
point of reference for Ore Reserve reporting of ‘brine pumped to
the evaporation ponds’
Stage 1 (15,000 lithium
carbonate equivalent tonnes per
annum)Financial Metrics
- Increase in
Pre-tax NPV from US$1.23 billion in the previous report to US$2.01
billion at a 10% discount rate, representing a ~63% increase in
value reflecting an increase in lithium price assumptions and
market outlook
- Operating costs
increased from US$3,612 per tonne LCE increased to US$4,529 per
tonne LCE due to increases in the price of soda ash, lime, natural
gas and labour costs since the previous study
Project Cost and Schedule
Update
- Increase in the development capital
cost estimate (“CAPEX”) from US$271 million in the
previous study to US$374 million, for mechanical completion,
representing a 38% increase which is in line with inflationary
conditions
- Substantial mechanical completion,
pre-commissioning and commissioning activities are expected in H1
CY25 with first production expected H2 CY25 and ramp up expected to
take 1 year
Stage 2 (30,000 tonnes
lithium carbonate equivalent per
annum)Project Cost and Schedule
Update
- The prefeasibility study update
confirms the Stage 2 expansion will be completed on the same design
basis as Stage 1 with a twofold modular replication of the Stage 1
design
- CAPEX is estimated at approximately
US$657 million, up from US$523 million in the previous study,
representing a 25% increase, with Stage 2 benefiting from Stage 1
detailed engineering, established on site infrastructure and
established regional construction teams and facilities
- Stage 2 construction is anticipated
to commence upon receipt of applicable permits and substantial
mechanical completion of Stage 1 with Stage 2 first production
approximately 2.5 - 3 years thereafter
Managing Director and Chief Executive Officer, Martin
Perez de Solay commented
“The updated study results clearly demonstrate
the exceptional value and robustness of this project and its future
expansion. As expected, global inflation has resulted in higher
capital and operating costs but it remains clear that we will
deliver material shareholder value through the development of Sal
de Vida. Pleasingly the resource and reserve have continued to grow
and will underpin future development.”
PROJECT BACKGROUND
Figure 1: Sal de Vida project
location
Allkem is developing the Sal de Vida Project in
Catamarca Province on the Salar del Hombre Muerto, approximately
1,400km northwest of Buenos Aires, Argentina. The Sal de Vida
deposit lies within the “lithium triangle”, an area encompassing
Chile, Bolivia and Argentina that contains a significant portion of
the world’s estimated lithium resources (Figure 1). Catamarca is a
proven mining jurisdiction and home to a number of successful
mining operations.
In 2022, Allkem commenced development of the
15,000 tonne per annum (“tpa”) Sal de Vida Stage 1
project. Construction is expected to be completed in the first half
of 2025. Allkem plans a further 30,000 tpa modular (15,000 tpa +
15,000 tpa) Stage 2 expansion which is currently at a
pre-feasibility study phase. The Project aims to produce 45,000 tpa
in total from the planned staged expansions.
The Stage 1 wellfield, brine distribution,
evaporation ponds, waste (wells and ponds) and Stage 1 process
plant cost estimates are Association for the Advancement of Cost
Engineering (“AACE”) Class 2 ±10%. Costs for the
30,000 tpa Stage 2 are AACE Class 4 +30% / - 20% with no escalation
of costs.
Lithium production has not commenced at the Sal
de Vida site. As of 31 August 2023, Sal de Vida Stage 1
construction was approximately 32% complete. Detailed engineering,
quantity estimation, contractor pricing, permitting and social
aspects are sufficiently progressed to report to feasibility study
level estimate for Stage 1. The layout and development
plan for Stage 1 allows for future expansion for subsequent stages.
An update to the pre-feasibility study (“PFS”) has
been completed for Sal de Vida Stage 2.
GEOLOGY &
MINERALISATION
The salar system in the Hombre Muerto basin is
considered to be typical of a mature salar. Several salars in the
lithium triangle contain relatively high concentrations of lithium
brine due to the presence of lithium-bearing rocks and local
geothermal waters associated with Andean volcanic activity. Such
systems commonly have a large halite core with brine as the main
aquifer fluid in at least the centre and lower parts of the aquifer
system.
Sal de Vida’s brine chemistry has a high lithium
grade, low levels of magnesium, calcium and boron impurities and
readily upgrades to battery grade lithium carbonate. Long-term
hydrological pump testing under operating conditions has
demonstrated excellent brine extraction rates to support the
production design basis.
RESOURCE AND RESERVE
ESTIMATES
Production wellfield
pumping
The production wellfield drilling program
commenced in late 2020 to construct an additional eight wells in
the eastern region of the salar for Stage 1 brine production and to
explore the resource at depth. The drilling program which also
entailed aquifer and pump testing reached completion in October
2021 and was monitored by consultants Montgomery & Associates
(“Montgomery”) and Allkem personnel. Since 2022,
intermittent pumping has occurred from the Stage 1 eastern
wellfield. Figure 2 shows the total registered pumping between July
2022 and April 2023 and corresponding lithium extracted from the
production wells. Figure 3 shows the location of identified
resources.
Figure 2: Registered pumping and
extracted lithium from the Stage 1 eastern wellfield
Figure 3: Location map of Measured,
Indicated and Inferred Lithium Mineral Resources
Brine Mineral Resource
Estimate
Montgomery was engaged to estimate the lithium
Mineral Resources and Ore Reserves in brine for various areas
within the Salar del Hombre Muerto basin in accordance with the
2012 edition of the JORC code (“JORC 2012”).
Although the JORC 2012 standards do not address lithium brines
specifically in the guidance documents, Montgomery followed the NI
43-101 guidelines for lithium brines set forth by the Canadian
Institute of Mining, Metallurgy and Petroleum (CIM 2014) which
Montgomery considers complies with the intent of the JORC 2012
guidelines with respect to providing reliable and accurate
information for the lithium brine deposit in the Salar del Hombre
Muerto.
Long-term pumping and production from the Stage
1 eastern wellfield (Figure 2) has increased confidence in that
area of Allkem’s concessions. Thus, the east-central Resource
polygons have been upgraded from Indicated Mineral Resources to
Measured Mineral Resources (Figure 3), leading to an increase in
Measured Mineral Resources of 1.03 Mt. Furthermore, a lithium
cut-off grade of 300 mg/L was utilised based on a projected LCE
price of US$20,000 per tonne over the entirety of the LOM, leading
to a total Resource increase of 0.32 Mt LCE. The total revised
Mineral Resource estimate of 7.17 Mt LCE (detailed in Table 1)
reflects a ~5% total increase to the prior Mineral Resource of 6.85
Mt LCE (Table 2).
The different Mineral Resource categories were
assigned based on available data and confidence in the
interpolation and extrapolation possible given reasonable
assumptions of both geologic and hydrogeologic conditions.
Measured, Indicated and Inferred Mineral Resource polygons;
totalling 160.9 km2, are displayed in Figure 3.
Table 1: Sal de Vida Mineral Resource
Estimate at August 2023
Category |
Brine volume |
Average Li |
In Situ Li |
Li2CO3
Equivalent |
Li2CO3
Variance to 2022 |
|
m3 |
mg/l |
tonnes |
Tonnes |
% |
Measured |
8.8 x 108 |
752 |
660,595 |
3,516,000 |
41 |
% |
Indicated |
7.6 x 108 |
742 |
564,375 |
3,004,000 |
-20 |
% |
Measured & Indicated |
1.6 x 109 |
747 |
1,224,970 |
6,520,000 |
5 |
% |
Inferred |
2.2 x 108 |
556 |
122,497 |
652,000 |
5 |
% |
Total |
1.9 x 109 |
724 |
1,347,467 |
7,172,000 |
5 |
% |
Note: Cut-off grade: 300 mg/L lithium. The reader is cautioned that
Mineral Resources are not Ore Reserves and do not have demonstrated
economic viability. Values are inclusive of Ore Reserve estimates,
and not “in addition to”. |
Table 2: Sal de Vida Mineral Resource
Estimate at April 2022
Category |
Brine volume |
Average Li |
In Situ Li |
Li2CO3
Equivalent |
|
|
m3 |
mg/l |
tonnes |
tonnes |
|
Measured |
6.2 x 108 |
757 |
467,235 |
2,487,000 |
|
Indicated |
8.9 x 108 |
793 |
703,201 |
3,743,000 |
|
Measured & Indicated |
1.5 x 109 |
775 |
1,170,437 |
6,230,000 |
|
Inferred |
2.1 x 108 |
563 |
116,668 |
621,000 |
|
Total |
1.7 x 109 |
752 |
1,287,105 |
6,851,000 |
|
Note: Cut-off grade: 500 mg/L lithium. The reader is cautioned that
Mineral Resources are not Ore Reserves and do not have demonstrated
economic viability. Values are inclusive of Ore Reserve estimates,
and not “in addition to”. |
Additional information for the resource
estimation can be found in the Annexures.
Brine Ore Reserve Estimate
The revised Ore Reserve Estimate of 2.49 Mt LCE
for 40 years reflects a 43% increase compared to the previous
estimate of 1.74 Mt LCE for 40 years. The difference in total
tonnage is attributable to the point of reference of the declared
reserve which has been aligned with the method used at Olaroz and
other major brine deposits. Process efficiency factors were
considered in the previous estimate, while the current reserve is
reported from a point of reference of brine pumped to the
evaporation ponds.
The updated Proved and Probable Ore Reserves are
displayed in Table 3, and a comparison to the previous Brine Ore
Reserve Statement is presented in Table 4. Based on the modelled
hydrogeological system and results of the numerical modelling, the
Proved Brine Ore Reserve reflects what is feasible to be pumped to
the ponds during the first seven years of operation at each of the
wellfields. Compared to the previous estimate, this represents a
1-year increase in the Proved Period which is mainly due to higher
certainty from long-term pumping in the eastern wellfield.
Furthermore, pumping optimisation was undertaken for the current
estimate to extract more brine from wells with higher allowable
pumping rates and lithium concentrations.
The model projects that the wellfields will
sustain operable pumping for 40 years; the last 33 years of pumping
from each wellfield has been categorised as Probable Brine Ore
Reserves. The Proved and Probable Ore Reserve estimate of 2.49 Mt
LCE represents approximately 38% of the current Measured and
Indicated Brine Resource estimate.
Table 3: Sal de Vida Ore Reserve
Estimate at August 2023
Category |
Wellfield |
Time Period |
Li Total Mass |
Li2CO3
Equivalent |
Li2CO3
Variance to 2022 |
|
|
years |
tonnes |
tonnes |
% |
Proved |
Stage I East |
1-7 |
30,541 |
163,000 |
81 |
% |
Proved |
Stage II Expansion |
3-9 |
53,046 |
282,000 |
57 |
% |
Total Proved |
|
1-9 |
83,587 |
445,000 |
65 |
% |
Probable |
Stage I East |
8-40 |
146,520 |
780,000 |
53 |
% |
Probable |
Stage II Expansion |
10-40 |
236,947 |
1,261,000 |
31 |
% |
Total Probable |
|
8-40 |
383,467 |
2,041,000 |
39 |
% |
Total Proved and Probable |
40 |
467,054 |
2,486,000 |
43 |
% |
Note: Assumes 300 mg/L Li cut-off grade
Table 4: Sal de Vida Ore Reserve
Estimate at April 2022
Category |
Wellfield |
Time Period |
Li Total Mass |
Li2CO3
Equivalent |
|
|
years |
tonnes |
tonnes |
Proved |
Stage I East |
1-6 |
16,908 |
90,000 |
Proved |
Stage II Southwest |
3-8 |
33,817 |
180,000 |
Total Proved |
|
1-8 |
50,725 |
270,000 |
Probable |
Stage I East |
7-40 |
95,828 |
510,074 |
Probable |
Stage II Southwest |
9-40 |
180,365 |
960,045 |
Total Probable |
|
7-40 |
276,193 |
1,470,118 |
Total Proved and Probable |
40 |
326,919 |
1,740,119 |
Note: Assumes 500 mg/L Li cut-off grade, 70% Li
process recovery
Table 5 shows the summary of total pumped brine
and projected average grade of the current Proved and Probable Ore
Reserves.
Table 5: Total pumped brine and
projected average grade of Proved and Probable Ore Reserves at
August 2023
Reserve Category |
Wellfield |
Time Period |
Projected Total Brine Pumped |
Projected Average Grade Li |
|
|
Years |
m3 |
mg/L |
Proved |
Stage I East |
1-7 |
3.90E+07 |
785 |
Proved |
Stage II Expansion |
3-9 |
6.58E+07 |
807 |
Total Proved |
|
1-9 |
1.05E+08 |
799 |
Probable |
Stage I East |
8-40 |
2.02E+08 |
726 |
Probable |
Stage II Expansion |
10-40 |
3.11E+08 |
763 |
Total Probable |
|
8-40 |
5.13E+08 |
748 |
Total Proved and Probable |
|
40 |
6.18E+08 |
757 |
The current numerical model projections suggest
that additional brine could be pumped from the basin from the
proposed wellfields past a period of 40 years. However,
recalibration of the model would be required after start-up pumping
of each wellfield to refine the model and support this
projection.
Additional information for the reserve
estimation can be found in the Annexures.
BRINE EXTRACTION AND
PROCESSING
Front-end engineering design
(“FEED”) work for Stage 1’s wellfields to process
plant and non-process infrastructure has been completed for an
initial production capacity of 15ktpa, later expanding to
45,000ktpa in Stage 2. A summary of the key physicals is displayed
in Table 6Table 6.
Table 6: Stage 1 - Summary of Stage 1
physicals for a 40-year project life
Key Physicals |
UoM |
|
Lithium Carbonate Produced life of mine |
t LC |
595,385 |
Lithium Carbonate Produced (annual average) – Stage 1 |
t LC |
15,000 |
Pond grade feed into process plant |
Wt % Li |
1.7 |
Pond Recovery (entrainment + leakage) |
% |
81 |
Plant Recovery (liming filter cake) |
% |
89 |
Average Product grade1 |
% Li2CO3 |
>99.65 |
1 Product mix entails 80% battery grade, 20% technical grade |
|
The process commences with brine extracted from
wells extending to a depth of up to 280m in the salar. Brine is
pumped to a series of evaporation ponds, where it is evaporated and
will be processed at the onsite lithium carbonate plant.
The wellfields are located on the Salar del
Hombre Muerto over the salt pan, with minimal infrastructure
residing on the surface. The brine distribution systems traverse
the salar to where the evaporation ponds are located. The process
plant is located adjacent to the evaporation ponds on colluvial
sediments. The waste disposal areas will surround the evaporation
ponds.
The process plant consists of a lithium
carbonate plant with a liming plant and associated plant
infrastructure, such as the power station, fuelling and
workshops. Process facilities are divided into four
main areas including the wellfield and brine distribution,
evaporation ponds, the lithium carbonate plant and discard
stockpiles. The process flowsheet is described below and summarised
in Figure 4.
As of 30 June 2023, the construction of the
first two strings of ponds reached over 98% completion with the
first 9 ponds completed and filled with brine and all ponds lined.
The engineering for the third string of ponds has been completed
and earth works have commenced. The main brine pipeline is complete
and the production wells have been commissioned. Camp expansion
activities and procurement of long lead items has progressed with
the arrival on site of a number of items of proprietary equipment.
Detailed engineering of the Process Plant continues, and steady
progress has been made on procurement of bulk materials. Process
Plant construction has also advanced with the mobilisation of the
EPC contractor and continuation of civil works including delivery
and installation of pre-cast foundations and associated concrete
works.
Figure 4: Sal de Vida Simplified Process
Flow Diagram
Wellfield and brine
distribution
There are two wellfields considered for
production; one in the East and one in the Southwest. For Stage 1,
only wells from the East wellfield will be used, while Stage 2 will
utilise the Southwest wellfield. The locations of production wells
were selected to reduce long-term freshwater drawdown and maintain
the highest possible brine grade.
Ten wells have been constructed for Stage 1, all
wells will be connected through pipelines to a booster station that
is be situated in a central location to the wellfield. The booster
station combines brines from the different wells and acts as a
brine pumping station to reach the ponds and provide a buffer for
seasonal flow changes. The average flow from the brine wells to the
first evaporation ponds will be approximately 159 litres per second
(“L/s”) for Stage 1.
Evaporation ponds
The solar evaporation pond system consists of a
series of halite and muriate (KCl) ponds, which concentrate brine
to a Li concentration suitable for feeding the lithium carbonate
plant. The ponds for Stage 1 cover a total area of approximately
450 ha and Stage 2 will cover a total of 850 ha. These areas were
calculated based on the expected evaporation rates and the
production well flow rates.
Halite ponds for Stage 1 are arranged in three
strings which operate in parallel, each string contains six cells
plus a buffer pond with the flow from one pond to the next in
series. Ponds of the same type are connected through weirs, which
allow for constant natural flow from one pond to the next,
maintaining brine levels in all ponds.
Evaporation results from the combination of
solar radiation, wind, temperature and relative humidity. Halite
salts (primarily sodium chloride) precipitate at the bottom of the
pond, are harvested periodically and stockpiled in accordance with
environmental requirements. The muriate ponds will have the same
design basis and be located adjacent to the halite ponds. When the
brine reaches a Li concentration of 21 g/L, it will be stored in a
set of concentrated brine storage ponds, from where the brine will
be fed to the lithium carbonate plant.
Liming
The halite ponds will feed evaporated brine to
the liming stage to partially remove magnesium. A solution of
milk-of-lime will be added to the brine inside mixing tanks,
precipitating magnesium and removing other impurities such as boron
and sulphates. The solids will be separated from the brine and
pumped to a discard facility. The limed brine will be fed to a
series of muriate ponds for further concentration. It will then be
stored in the concentrated brine storage ponds to act as buffer
ponds before feeding the process plant, to accommodate seasonal
flow variations and provide consistent feed to the process
plant.
Lithium carbonate plant
The lithium carbonate plant is designed to
produce 15,000 tpa of lithium carbonate in Stage 1, with Stage 2
enabling the production of an additional 30,000 tpa. The plant
design was based on average brine supplies of 26 m3/h for Stage 1
and an additional 52 m3/hr for stage 2 respectively. The design
includes an average lithium concentration of 21 g/l in the
softening feed. Plants will operate continuously with a design
availability of 91%.
Brine from the concentrated brine storage ponds
will re-enter the process plant in the softening stage to further
remove magnesium and calcium. Solid contaminants will be sent to a
filter cake tank to be re-pulped with the liming discards before
reporting to the discard facility. Softened brine will
report to an ion exchange (“IX)” circuit feed tank
to remove the remaining calcium and magnesium ions and meet battery
grade specifications. Lithium-concentrated brine from the IX stage
will be combined with sodium carbonate at elevated temperatures to
produce lithium carbonate. The lithium carbonate solids will be
recovered while the liquor will be recycled back into the process.
The lithium carbonate solids will be dried to <1% moisture,
before being filtered and cooled. The solids will be micronised and
iron contaminants will be removed magnetically. The
micronised product will then be bagged for transport and sale.
Salt waste disposal
During the evaporation phase the build-up of
solid sodium chloride, magnesium, boron and sulphate salts will
occur in the ponds. Over time the solids will build to a level
where their removal is required to maintain a working liquid volume
within the ponds. All ponds will be harvested on average once per
year with the solids placed in storage facilities adjacent to the
ponds. The estimated annual total of salt harvested and stockpiled
from the halite ponds is 1.4 million tpa, and from the muriate
ponds is 79,000 tpa for Stage 1 of the Project. For Stage 2, the
annual salt harvest will be 2.8 million tpa and 158,000 tpa for
halite and muriate ponds respectively.
The salt disposal facility covers ~300 ha for
Stage 1 and 600 ha for Stage 2 and will consist of halite, muriate,
and co-disposal stockpiles surrounding the halite ponds. All salt
waste is of similar chemistry to the surrounding salar and no
adverse environmental impacts are expected.
Final product
Project economics are based on a production and
sales volume mix comprising 80% battery grade and 20% technical
grade. The operating intention is to maximise the production of
battery grade however the 20% allowance for lower grade products is
a prudent approach at this stage of the development.
SITE LAYOUT &
INFRASTRUCTURE
The Project’s tenements cover 26,253 ha and all
process facilities will be located in the southeastern sector of
the Salar del Hombre Muerto. As seen in Figure 5, the East
Wellfield for Stage 1 is located on the eastern sub-basin of the
Salar del Hombre Muerto over the salt pan, and the ponds for Stage
1 are located in two areas directly south. Stage 2 will be located
southeast of the Southwest wellfield.
The brine distribution system traverses the
salar towards where the evaporation ponds are located. The location
of the ponds has been determined based on a number of factors
including optimal constructability properties and minimising
earthworks, environmental impact and risk of flooding.
The processing plant for all stages is located
adjacent to Stage 1’s evaporation ponds. A road system, including
ramps and causeways, connects the processing facilities and
provides access to all working areas.
Supporting infrastructure &
logistics
The following main facilities are planned for
the Project:
- Raw water system
- Power generation and distribution
- Fuel storage and dispensing
- Construction camp to accommodate up to 900 people
- Sewage treatment plant
- Fire protection system
- Buildings for the process plant, reagent and product
storage
- Various buildings for administration and site services
- Site roads, causeways and river crossings
- Communications and mobile equipment
- Steam generation, water heating and compressed air system
- Drainage system
Figure 5: Site layout for Stage 1
(blue) and Stage 2 expansion (green)
The main route to the Project site is from the
city of Catamarca via national route 40 to Belen, then provincial
route 43 through Antofagasta de la Sierra to the Salar del Hombre
Muerto. The road is mostly paved to Antofagasta de la Sierra and
continues unpaved for the last 145 km to Salar del Hombre Muerto.
This road is well maintained and also serves Livent Corporation’s
Fenix lithium operations and Galan Lithium Ltd.’s Hombre Muerto
Project. The Project is also serviced by key infrastructure
including major roads, rail, air and multiple seaports in Argentina
and Chile.
The Ferrocarril Belgrano railway line is located
100 km to the north of the Project and the use of rail during later
project stages is a possibility. A public airstrip is located in
Antofagasta de La Sierra and a private airstrip is located at
Livent’s Salar del Hombre Muerto operations.
International cargo for Sal de Vida could use a
combination of ports in Buenos Aires, Argentina and Chile. The
Ports of Antofagasta and Angamos consist of deep-water port
facilities serving the mining industry in northern Chile. The Ports
of Rosario, Campana and Buenos Aires consist of large port
facilities serving multiple industries in Argentina’s main economic
hubs.
FINANCIAL PERFORMANCE
Development Capital and Operating
Costs
Project development capital expenditure
(“CAPEX") for both stages combined producing
45,000 tpa lithium carbonate is estimated to be US$1,031 million.
Further details are summarised in Table 7.
Table 7: Stage 1 and 2 - Summary of
Development Capital Cost
Development Capital Cost |
Units |
Stage 1Feasibility Study |
Stage 2Pre-feasibility Study |
Total |
Direct Cost |
|
|
|
|
General Engineering & Studies |
US$M |
11 |
34 |
46 |
Wellfield & Brine Distribution |
US$M |
13 |
25 |
37 |
Evaporation Ponds & Waste |
US$M |
68 |
141 |
209 |
Lithium Carbonate Plant |
US$M |
182 |
342 |
524 |
Utilities |
US$M |
9 |
16 |
25 |
Infrastructure |
US$M |
23 |
13 |
36 |
Total Direct CAPEX |
US$M |
306 |
571 |
877 |
Owners Cost + Contingency |
US$M |
69 |
86 |
154 |
TOTAL CAPEX |
US$M |
374 |
657 |
1,031 |
Minor discrepancies may occur due to rounding |
|
The Stage 1 project development CAPEX estimated
to be US$374 million up to mechanical completion, this represents a
38% increase from US$271 million in the previous study. The
estimate includes wellfields to ponds, the lithium carbonate plant,
non-process infrastructure and various indirect costs detailed in
Table 7. The increase includes a ‘new’ foreign goods and services
tax (Decree 377/2023) (US$11 million), a schedule extension (US$29
million), regional inflation and FX adjustments (US$38 million),
and a re-estimate of contingency (US$21 million) on the remainder
of the project.
Stage 2 CAPEX is estimated at approximately
US$657 million, up from US$523 million in the previous study,
representing a 26% increase. The development CAPEX estimate for
Stage 2 is supported by the design basis of Stage 1 with the
fundamental approach to replicate Stage 1 twofold in the Stage 2
design with increased wells, pumps, evaporation ponds and plant
capacity. The future project will benefit from Stage 1 through
detailed engineering, established on site infrastructure and
established regional construction teams and facilities. Intangible
benefits include the continuity of people, systems and processes,
engineering efficiencies and the targeted allocation of
contingency.
Operating expenditure (“OPEX”)
is estimated to be US$4,529 per tonne LCE for Stage 1 from
US$3,612/t LC in the previous study due to material increases in
the price of soda ash, lime and labour costs.
Operating cost for all stages is estimated to
average US$4,003 per tonne LCE, a 12% decrease compared to Stage 1
on a standalone basis. Further details are summarised in Table
8.
Table 8: Stage 1 and 2 - Summary of
Operating Cost
Operating Cost |
Units |
Stage 1Feasibility Study |
Stage 2Pre-feasibility Study |
Total |
Reagents |
US$/t LCE |
1,681 |
1,844 |
1,680 |
Labour |
US$/t LCE |
703 |
257 |
411 |
Energy |
US$/t LCE |
608 |
603 |
605 |
General and Administration |
US$/t LCE |
801 |
432 |
529 |
Consumables and Materials |
US$/t LCE |
561 |
415 |
603 |
Transport and Port |
US$/t LCE |
175 |
175 |
175 |
TOTAL OPERATING COST |
US$/ t LCE |
4,529 |
3,726 |
4,003 |
Minor discrepancies may occur due to rounding |
|
For SDV Stage 2, operational synergies are
expected with labour, reagents and product
handling.
Lithium carbonate price
forecast
Lithium has diverse applications including
ceramic glazes, enamels, lubricating greases, and as a catalyst.
Demand in traditional sectors grew by approximately 4% CAGR from
2020 to 2022. Dominating lithium usage is in rechargeable
batteries, which accounted for 80% in 2022, with 58% attributed to
automotive applications. Industry consultant, Wood Mackenzie
(“Woodmac”) estimates growth in the lithium market
of 11% CAGR between 2023-2033 for total lithium demand, 13% for
automotive, and 7% for other applications.
Historical underinvestment and strong EV demand
have created a supply deficit, influencing prices and investment in
additional supply. Market balance remains uncertain due to project
delays and cost overruns. The market is forecast to be in deficit
in 2024, have a fragile surplus in 2025, and a sustained deficit
from 2033.
Prices have fluctuated in 2022-2023, with
factors like plateauing EV sales, Chinese production slowdown, and
supply chain destocking influencing trends. Woodmac notes that
battery grade carbonate prices are linked to demand growth for LFP
cathode batteries and are expected to decline but rebound by 2031.
Lithium Hydroxide’s growth supports a strong demand outlook, with
long-term prices between US$25,000 and US$35,000 per tonne (real
US$ 2023 terms).
PROJECT ECONOMICS
An economic analysis was developed using the
discounted cash flow method and was based on the data and
assumptions for capital and operating costs detailed in this report
for brine extraction, processing and associated infrastructure. The
evaluation was undertaken on a 100% equity basis.
The basis of forecast lithium carbonate pricing
was provided by Woodmac for the period 2023 to 2035, with a
longer-term price of US$28,000/t and US$26,000/t used for battery
grade and technical grade lithium carbonate from 2035 onwards.
A royalty agreement with the Catamarca
Provincial Government has been executed, confirming a life of
project royalty rate at 3.5% of net sales revenue (revenue less
taxes). This agreement applies to both the SDV Stage 1 and Stage 2
expansion.
The key assumptions and results of the economic
evaluation are displayed in Tables 9 and 10 below.
Table 9: Key assumptions utilised in the
project economics
Assumption |
Units |
Stage 1 |
Stage 2 |
Project Life Estimate |
Years |
40 |
40 |
Discount Rate (real) |
% |
10 |
10 |
Provincial Royalties 1,2 |
% of LOM net revenue |
3.5 |
3.5 |
Corporate Tax2 |
% |
35 |
35 |
Annual Production3 |
tonnes LCE |
15,000 |
30,000 |
CAPEX |
US$M |
374 |
657 |
Operating Cost |
US$/tonne LCE |
4,529 |
3,726 |
Average Selling Price4 |
FOB US$/tonne LCE |
27,081 |
26,922 |
1 Provincial
royalty agreement at 3.5%, export duties, incentives and other
taxes are not shown. 2 There is a risk that the Argentina
Government may, from time to time, adjust corporate tax rates,
export duties and incentives that could impact the Project
economics.3 Based on 80% battery grade, 20% technical grade lithium
carbonate of annual production.4 Based on price forecast provided
from Wood Mackenzie and targeted production grades stated in
Footnote 3 above. |
The study update for all stages demonstrates
strong financial outcomes with a pre-tax NPV at a 10% discount rate
of US$5.51 billion, this represents a ~82% increase from US$3.04
billion in the previous study. SDV Stage 1 reflects an
increase in pre-tax NPV from US$1.23 billion in the previous report
to US$2.01 billion at a 10% discount rate, representing a ~63%
increase in value.Further project economics are summarised in Table
10.
Table 10: Stage 1 and 2 – Summary of
financials over a 40-year project life
Financial Summary |
Units |
Stage 1Feasibility Study |
Stage 2Pre-feasibility Study |
Total |
NPV @ 10% (Pre-tax) |
US$M |
2,006 |
3,509 |
5,515 |
NPV @ 10% (Post-tax) |
US$M |
1,152 |
2,028 |
3,180 |
IRR (Pre-tax) |
% |
45.5 |
50.3 |
47.7 |
IRR (Post-tax) |
% |
32.5 |
35.3 |
33.9 |
Payback Period1 |
Years |
2.6 |
2.4 |
3.7 |
Development Capital Intensity |
US$ / tpa LC |
24,959 |
21,891 |
22,914 |
1 Payback period is from date of first commercial production |
|
Sensitivity Analysis
As displayed in Table 10, the SDV Stage 1 study
update demonstrates strong financial outcomes with a post-tax NPV
at 10% discount rate of US$1,152 million and post-tax IRR of
32.5%. Figure 6 analyses the impact on post-tax NPV
when pricing, operating cash costs and development CAPEX fluctuate
between +/- 25 %.
Figure 6: NPV Sensitivity
Analysis
ENVIRONMENTAL AND SOCIAL
IMPACTS
Carbon emissions management
Allkem is committed to the transition to net
zero emissions by 2035 and is progressively implementing actions
across the group to achieve this target.
Power generation at Sal de Vida is designed to
be sourced initially from diesel generators, and then from gas
generators, whilst maximising a photovoltaic energy solution. A
standalone study is being undertaken with the intention of
replacing all remaining site-based diesel generated power with
natural gas. Allkem is targeting 30% of power
generation for Stage 1 production to be sourced from photovoltaic
energy generated by a site-based solar farm. The Company is
currently in a tender process to install this hybrid solution for
day 1 of Stage 1 production.
Environment
Allkem is committed to the responsible use of
water resources and minimising environmental impacts. The
internally developed process flowsheet was selected partly on the
basis it consumed significantly less energy and water than other
conventional technologies.
The Sal de Vida Project will consume minor
amounts of raw water, equivalent to 1-2% of the total groundwater
recharge to the system. There is no expected loss of water to
communities with either their groundwater or surface water usage.
Water monitoring takes place at seven different control points
alongside nearby rivers in addition to periodic sampling to test
flow rates, chemical and physical properties.
An environmental baseline study was performed
covering areas such as water, flora, fauna, hydrogeology,
hydrology, climate, landscape, ecosystem characterisation, and
socio-economic considerations. This study was used to support the
EIA and is being used to monitor any impacts from construction
activities and/or operations. Collaborative and community water
sampling continues with local communities and provincial
regulators.
A physical climate change impact risk study was
completed in 2020. Overall, no material climate change risks were
identified, and projections will continue to be used to inform
project design and operations management.
Community engagement
Allkem is committed to regularly engaging with
community stakeholders and providing positive, lasting benefits
through employment opportunities, local procurement, and
educational and health initiatives. As part of a two-year corporate
social responsibility program agreed in 2019, the Company funded
three projects to support the communities nearest to Sal de Vida.
This included the construction of a high school in El Peñón
village, expansion of a primary school in Antofagasta de la Sierra
and construction of a first aid facility in Cienaga La Redonda. A
community office was established in Antofagasta de la Sierra in
January 2020. Separately, a social baseline study including a
perception test returned positive results about the Company and the
Sal de Vida Project.
Since 2021, Sal de Vida has been developing a
“Completion of Education” programme that benefits employees of the
project, the communities of Ciénaga Redonda and Antofalla. This
programme is carried out jointly through an agreement signed with
Catamarca Education Ministry. Allkem aims to support local
communities by maximising health, wellbeing and the procurement of
local goods and services whilst upskilling and providing future
employment opportunities.
As of 30 June 2023, over 70% of the local
employees are from Catamarca and Stage 1 will create approximately
900 full-time positions in the peak of
construction.
Further engagement with the provincial
government and stakeholders, including the communities of
Antofagasta de La Sierra, continue in relation to project
updates.
Regulations and permitting
Sal de Vida Stage 1 (15kpta production capacity)
is fully permitted after receiving approval from regulators in
December 2021 (for 10.7ktpa production capacity) and subsequently
in December 2022 (for 15ktpa production capacity, which included an
additional third string of evaporation ponds which covers ~150ha).
These permits are being used for construction activities which
commenced in January 2022 to build the first two strings of ponds,
the brine distribution system, additional camp capacity, process
plant and non-process infrastructure. In addition, water easements
have been issued and a resolution was issued permitting
construction of the solar farm.
Stage 2 will require a new EIA approval that
will be submitted once the front-end engineering design and
technical studies for this stage are completed. A ground water
permit is also in place, providing sufficient supply of water for
all stages of operations.
EXECUTION STRATEGY
Project Schedule
SDV Stage 1 pond construction commenced in
January 2022. The project has been divided into a number of work
packages, namely: well field and brine distribution, evaporation
ponds, process plant and utilities, and an energy package.
As of 31 August 2023, construction of the first
two string of ponds was completed, and the third string had reached
59% of construction completion. The process plant
engineering is at 59%, procurement progress at 63% and construction
progress at 9%. Camp construction was also complete
with 888 beds available. Long lead equipment procurement is well
advanced with the majority of equipment forecast for arrival prior
to end of CY23.
Substantial mechanical completion,
pre-commissioning and commissioning activities are expected by H1
2025 with first production expected in H2 2025 and ramp up expected
to take 1 year.
The schedule change for SdV relates improved
understanding of the current execution plan, the ongoing import
challenges and delays experienced in country by Allkem and it
contractors and vendors as well as an improved understanding of
regional productivity factors.
The prefeasibility study update for SDV Stage 2
confirms the expansion will be completed on the same design basis
as Stage 1 with a twofold modular replication of the Stage 1
design. Stage 2 construction is anticipated to commence upon
receipt of applicable permits and substantial mechanical completion
of Stage 1 with Stage 2 first production approximately 2.5 - 3
years thereafter.
Funding
Funding is expected to be provided through one
or more of the following:
- existing corporate cash;
- existing or new corporate debt or project finance
facilities;
- cash flow from operations.
Offtake Strategy
Allkem continues discussions with prospective
customers. In line with the Project execution schedule, these
discussions are expected to advance to negotiations throughout the
course of the project. Interest and demand remains strong against
the backdrop of a tight market, and Allkem seeks to target high
growth regions and determine the optimal contracting arrangement at
the time of product qualification.
This release was authorised by Mr Martin Perez de
Solay, CEO and Managing Director of Allkem Limited.
Allkem
LimitedABN 31 112 589 910 Level 35, 71 Eagle StBrisbane,
QLD 4000 |
Investor Relations & Media EnquiriesAndrew
Barber M: +61 418 783 701 E:
Andrew.Barber@allkem.coPhoebe LeeP: +61 7 3064
3600 E: Phoebe.Lee@allkem.co |
Connect info@allkem.co+61 7 3064
3600www.allkem.co |
IMPORTANT NOTICES
This investor ASX/TSX release
(“Release”) has been prepared by Allkem Limited
(ACN 112 589 910) (the “Company” or
“Allkem”). It contains general information about
the Company as at the date of this Release. The information in this
Release should not be considered to be comprehensive or to comprise
all of the material which a shareholder or potential investor in
the Company may require in order to determine whether to deal in
Shares of Allkem. The information in this Release is of a general
nature only and does not purport to be complete. It should be read
in conjunction with the Company’s periodic and continuous
disclosure announcements which are available at allkem.co and with
the Australian Securities Exchange (“ASX”)
announcements, which are available at www.asx.com.au.
This Release does not take into account the
financial situation, investment objectives, tax situation or
particular needs of any person and nothing contained in this
Release constitutes investment, legal, tax, accounting or other
advice, nor does it contain all the information which would be
required in a disclosure document or prospectus prepared in
accordance with the requirements of the Corporations Act 2001 (Cth)
(“Corporations Act”). Readers or recipients of
this Release should, before making any decisions in relation to
their investment or potential investment in the Company, consider
the appropriateness of the information having regard to their own
individual investment objectives and financial situation and seek
their own professional investment, legal, taxation and accounting
advice appropriate to their particular circumstances.
This Release does not constitute or form part of
any offer, invitation, solicitation or recommendation to acquire,
purchase, subscribe for, sell or otherwise dispose of, or issue,
any Shares or any other financial product. Further, this Release
does not constitute financial product, investment advice (nor tax,
accounting or legal advice) or recommendation, nor shall it or any
part of it or the fact of its distribution form the basis of, or be
relied on in connection with, any contract or investment
decision.
The distribution of this Release in other
jurisdictions outside Australia may also be restricted by law and
any restrictions should be observed. Any failure to comply with
such restrictions may constitute a violation of applicable
securities laws.
Past performance information given in this
Release is given for illustrative purposes only and should not be
relied upon as (and is not) an indication of future
performance.
Forward Looking Statements
Forward-looking statements are based on current
expectations and beliefs and, by their nature, are subject to a
number of known and unknown risks and uncertainties that could
cause the actual results, performances and achievements to differ
materially from any expected future results, performances or
achievements expressed or implied by such forward-looking
statements, including but not limited to, the risk of further
changes in government regulations, policies or legislation; risks
that further funding may be required, but unavailable, for the
ongoing development of the Company’s projects; fluctuations or
decreases in commodity prices; uncertainty in the estimation,
economic viability, recoverability and processing of mineral
resources; risks associated with development of the Company
Projects; unexpected capital or operating cost increases;
uncertainty of meeting anticipated program milestones at the
Company’s Projects; risks associated with investment in publicly
listed companies, such as the Company; and risks associated with
general economic conditions.
Subject to any continuing obligation under
applicable law or relevant listing rules of the ASX, the Company
disclaims any obligation or undertaking to disseminate any updates
or revisions to any forward-looking statements in this Release to
reflect any change in expectations in relation to any
forward-looking statements or any change in events, conditions or
circumstances on which any such statements are based. Nothing in
this Release shall under any circumstances (including by reason of
this Release remaining available and not being superseded or
replaced by any other Release or publication with respect to the
subject matter of this Release), create an implication that there
has been no change in the affairs of the Company since the date of
this Release.
Competent Person Statement
The information in this report that relates to
Sal de Vida’s Exploration Results, Mineral Resources and Reserves
is based on information compiled by Michael Rosko, MS PG, and
Brandon Schneider, MS PG, both of whom are Competent Persons and
Registered Members of the Society for Mining, Metallurgy and
Exploration, Inc (SME), a ‘Recognised Professional Organsation’
(RPO) included in a list posted on the ASX website from time to
time. Mike Rosko and Brandon Schneider are both employees of
Montgomery and Associates and have sufficient experience that is
relevant to the style of mineralisation and type of deposit under
consideration and to the activity being undertaken to qualify as a
Competent Person as defined in the 2012 Edition of the
‘Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves’. Mike Rosko and Brandon Schneider
consent to the inclusion in this announcement of the matters based
on their information in the form and context in which it
appears.
The scientific and technical information
contained in this announcement has been reviewed and approved by,
Michael Rosko, MSc. Geology (Montgomery and Associates) and Brandon
Schneider, MSc. Geological Sciences (Montgomery and Associates), as
it relates to geology, modelling, and resource and reserve
estimates; Michael Gunn, BSc. Chemical Engineering (Gunn Metals),
as it relates to processing, facilities, infrastructure, project
economics, capital and operating cost estimates. The scientific and
technical information contained in this release will be supported
by a technical report to be prepared in accordance with National
Instrument 43-101 – Standards for Disclosure for Mineral Projects.
The Technical Report will be filed within 45 days of this release
and will be available for review under the Company’s profile on
SEDAR at www.sedar.com.
Not for release or distribution in the
United States
This announcement has been prepared for
publication in Australia and may not be released to U.S. wire
services or distributed in the United States. This announcement
does not constitute an offer to sell, or a solicitation of an offer
to buy, securities in the United States or any other jurisdiction,
and neither this announcement or anything attached to this
announcement shall form the basis of any contract or commitment.
Any securities described in this announcement have not been, and
will not be, registered under the U.S. Securities Act of 1933 and
may not be offered or sold in the United States except in
transactions registered under the U.S. Securities Act of 1933 or
exempt from, or not subject to, the registration of the U.S.
Securities Act of 1933 and applicable U.S. state securities
laws.
ANNEXURE A
ADDITIONAL MINERAL RESOURCE & ORE
RESERVE INFORMATION
Additional information for the resource
estimation
Diamond drill cores were obtained in the field
for both drainable and total porosity. Porosity samples were sealed
in plastic tubes and shipped to Core Laboratories in Houston,
Texas, for analysis. Depth-specific brine samples were collected
from the in-situ formation, ahead of the core bit. Four additional
methods were used to obtain brine samples. Brine samples used to
support the reliability of the depth-specific samples included
analyses of brine centrifuged from core samples, brine obtained
from low flow sampling of the exploration core holes, brine samples
obtained near the end of the pumping tests in the exploration
wells, and brine samples obtained during reverse- circulation air
drilling. After the samples were sealed on site, they were stored
in a cool location, then shipped in sealed containers to the
laboratories for analysis.
Borehole and well spacing is in general about 4
km in most areas, and is consistent with guidelines determined by
Houston et al., 2011 for evaluation of brine-based lithium
resources in salar-type systems. The drilling density was
sufficient to demonstrate a high degree of confidence in the
understanding of the location and nature of the aquifer, and brine
grade both horizontally and vertically. The Sal de Vida area has
been drilled and logged with vertical exploration boreholes and
wells.
The Mineral Resource was estimated using the
polygon method. To estimate total amount of lithium in the brine,
the basin was first sectioned into polygons based on the location
of exploration drilling. Polygon sizes were variable. Each polygon
block contained one diamond drill exploration hole that was
analysed for both depth specific brine chemistry and drainable
porosity. Boundaries between polygon blocks are generally
equidistant from diamond drill holes. For some polygon blocks,
outer boundaries are the same as basin boundaries, as discussed
above.
Within each polygon shown on the surface, the
subsurface lithologic column was separated into hydrogeologic
units. Each unit was assigned a specific thickness based on core
descriptions and was given a value for drainable porosity and
average lithium content based on laboratory analyses of samples
collected during exploration drilling. Correlation between depth
and lithium concentration in the brine was observed further
increasing confidence in the method. The computed resource for each
polygon was the sum of the products of saturated hydrogeologic unit
thickness, polygon area, drainable porosity and lithium
content.
A cut-off grade of 300 mg/L of lithium was used.
Hydrogeologic units within each polygon with lithium content less
than cut-off grade were not included in the lithium Mineral
Resource calculations. The Mineral Resource computed for each
polygon is independent of adjacent polygons, but adjacent borehole
geology was used to confirm stratigraphic continuity of the units
surrounding each borehole.
Mining methodology ultimately would be via well
pumping in areas identified as favourable for brine extraction. An
on-site pilot plant demonstrated the ability to extract the lithium
from the brine.
Drilling information from the production well
extensions have resulted in the increased depth of the basement
model and have increased the volume of the lithium brine hosting
aquifer. Locations of all drill holes used for the estimation is
shown in in the table below.
Table 2: Location of drill
holes
Hole ID |
Easting (m) |
Northing (m) |
Elevation (masl) |
Depth (m) |
Drilling Method |
Azimuth |
Dip |
SVH10_05 |
3,401,501 |
7,187,997 |
3,967 |
51 |
Diamond |
0 |
-90o |
SVH10_06 |
3,407,698 |
7,198,544 |
3,966 |
109.21 |
Diamond |
0 |
-90o |
SVH10_07 |
3,405,096 |
7,200,713 |
3,972 |
110.60 |
Diamond |
0 |
-90o |
SVH10_08 |
3,412,000 |
7,198,004 |
3,970 |
136.10 |
Diamond |
0 |
-90o |
SVH10_09 |
3,404,610 |
7,192,659 |
3,969 |
116.17 |
Diamond |
0 |
-90o |
SVH10_10 |
3,402,046 |
7,192,921 |
3,967 |
114.76 |
Diamond |
0 |
-90o |
SVH10_11 |
3,401,991 |
7,200,980 |
3,969 |
102.35 |
Diamond |
0 |
-90o |
SVH10_12 |
3,404,945 |
7,194,862 |
3,968 |
112.72 |
Diamond |
0 |
-90o |
SVH10_13 |
3,399,997 |
7,192,002 |
3,966 |
135.37 |
Diamond |
0 |
-90o |
SVH10_14 |
3,397,992 |
7,193,440 |
3,966 |
145.15 |
Diamond |
0 |
-90o |
SVH11_15 |
3,403,401 |
7,190,002 |
3,969 |
149.00 |
Diamond |
0 |
-90o |
SVH11_16 |
3,411,992 |
7,191,599 |
3,974 |
171.23 |
Diamond |
0 |
-90o |
SVH11_24 |
3,401,757 |
7,190,453 |
3,967 |
195.54 |
Diamond |
0 |
-90o |
SVH11_25 |
3,406,876 |
7,193,763 |
3,970 |
155.77 |
Diamond |
0 |
-90o |
SVH11_26 |
3,402,708 |
7,196,334 |
3,966 |
139.09 |
Diamond |
0 |
-90o |
SVH11_27 |
3,409,861 |
7,192,435 |
3,973 |
137.31 |
Diamond |
0 |
-90o |
SVH11_28 |
3,409,188 |
7,196,108 |
3,969 |
95.62 |
Diamond |
0 |
-90o |
SVH11_28 |
3,409,188 |
7,196,108 |
3,969 |
95.62 |
Diamond |
0 |
-90o |
SVWP21-01 |
3,411,502 |
7,195,299 |
3,972 |
240 |
Rotary |
0 |
-90o |
SVWP21-02 |
3,412,559 |
7,194,884 |
3,973 |
307 |
Rotary |
0 |
-90o |
SVWP21-03 |
3,411,664 |
7,194,301 |
3,974 |
202 |
Rotary |
0 |
-90o |
SVWP21_04 |
3,412,788 |
7,193,901 |
3,973 |
236 |
Rotary |
0 |
-90o |
SVWP21_05 |
3,411,643 |
7,193,289 |
3,973 |
212 |
Rotary |
0 |
-90o |
SVWP21_06 |
3,412,771 |
7,192,906 |
3,974 |
267.7 |
Rotary |
0 |
-90o |
SVWP21_07 |
3,411,663 |
7,192,303 |
3,974 |
250 |
Rotary |
0 |
-90o |
SVWP20_08 |
3,412,781 |
7,191,991 |
3,976 |
307 |
Rotary |
0 |
-90 o |
Note: Easting and Northing shown using Gauss Krüger coordinate
system, Posgar 94 datum. masl = meters above sea level.
Additional information for the Ore
Reserve estimation
The methodology used to develop the estimated
resources, is different to the methodology used to estimate the
reserves, but consistent with the informal guidelines for lithium
brines developed by Houston et al., 2012. Their document provides
informal guidelines for estimation of Brine Mineral Resources and
Brine Ore Reserves, and their methodology is consistent with
industry standards for characterisation of aquifers and
wellfields.
The document states that key variables,
“hydraulic conductivity, recovery, brine behaviour and grade
variation over time, etc. and fluid flow simulation models” are
considered when estimating the Brine Reserve and determining
economic extraction. Given the nature of brine, the same guidelines
regarding well spacing and grade cannot be applied as if the
deposit was a stationary (i.e. static) orebody. The guidelines
regarding lithium brine deposits, as suggested by the Ontario
Securities Commission (2011), were considered acceptable and
applied by Montgomery during construction of the groundwater flow
model used to estimate the reserve.
Where previous methods were used to estimate the
total amount of brine, and therefore lithium in storage that could
be theoretically drained in the entire mining concession, the
method used for reserve estimation is completely different and
focuses on the potential for retrieval of lithium via wellfield
pumping in selected areas where pumping at relatively large
abstraction rates have been demonstrated. As the brine is a mobile
fluid, it is necessary to use a calibrated numerical groundwater
flow model, respective of fluid density, to project future
wellfield production and projected future brine grade.
Due to various levels of uncertainty in
conceptualising any hydrogeological system, all groundwater flow
and transport models incorporate inherent uncertainty. To lessen
the effects of uncertainty, good model calibration to observed
field conditions is essential for judging confidence in model
projections. However, even with reasonable short-term model
calibration to 30-day, hydraulic testing of the brine aquifer that
was conducted in late 2012 and in 2020, long-term model projections
are less certain because of outstanding variables. These variables
include locations of aquifer boundaries, lateral continuity of key
aquifer zones, presence of fresh and brackish water that have the
potential to dilute the brine in the wellfield area, and the
uniformity of aquifer parameters within specific aquifer units.
Although the numerical model was constructed to be reasonably
conservative when data are scarce or assumed (i.e., law of
parsimony), there is always a level of uncertainty associated with
projections of long-term outcomes. Therefore, it is appropriate to
categorise the pumping from the first seven years of pumping at
each wellfield as a Proved Brine Ore Reserve. Although projections
of long-term pumping past the first seven years from the wellfields
are less certain. There is a reasonable understanding of the
hydrogeological system that over the long-term the projected pumped
brine can be categorised as a Probable Brine Ore Reserve for the
remaining 33 years of pumping at each wellfield.
It is standard in the industry to recalibrate
and update numerical groundwater models after start-up and during
operation of the production wellfields. As the wellfields are
pumped, long-term data for pumping rates, water levels, and brine
chemistry are generated; calibration to these new data will improve
the reliability and predictive capabilities of the model. Future
Probable Ore Reserve estimates may also be modified based on
production pumping results, and projections from the recalibrated
model may result in confidence category upgrades of Probable Brine
Ore Reserves to Proved Brine Ore Reserves.
Statement of Brine Ore
Reserves
The groundwater model simulates concentrations
of TDS, which are used to derive concentrations of lithium by
linear relationships developed for each wellfield. It is assumed
that the relationship between TDS and lithium content is constant
during 40-year period of brine production from the East and
Southwest wellfields. In this manner, the concentrations of lithium
on model projections of TDS in the brine produced from pumping
wells in each production wellfield are estimated.
Using the numerical groundwater flow model
projections, total lithium to be extracted from the proposed
Southwest and East wellfields was calculated for a total period of
40 years, considering the two stages of the project, and taking
into account that each wellfield will be pumping for 40 years with
a gap of two years between wellfields (Stage 1 East and Stage 2
Expansion). The model projections used to determine the Brine Ore
Reserve that assumed increasing pumping from both wellfields,
indicate that the proposed wellfields should be able to produce a
reliable quantity of brine at an average annual rate of
approximately 315 L/s in the case of the eastern wells and about
191 L/s in the case of southwestern wells. The average grade at
start-up calculated from the initial model simulations used to
estimate the Brine Ore Reserve is expected to be about 805 mg/L of
lithium in the Stage 1 East Wellfield and 815 mg/L for the
southwest wells of Stage 2; the average final grade after
40 years of pumping is projected to be approximately 750 mg/L
of lithium (considering all wellfields) due to dilution. Depending
on how the wellfields are ultimately operated, these rates and
grades may be different.
Using the groundwater model, the average TDS
content of brine was estimated for each pumping cycle for each
wellfield. After estimating the total lithium content for each time
step and summing the amounts of lithium projected to be pumped
during those time steps, a total mass of unprocessed lithium to be
pumped from the wellfields was estimated. The results are
summarised in Table 12.
Table 3: Summary of total projected LCE
pumped during 40 years of wellfield operations.
Time Period |
Years |
Active Wellfield |
Lithium Total Mass(Tonnes) |
Li2CO3 Equivalent(Tonnes) |
1 |
1-2 |
Stage 1 East |
8,052 |
42,857 |
2 |
3-40 |
Stage 2 Expansion |
459,002 |
2,443,173 |
Total |
467,054 |
2,486,030 |
Total mass values in 1,000-kilogram units
(tonnes) of lithium were then converted to LCE units using 5.3228
as the conversion factor. Therefore, the amount of lithium in the
brine supplied to the ponds in 40 years of pumping is estimated to
be about 2.48 Mt LCE.
Modelling results indicate that during the
40-year pumping period, brine will be diluted by fresh and brackish
water, so the pumping rates increase slightly with time, to meet
the anticipated LCE tonnes per year for each wellfield.
During the evaporation and concentration process
of the brines, there will be anticipated losses of lithium. The
total amounts provided in Table 12 do not include anticipated loss
of lithium due to process losses and leakages after brine is pumped
to the evaporation ponds. The amount of recoverable lithium from
the various processing phases is calculated to be 70% of the total
brine supplied to the ponds.
ANNEXURE B
JORC Table 1 – Section 1 Sampling Techniques and Data
related to Sal de Vida (SDV) exploration drilling
(Criteria in this section apply to all succeeding sections.)
Criteria |
JORC Code explanation |
Commentary |
Sampling techniques |
- Nature and quality of sampling (eg cut channels, random chips,
or specific specialised industry standard measurement tools
appropriate to the minerals under investigation, such as down hole
gamma sondes, or handheld XRF instruments, etc). These examples
should not be taken as limiting the broad meaning of sampling.
- Include reference to measures taken to ensure sample
representivity and the appropriate calibration of any measurement
tools or systems used.
- Aspects of the determination of mineralisation that are
Material to the Public Report.
- In cases where ‘industry standard’ work has been done this
would be relatively simple (eg ‘reverse circulation drilling was
used to obtain 1 m samples from which 3 kg was pulverised to
produce a 30 g charge for fire assay’). In other cases more
explanation may be required, such as where there is coarse gold
that has inherent sampling problems. Unusual commodities or
mineralisation types (eg submarine nodules) may warrant disclosure
of detailed information.
|
- Drainable porosity and brine sampling was conducted at
accredited laboratories. Drill cuttings were described and stored
in labelled plastic cutting boxes onsite. Sampled wells include
diamond drillholes (for the analysis of drainable porosity and
brine chemistry) as well as reverse circulation wells (to analyze
brine chemistry). Core was described at 1-m intervals. Downhole
geophysical logging was completed for the Phase 2 to Phase 5
programs, and consisted of gamma ray, resistivity,
spontaneous-potential surveys, and borehole magnetic resonance and
spectral gamma ray.
- Neither porosity (core) nor chemistry (brine) samples were
subjected to any further preparation prior to shipment to
participating laboratories. After the samples were sealed on site,
they were stored in a cool location, and then shipped in sealed
containers to the laboratories for analysis.
- Brine samples were handled by experienced geoscientists with a
rigorous QA/QC program in place. An accredited laboratory was
selected as the primary laboratory to assay the brine samples, and
5 secondary QA/QC labs were used throughout the drilling
programs.
- -For drainable porosity sampling, Full diameter core with no
visible fractures was selected and submitted for laboratory
analyses. The selected sleeved core samples were capped with
plastic caps, sealed with tape, weighed, and stored for shipment.
The typical sample length was 15 – 40 cm.
-Brine samples were collected by drive-point samplers, centrifuge
to confirm the drive-point sampling methodology, low-flow pumping
and directly collected from the discharge line near the end of each
pumping test for reverse circulation wells. |
Drilling techniques |
- Drill type (eg core, reverse circulation, open-hole hammer,
rotary air blast, auger, Bangka, sonic, etc) and details (eg core
diameter, triple or standard tube, depth of diamond tails,
face-sampling bit or other type, whether core is oriented and if
so, by what method, etc).
|
- -Throughout the 6 phases of drilling, a range of drill types
and sizes were used. Each phase is broken out here.
-Phase 1: Core holes (6.4cm and 4.8cm) and conventional circulation
mud-rotary drills were used (4.8cm).-Phase 2: Core holes (6.4cm and
4.8cm) and conventional circulation mud-rotary drill were used
(20.3cm).-Phase 3: All wells were drilled by conventional mud
rotary circulation. Drilled borehole diameters were 17.5 inches
(444.5 mm), 12.25 inches (311.2 mm) and 8 inches (203.2 mm). -Phase
4: rotary drill rig and completed with 10-inch PVC casing and
gravel pack filter. -Phase 5: rotary drill rig and completed with
8-inch PVC casing and gravel pack filter.-Phase 6: The wells were
drilled by conventional mud rotary circulation. Drilled borehole
diameters were 24 inches (609.6 mm), 16 inches (406.4 mm) and 8.75
inches (222.25 mm). Once drilling was completed, production wells
were cased with 10-inch (254 mm) blank PVC casing and a PVC well
screen (slot size 0.75 mm). Gravel pack (1 – 2 mm and 1 – 3 mm
diameters sand) was installed in the annular space surrounding the
well screen. A bentonite seal was installed above the gravel pack,
then cement and fill material were placed to the level of the land
surface. |
Drill sample recovery |
- Method of recording and assessing core and chip sample
recoveries and results assessed.
- Measures taken to maximise sample recovery and ensure
representative nature of the samples.
- Whether a relationship exists between sample recovery and grade
and whether sample bias may have occurred due to preferential
loss/gain of fine/coarse material.
|
- -Unwashed and washed drill cuttings from the exploration and RC
wells were described and stored in labelled plastic cutting boxes.
Core was described at 1-m intervals.
-Recovery percentages of drill core were recorded for each core
hole; percent recovery was excellent for the majority of the
samples obtained, except for weakly cemented, friable clastic
sediments.-The core holes descriptions are qualitative and
quantitative. It allows the geoscientist to qualify the lithology,
while quantitatively providing porosity measurements. Cutting
samples were not analysed chemically and descriptions were a
qualitative evaluation of the lithologies encountered in the hole.
There is no relationship between sample recovery and ion
concentrations in the brine in this case. |
Logging |
- Whether core and chip samples have been geologically and
geotechnically logged to a level of detail to support appropriate
Mineral Resource estimation, mining studies and metallurgical
studies.
- Whether logging is qualitative or quantitative in nature. Core
(or costean, channel, etc) photography.
- The total length and percentage of the relevant intersections
logged.
|
- Exploration to date has identified the Sal de Vida brine, and
has used exploration methodology conventional to brine exploration,
such as geophysics and surface sampling, in addition to the
drilling programs. In the CP’s opinion, the drill data and
hydrogeological studies are acceptable to support the Brine Mineral
Resource and Ore Reserve estimates.
- -The core logging has been both qualitative and quantitative,
and accomplished to a level appropriate for the resource
estimation. Field logging is considered qualitative, where the lab
analyses for drainable porosity is quantitative.
-Cuttings logging is of a qualitative nature and results were
compared with the quantitative geophysical logs to interpret the
lithologies encountered in the hole.
- All intersections with sample recovery were logged, and total
drilled lengths and percent recovery recorded.
|
Sub-sampling techniques and sample preparation |
- If core, whether cut or sawn and whether quarter, half or all
core taken.
- If non-core, whether riffled, tube sampled, rotary split, etc
and whether sampled wet or dry.
- For all sample types, the nature, quality and appropriateness
of the sample preparation technique.
- Quality control procedures adopted for all sub-sampling stages
to maximise representivity of samples.
- Measures taken to ensure that the sampling is representative of
the in situ material collected, including for instance results for
field duplicate/second-half sampling.
- Whether sample sizes are appropriate to the grain size of the
material being sampled.
|
- Brine samples were collected by drive-point samplers, micro
samples were centrifuged from core to confirm the drive-point
sampling methodology, low-flow pumping and directly collected from
the discharge line near the end of each pumping test for reverse
circulation wells.
- Neither porosity (core) nor chemistry (brine) samples were
subjected to any further preparation prior to shipment to
participating laboratories. After the samples were sealed on site,
they were stored in a cool location, and then shipped in sealed
containers to the laboratories for analysis.
- Analytical quality for the brine samples was monitored through
the use of randomly inserted quality control samples, including
standard reference materials (SRMs), blanks and duplicates, as well
as check assays at independent laboratories. Each batch of samples
submitted to the laboratory contained at least one blank, one
low-grade SRM, one high-grade SRM and sample duplicates.
Approximately 38% of the samples submitted for analysis were
quality control samples.
- Duplicates, Standards and Blanks were used in the QA/QC program
as well as up to 5 external laboratories to verify the data.
- Both brine and core samples were determined by the laboratories
to be of adequate size for reliable analyses.
|
Quality of assay data and laboratory tests |
- The nature, quality and appropriateness of the assaying and
laboratory procedures used and whether the technique is considered
partial or total.
- For geophysical tools, spectrometers, handheld XRF instruments,
etc, the parameters used in determining the analysis including
instrument make and model, reading times, calibrations factors
applied and their derivation, etc.
- Nature of quality control procedures adopted (eg standards,
blanks, duplicates, external laboratory checks) and whether
acceptable levels of accuracy (i.e. lack of bias) and precision
have been established.
|
-The total porosity was measured with the core plug samples from
the drainable porosity test. The procedure is to oven dry the
sample and calculate the weight loss.-The brine chemistry tests are
based upon American Public Health Association (APHA), Standard
Methods for Examination of Water and Wastewater, Environmental
Protection Agency (EPA), and American Society for Testing Materials
(ASTM) protocols.-Physical parameters, such as pH, conductivity,
density, and TDS are directly determined from the brine samples.
Analysis of lithium, potassium, calcium, sodium and magnesium is
achieved by fixed dilution of filtered samples and direct
aspiration into atomic absorption (AA) or inductively coupled
plasma (ICP) instruments. All methods are considered to be industry
standard methods.
- All tools used were in accordance with the ISO 9001
accreditation and consistent with ISO 17025 methods at other
laboratories. All laboratories used to analyse samples for the
Resource Estimate were/are independent of Allkem.
- -Analytical quality was monitored
through the use of randomly inserted quality control samples,
including standard reference materials (SRMs), blanks and
duplicates, as well as check assays at independent laboratories.
Each batch of samples submitted to the laboratory contained at
least one blank, one low-grade SRM, one high-grade SRM and two
sample duplicates. Approximately 38% of the samples submitted for
analysis were quality control samples.
-The relative standard deviation values for the Standard Reference
Materials ranged from 3.7 to 7.5, indicating good overall
analytical reproducibility for the standard analyses conducted.-The
relative standard deviation values for the blanks range from 3.0 to
7.4, indicating good overall analytical reproducibility for
standard analyses conducted at Alex Stewart.-Sample and laboratory
duplicate analyses indicated acceptable precision for lithium,
potassium, and magnesium analyses conducted at Alex Stewart.-The
round robin analytical program conducted by the previous owner
Lithium One at the beginning of the 2010 – 2011 drill program
indicated comparable accuracy and precision to that achieved by
Alex Stewart. For this reason, the University of Antofagasta was
chosen as the check analysis laboratory for the 2010 drill program.
Due to turnaround time delays using the University of Antofagasta,
ACME was used as the check analysis laboratory for the 2011 drill
program. |
Verification of sampling and assaying |
- The verification of significant intersections by either
independent or alternative company personnel.
- The use of twinned holes.
- Documentation of primary data, data entry procedures, data
verification, data storage (physical and electronic)
protocols.
- Discuss any adjustment to assay data.
|
- Verification by the CP Montgomery & Associates Consultores
Limitada covered field exploration and drilling and testing
activities. These included descriptions of drill core and cuttings,
laboratory results for drainable porosity and chemical analyses,
including quality control results, and review of surface and
borehole geophysical surveys.
- No holes were twinned, duplicate brine samples were presented
to the laboratories.
- -In the early phases of the Project, all data were transferred
into a central data repository managed by Montgomery &
Associates and other consultants. The database was originally
located In Denver, Colorado and later synchronised with a data
repository in the Project offices in Argentina, and a separate data
repository at Montgomery and Associates’ offices In Tucson,
Arizona. Currently, Allkem manages the main database.
-Raw data from the Project were transferred into a customised
Access database and used to generate reports as needed.-Field data
were transferred by Field personnel into customised data entry
templates. Field data were verified before being uploaded into the
Access database using the methodology of crosschecking data between
Field data sheets and Excel tables loaded in the server. data
contained in the templates were loaded using an import tool, which
eliminated data reformatting. Data were reviewed after database
entry.-Laboratory assay certificates were directly loaded into the
Access database. Quality control reports were automatically
generated for every imported assay certificate and reviewed by to
ensure compliance with acceptable Quality control standards.
Failures were reported to the Laboratory for correction.-The
drainable porosity and chemistry data used to support the Brine
Resource estimates were verified. These verifications confirmed
that the analytical results delivered by the participating
laboratories and the digital exploration data were sufficiently
reliable for Brine Resource estimation purposes. No adjustments to
assay data are recorded.
- No adjustments to assay data are recorded.
|
Location of data points |
- Accuracy and quality of surveys used to locate drill holes
(collar and down-hole surveys), trenches, mine workings and other
locations used in Mineral Resource estimation.
- Specification of the grid system used.
- Quality and adequacy of topographic control.
|
- All drill hole collar were surveyed using Trimble differential
GPS instruments, handheld GPS or differential GNSS instrument. The
North and East coordinates, elevation above ground level, elevation
at the wellhead and stick-up elevation were provided through the
RTK method and were linked to the official reference system and
reference frame.
- Coordinates on UTM system (Universal Transverse Mercator),
Datum GAUSS KRÛGGER-POSGAR 07
|
Data spacing and distribution |
- Data spacing for reporting of Exploration Results.
- Whether the data spacing and distribution is sufficient to
establish the degree of geological and grade continuity appropriate
for the Mineral Resource and Ore Reserve estimation procedure(s)
and classifications applied.
- Whether sample compositing has been applied.
|
- -Exploration holes in general are spaced on a <1000m spacing
in several locations over the site.
- Exploration to date has identified the Sal de Vida brine, and
has used exploration methodology conventional to brine exploration,
such as geophysics and surface sampling, in addition to the
drilling programs. In the CP’s opinion, the drill data and
hydrogeological studies are acceptable to support the Brine Mineral
Resource and Ore Reserve estimates.
- The samples taken during the pumping tests are composite
samples, sourced from a single well, but pumped from multiple
aquifer zones within that one well.
|
Orientation of data in relation to geological structure |
- Whether the orientation of sampling achieves unbiased sampling
of possible structures and the extent to which this is known,
considering the deposit type.
- If the relationship between the drilling orientation and the
orientation of key mineralised structures is considered to have
introduced a sampling bias, this should be assessed and reported if
material.
|
- The salar deposits that host lithium-bearing brines consist of
sub-horizontal beds and lenses of sand, silt, halite, clay and
minor gravels, depending on the location within the salar. Drill
holes are vertical and essentially perpendicular to these units
intersecting close to their true thickness.
|
Sample security |
- The measures taken to ensure sample security.
|
- All samples were labelled with
permanent marker, sealed with tape and stored at a secure site
until transported to the laboratory for analysis. Labels were
hand-written in accordance with the chain-of-custody field data
sheets. Samples were packed into secured boxes with chain-of-
custody forms and shipped to the relevant laboratory.
|
Audits or reviews |
- The results of any audits or reviews of sampling techniques and
data.
|
- Geochemical Applications International has conducted laboratory
audits of Alex Stewart as part of a round robin analysis for the
2010-2011 drill program.
|
Section 2 - Reporting of Exploration
Results
(Criteria listed in the preceding section also apply to this
section.)
Criteria |
JORC Code explanation |
Commentary |
Mineral tenement and land tenure status |
- Type, reference name/number, location and ownership including
agreements or material issues with third parties such as joint
ventures, partnerships, overriding royalties, native title
interests, historical sites, wilderness or national park and
environmental settings.
- The security of the tenure held at the time of reporting along
with any known impediments to obtaining a licence to operate in the
area.
|
- - Sal de Vida (latitude 25° 24’ 33.71” South, longitude 66° 54’
44.73” West) is located approximately 200 kilometres south of the
Olaroz Project, Allkem’s operating mine in the high-altitude Puna
ecoregion of the Altiplano of northwest Argentina at approximately
4,000 meters above sea level. Sal de Vida is within Salar del
Hombre Muerto in the Province of Catamarca.
-Allkem’s mining tenement interests in the Sal de Vida Project are
held by Galaxy Lithium (Sal de Vida) S.A., a wholly owned
subsidiary of Galaxy Resources Ltd. (Australia) which in turn is
100% owned by Allkem Ltd since August 2021.-Allkem currently has
mineral rights over 26,253 ha at Salar del Hombre Muerto, which are
held under 31 mining concessions. Allkem has been granted easements
related to water, camps, infrastructure and services enabling
commencement of Stage 1 construction. The Project is not subject to
any known environmental liabilities other than those actions and
remedies indicated in the Environmental Impact Study approval
process.-All the mining concessions for the Sal de Vida Project
were secured under purchasing agreements with pre-existing owners
and claimants. In some cases, sellers retained usufruct rights (a
legal right accorded to a person or party that confers the
temporary right to use and derive income or benefit from someone
else's mining property) and commercial rights (third-party rights)
for the development of ulexite (borates) at surface. -Pursuant to
Argentinian Law 4757 (as amended), Catamarca Mining royalty is
limited to 3% of the mine head value of the extracted ore, which
consist in the sales price less direct cash costs related to
exploitation (excluding fixed asset depreciation, the “Mining
Royalty”).-On December 20, 2021, GLSSA and the Governor of the
Province of Catamarca subscribed a Royalties Commitment Deed (the
“Royalty Agreement”), pursuant to which GLSSA agrees to pay to the
Province of Catamarca a maximum amount of 3.5% of the “net monthly
revenue” from the Project, as follows: -The “Mining Royalty” will
be paid as indicated by the provincial Royalty Regime. -An
“Additional Contribution” of 3.2% less the Mining Royalty and the
applicable water canon; and -0.3% shall be paid as a “Corporate
Social Responsibility (CSR) Contribution”.-The validity of the
Royalty Agreement is subject to the approval of the Legislature of
the Province of Catamarca, which is in due course to be
obtained.-The payment of Mining Royalty is due once the commercial
production of the Sal de Vida Project commences and the payment of
the Additional Contribution and CSR Contribution is due once the
Province of Catamarca (through the relevant authority) grants GLSSA
the relevant water concession pursuant to Section 7 of the Water
Law No. 2577, as amended. -The Additional Contribution and CSR
Contribution will be paid through a Trust, pursuant to provincial
legislation to be enacted.-The 3.5% maximum amount shall be the
maximum amount payable by GLSSA to the province of Catamarca, for
any reason whatsoever, for the whole life of the Project (including
any expansions). -The “net monthly revenue” will be calculated by
reference to the amounts invoiced by GLSSA each month for the sale
of lithium products produced from the Project, and for the Mining
Royalty, less (i) any taxes, duties, levies included on those
invoiced amounts and (ii) any sales reimbursement.
- -Legal opinion provided supports that Allkem currently holds an
indirect 100% interest in the Sal de Vida Project through its
subsidiary Galaxy Lithium (Sal de Vida) S.A.
-Legal opinion provided supports that the mineral tenures held are
valid and sufficient to support declaration of Brine Mineral
Resources and Brine Ore Reserves.-Social and permitting
applications have sufficiently progressed to permit the
commencement of Stage 1 construction. The CP is not aware of any
significant environmental, social, or permitting issues that would
prevent future exploitation of the Sal de Vida Project, other than
as discussed in this Report. |
Exploration done by other parties |
- Acknowledgment and appraisal of exploration by other
parties.
|
- No exploration by other parties is known for lithium
carbonate.
- Prior mining was done on site for ulexite, within 5m of
surface.
|
Geology |
- Deposit type, geological setting and style of
mineralisation.
|
- -The regional geological setting is the Altiplano Puna plateau,
an area of uplift that began during the middle to late Miocene (10
– 15 Ma). Red-bed sediments formed during the early to middle
Miocene in areas of structural depressions. During the middle to
late Miocene, a combination of thrust faulting, uplift and
volcanism led to the sedimentary basins becoming isolated. The
Cordilleras and major watersheds bound the Puna area to the west
and east. Sedimentation in these basins began with the formation of
alluvial fans at the feet of the uplifted ranges and continued with
the development of playa sandflats and mudflat facies.
-In basin areas, the watersheds are within the basins; there are no
outlets from the basins. Ongoing runoff, both surface and
underground, continued solute dissolution from the basins and
concentration in their centres where evaporation is the only
outlet. Evaporite minerals occur both as disseminations within a
clastic sequence and as discrete beds.-The Salar system in the
Hombre Muerto basin is considered a typical mature salar. The
Hombre Muerto basin has an evaporite core that is dominated by
halite. Basin margins are steep and are interpreted to be fault
controlled. The east basin margin is predominantly Pre-Cambrian
metamorphic and crystalline rocks belonging to Pachamama formation.
Volcanic tuff and reworked tuffaceous sediments, most likely from
Cerro Galan complex, together with tilted Tertiary rocks, are
common along the western and northern basin margins. In the Sal de
Vida Project area, the dip angle of Tertiary sandstone is commonly
about 45º to the southeast. Porous travertine and associated
calcareous sediments are common in the subsurface throughout the
basin and are flat lying; these sediments appear to form a marker
unit that is encountered in most core holes at similar altitudes.
Several exploration boreholes located near basin margins completely
penetrated the flat-lying basin-fill deposits, and have bottoms in
tilted Tertiary sandstone, volcanic tuff, and micaceous
schist. |
Drill hole Information |
- A summary of all information material to the understanding of
the exploration results including a tabulation of the following
information for all Material drill holes:
- easting and northing of the drill hole collar
- elevation or RL (Reduced Level – elevation above sea level in
metres) of the drill hole collar
- dip and azimuth of the hole
- down hole length and interception depth
- hole length.
- If the exclusion of this information is justified on the basis
that the information is not Material and this exclusion does not
detract from the understanding of the report, the Competent Person
should clearly explain why this is the case.
|
A table accompanying this announcement is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/36cb1c7d-e877-49a9-bab1-ab46d3865215Notes:
a = Coordinates on UTM system (Universal Transverse Mercator),
Datum GAUSS KRÛGGER-POSGAR 07.b = metres, amsl = above mean sea
levelc = metres, bls = below land surfaceAll drill holes are
vertical (dip -90, azimuth 0 degrees)d = the table presents recent
wells from Allkem (Lithium One exploration wells are not
included) |
Data aggregation methods |
- In reporting Exploration Results, weighting averaging
techniques, maximum and/or minimum grade truncations (eg cutting of
high grades) and cut-off grades are usually Material and should be
stated.
- Where aggregate intercepts incorporate short lengths of high
grade results and longer lengths of low grade results, the
procedure used for such aggregation should be stated and some
typical examples of such aggregations should be shown in
detail.
- The assumptions used for any reporting of metal equivalent
values should be clearly stated.
|
- The pumping well samples are composite samples that reflect
inflows from different levels within the wells, which are screened
at multiple levels throughout their depth. The lithium
concentration in the pumped samples is an average of the
concentration from different units with relatively higher and lower
values than the average. More permeable units contribute a higher
proportion of the brine in the pumped samples.
- No other aggregate methods were used.
- Lithium carbonate equivalent (LCE) values are reported but are
directly proportional to the amount of lithium in the resource
brine. Therefore, they are not considered to be “equivalent” values
as commonly defined in mining.
|
Relationship between mineralisation widths and intercept
lengths |
- These relationships are particularly important in the reporting
of Exploration Results.
- If the geometry of the mineralisation with respect to the drill
hole angle is known, its nature should be reported.
- If it is not known and only the down hole lengths are reported,
there should be a clear statement to this effect (eg ‘down hole
length, true width not known’).
|
- The sediments hosting brine are interpreted to be essentially
perpendicular to the vertical drill holes, representing true
thicknesses in drilling. Except in those areas where fresh water
occurs in the upper part of the aquifer, the entire thickness of
sediments is believed to be mineralized with lithium brine, with
the water table within approximately 1 metre of surface in most
part of the salar. Lithium is hosted in brine in pores within the
different terrestrial sedimentary units in the salt lake
sequence.
|
Diagrams |
- Appropriate maps and sections (with scales) and tabulations of
intercepts should be included for any significant discovery being
reported These should include, but not be limited to a plan view of
drill hole collar locations and appropriate sectional views.
|
Location map of exploration
boreholes:https://www.globenewswire.com/NewsRoom/AttachmentNg/6688e15e-24b3-432f-906a-7a5fbabe8dc7Hydrogeological
Cross-Section Locations (Plan
View): https://www.globenewswire.com/NewsRoom/AttachmentNg/9e44d413-c250-4b5c-8131-5ee17e9de189Hydrogeological
Cross-Section
A-A': https://www.globenewswire.com/NewsRoom/AttachmentNg/4bf147ad-2352-436a-bf1c-c31260fd2b00Hydrogeological
Cross-Section
B-B':https://www.globenewswire.com/NewsRoom/AttachmentNg/6ee3718a-a4b6-481d-a1d2-d8c4d57d6537Hydrogeological
Cross-Section
C-C':https://www.globenewswire.com/NewsRoom/AttachmentNg/6ebc1ebf-d84a-4f51-9a02-59c578308c95Hydrogeological
Cross-Section
D-D':https://www.globenewswire.com/NewsRoom/AttachmentNg/29ad6408-5e63-4141-954a-7c26a3084960 |
Balanced reporting |
- Where comprehensive reporting of all Exploration Results is not
practicable, representative reporting of both low and high grades
and/or widths should be practiced to avoid misleading reporting of
Exploration Results.
|
- Exploration results are presented
from all areas of the Sal de Vida mine concessions and are believed
to representative. Reported results have not been screened,
disregarded, or specifically selected to mislead the reader.
|
Other substantive exploration data |
- Other exploration data, if meaningful and material, should be
reported including (but not limited to): geological observations;
geophysical survey results; geochemical survey results; bulk
samples – size and method of treatment; metallurgical test results;
bulk density, groundwater, geotechnical and rock characteristics;
potential deleterious or contaminating substances.
|
- -A number of geophysical surveys have been completed and are
summarized in the Geophysical Survey table below. The gravity
survey locations are shown in Location of Year 2021 Gravity Survey
Lines, the vertical electric sounding point locations in Location
Map, Vertical Electric Sounding Points, transient electromagnetic
survey profile line locations in Location Map, Transient
Electromagnetic Survey Profiles, and 2D and 3D reinterpretation of
depth to basement rock at Sal de Vida Project is shown in 2D Plan
View of Sal de Vida Basement Map and 3D Model Update of the Cerro
Ratones Northeast Edge, respectively.
- Geophysical
Surveys:https://www.globenewswire.com/NewsRoom/AttachmentNg/951fdcc4-c5b5-4894-9082-b408f397fae8
Location of Year 2021 Gravity Survey
Lines:https://www.globenewswire.com/NewsRoom/AttachmentNg/f6283ea9-d56b-43fc-83e3-54d366cf9c87 Location
Map, Vertical Electric Sounding Points (Note: Figure from GEC
Geophysical Exploration & Consulting S.A., 2010. Green
represents VES readings and red proposed drill holes. Red triangles
represent core
holes):https://www.globenewswire.com/NewsRoom/AttachmentNg/8817bbc1-492e-4410-b6ac-15fb985907deLocation
Map, Transient Electromagnetic Survey
Profiles:https://www.globenewswire.com/NewsRoom/AttachmentNg/6c03d0c4-cc46-488f-90d9-5432503c98f32D
Plan View of Sal de Vida Basement Map (Note: Tertiary Basement is
indicated in green and in the Precambrian Basement is indicated in
brownish
yellow):https://www.globenewswire.com/NewsRoom/AttachmentNg/34dee8dd-cf4e-495a-ac7e-c4fe85d5d82f3D
Model Update of the Cerro Ratones Northeastern Outcrop (Note:
Tertiary Basement is indicated in green and the Precambrian
Basement in gray with a 1:3 vertical
exaggeration):https://www.globenewswire.com/NewsRoom/AttachmentNg/9568a937-3c03-4cfd-a6e3-e8eb14723e96-During
the exploration program, downhole electrical conductivity surveys
were conducted at many of the wells after completion and boreholes
to identify fresh water and brine-bearing parts of the aquifer.
Electrical conductivity is a measure of the water’s ability to
conduct electricity and is an indirect measure of the water’s ionic
activity and dissolved solids content. Electrical conductivity is
positively correlated with brine concentration. The purpose of the
profiles was to: -Determine the electrical conductivity profile and
identify potential freshwater influence and low density, and
-Provide additional verification for the chemistry profiles
generated from depth-specific samples.-Short-term pumping tests
under operating conditions have demonstrated excellent brine
extraction and aquifer recharge rates to support the production
design basis.-Long-term pumping tests under operating conditions at
each wellfield did not show any significant or obvious change in
the aquifer water chemistry entering the wellfields during the
pumping period. |
Further work |
- The nature and scale of planned further work (eg tests for
lateral extensions or depth extensions or large-scale step-out
drilling).
- Diagrams clearly highlighting the areas of possible extensions,
including the main geological interpretations and future drilling
areas, provided this information is not commercially
sensitive.
|
- -Exploration should be conducted to better identify and
potentially demonstrate additional extractable brine in other parts
of the basin. Favourable exploration results represent Project
upside potential. The following additional investigations are
recommended:
-Geophysical surveys: perform additional gravity, magnetic, and
resistivity surveys over the east, south and west sub-basins to
supplement the existing surveys. -Core drilling: additional wells
in the southwest and eastern portions of the mine concessions that
are deeper than 300 m.-Downhole sampling of any additional wells to
obtain brine chemistry and drainable porosity results.-Additional
30-day pumping tests to identify potential for new
wellfields.-Quality assurance and quality control (QA/QC) measures
should be continued for all collected brine samples including the
use of blanks, duplicates, standards, and secondary (external)
laboratories to increase confidence in the obtained data. 10% to
20% of the collected samples should be analysed for QA/QC purposes,
and a round-robin analysis of brine samples is recommended. The
determination of drainable porosity should be confirmed with two
independent methodologies including the analysis of core samples
and indirect measurements (e.g., borehole magnetic resonance),
among others. |
Section 3 Estimation and Reporting of Mineral
Resources
Criteria |
JORC Code explanation |
Commentary |
Database integrity |
- Measures taken to ensure that data has not been corrupted by,
for example, transcription or keying errors, between its initial
collection and its use for Mineral Resource estimation
purposes.
- Data validation procedures used.
|
- Verification and validation of the assay data was performed for
the 51 sample sites. Verification includes pH, density,
conductivity, TDS, sulphate, Cl, alkalinity, B, Ca, K, Li, Mg and
Na. Verification of the location of trenches and samples collected
by use of differential GPS was also conducted.
- For the Feasibility Study, Montgomery and Associates personnel
verified the drainable porosity and chemistry data used for the
Brine Mineral Resource estimates. These verifications support that
the analytical results delivered by the participating laboratories
and the digital exploration data were sufficiently reliable for the
Brine Mineral Resource and Brine Ore Reserve estimations outlined
in this Report.
-A customized Access database was generated after integration
between original database and raw data from the project. It
included a crosschecking methodology, assays certificates, quality
control standards.-Database lithium grades include QA/QC procedures
where standards, duplicates, blanks and check analysis were
used.-The CPs concluded that the information was acceptable to
support Brine Resource estimation. |
Site visits |
- Comment on any site visits undertaken by the Competent Person
and the outcome of those visits.
- If no site visits have been undertaken indicate why this is the
case.
|
- Consulting firm Montgomery & Associates Consultores
Limitada is assigned as Qualified Persons and have supervised the
technical report and take responsibility for its contents.
- Consulting firm Montgomery & Associates Consultores
Limitada is responsible for the Mineral Resources estimates and
they have visited the site in numerous occasions, from 2010 to the
present, and have reviewed the exploration activities. The last
visit was conducted from July 31 to August 02, 2023, where the
pumping wells and pilot ponds were also reviewed.
|
Geological interpretation |
- Confidence in (or conversely, the uncertainty of ) the
geological interpretation of the mineral deposit.
- Nature of the data used and of any assumptions made.
- The effect, if any, of alternative interpretations on Mineral
Resource estimation.
- The use of geology in guiding and controlling Mineral Resource
estimation.
- The factors affecting continuity both of grade and
geology.
|
- There is a high level of confidence in the geological model for
the Project. Six Hydrogeological units are defined based on five
dominating lithologies where drainable porosity and brine chemistry
analysis were performed. Sal de Vida’s brine chemistry has a high
lithium grade, low levels of magnesium, calcium and boron
impurities and readily upgrades to battery grade lithium
carbonate.
- Interpretation is based on drill core and cuttings, drilling
and test results, brine chemistry and porosity laboratory analysis,
aquifer testing results, geophysical survey and other information
available from the work carried out between 2009 to date. Porosity
samples were collected during 2010, 2011, and 2012 from intact HQ
and NQ-core. Full diameter core with no visible fractures was
selected and submitted to Core Laboratory Petroleum Servicios,
Texas.
- In addition to the depth-specific brine samples obtained by
drive-points during coring, brine samples used to support the
reliability of the depth-specific samples included analyses of
brine centrifuged from core samples, brine obtained from low flow
sampling of the exploration core holes and brine samples obtained
near the end of the pumping tests in the exploration and production
wells. Brine chemistry samples were sent to Alex Steward lab,
duplicates samples were sent to University of Antofagasta lab and
ACME Santiago lab was used for check analysis. Duplicate samples
were sent to ALS Chemex lab, Argentina.
- In the CP’s opinion, and based on the brine system deposit
model, knowledge of the geological setting of the Salar and
associated hydrogeological systems, all drill data and
hydrogeological studies are acceptable to support the Brine Mineral
Resource and Ore Reserve estimates.
|
Dimensions |
- The extent and variability of the Mineral Resource expressed as
length (along strike or otherwise), plan width, and depth below
surface to the upper and lower limits of the Mineral Resource.
|
- The deposit type is a brine aquifer within a salar basin. The
extent of the active model resources covers an area of 146 km2 for
Measured and Indicated Mineral Resources plus an area of 14.9 km2
for Inferred Mineral Resources, with a total of 160.9 km2.
|
Estimation and modelling techniques |
- The nature and appropriateness of the estimation technique(s)
applied and key assumptions, including treatment of extreme grade
values, domaining, interpolation parameters and maximum distance of
extrapolation from data points. If a computer assisted estimation
method was chosen include a description of computer software and
parameters used.
- The availability of check estimates, previous estimates and/or
mine production records and whether the Mineral Resource estimate
takes appropriate account of such data.
- The assumptions made regarding recovery of by-products.
- Estimation of deleterious elements or other non-grade variables
of economic significance (eg sulphur for acid mine drainage
characterisation).
- In the case of block model interpolation, the block size in
relation to the average sample spacing and the search
employed.
- Any assumptions behind modelling of selective mining
units.
- Any assumptions about correlation between variables.
- Description of how the geological interpretation was used to
control the resource estimates.
- Discussion of basis for using or not using grade cutting or
capping.
- The process of validation, the checking process used, the
comparison of model data to drill hole data, and use of
reconciliation data if available.
|
- The employed methodology for Mineral Resources is polygon based
where every polygon contains at least 1 diamond drill exploration
or exploration well. The boundaries between polygon blocks are
generally equidistant from diamond drill holes. The depth of each
polygon is based on the total depth of each borehole, and the
subsurface lithological column was separated into hydrogeologic
units which vary with depth based on the lithologic logs and other
available field information.
- Each polygon is given a representative value for drainable
porosity and average lithium content based on laboratory analyses
of samples collected during exploration drilling.
- The Mineral Resource was estimated by summing the aquifer
volume multiplied by drainable porosity and lithium grade for each
interval of the individual polygons and resource category.
- No deleterious elements have been modelled as part of the brine
feed.
|
Moisture |
- Whether the tonnages are estimated on a dry basis or with
natural moisture, and the method of determination of the moisture
content.
|
- Moisture content of the cores was measured (porosity and
density measurements were made), but because brine is extracted by
pumping, the sediment moisture is not a relevant parameter for the
Resource Estimate.
|
Cut-off parameters |
- The basis of the adopted cut-off grade(s) or quality parameters
applied.
|
- A cut-off grade of 300 mg/l was conservatively used based on a
breakeven cut-off grade for a projected lithium carbonate
equivalent (LCE) price of US$20,000 per tonne over the entirety of
the Life of Mine (LOM), as well as a grade tonnage curve.
|
Mining factors or assumptions |
- Assumptions made regarding possible mining methods, minimum
mining dimensions and internal (or, if applicable, external) mining
dilution. It is always necessary as part of the process of
determining reasonable prospects for eventual economic extraction
to consider potential mining methods, but the assumptions made
regarding mining methods and parameters when estimating Mineral
Resources may not always be rigorous. Where this is the case, this
should be reported with an explanation of the basis of the mining
assumptions made.
|
- The Mineral Resource has been quoted in terms of brine volume,
concentration of lithium and their product lithium carbonate
(LCE).
- No mining or recovery factors have been applied (although the
use of the drainable porosity and exclusion of polygon intervals
below the 300 mg/L lithium cut-off grade supports the reasonable
prospects for eventual economic extraction with the proposed mining
methodology). It should be noted that conversion of resources to
reserves for brine deposits is lower than that for hard rock
deposits.
-Dilution of brine concentrations may occur over time and typically
there are lithium losses in both the ponds and processing plant in
brine mining operations. -The conceptual mining method is
recovering brine from the salt lake via a network of wells, the
established practice on existing lithium brine projects.-Detailed
hydrologic studies of the salar have been undertaken (catchment and
groundwater modelling) to evaluate the extractable resources and
potential extraction rates. |
Metallurgical factors or assumptions |
- The basis for assumptions or predictions regarding
metallurgical amenability. It is always necessary as part of the
process of determining reasonable prospects for eventual economic
extraction to consider potential metallurgical methods, but the
assumptions regarding metallurgical treatment processes and
parameters made when reporting Mineral Resources may not always be
rigorous. Where this is the case, this should be reported with an
explanation of the basis of the metallurgical assumptions
made.
|
- Lithium carbonate and potassium chloride is projected to be
produced on site via conventional brine processing techniques and
evaporation ponds to concentrate the brine prior to processing as
currently Allkem’s Olaroz operation does. Brine composition from
Sal de Vida (SDV) could be processed using similar processing
technology to that applied in the Olaroz production facility, which
has been successfully applied to produce lithium carbonate in the
Allkem (Previously Orocobre) facilities.
|
Environmental factors or assumptions |
- Assumptions made regarding possible waste and process residue
disposal options. It is always necessary as part of the process of
determining reasonable prospects for eventual economic extraction
to consider the potential environmental impacts of the mining and
processing operation. While at this stage the determination of
potential environmental impacts, particularly for a greenfields
project, may not always be well advanced, the status of early
consideration of these potential environmental impacts should be
reported. Where these aspects have not been considered this should
be reported with an explanation of the environmental assumptions
made.
|
- -Impacts of the lithium carbonate production operation at the
SDV salar include surface disturbance from the creation of
extraction/processing facilities and associated infrastructure,
accumulation of various salt tailings impoundments and extraction
from brine and freshwater aquifers regionally. Lime is used to
increase precipitation of impurities like magnesium and calcium
solids. Precipitated salts are collected in ponds and later
returned to the salar.
-A small fraction of waste solids is generated in the lithium
carbonate plant, that are mainly impurities removed from the brine.
The main solids are a mixture of magnesium hydroxide and calcium
carbonate. Waste disposals areas will surround the evaporation
ponds to the north, east and southeast.-Waste disposals areas will
surround the evaporation ponds to the north, east and southeast.
This facility will consist of halite, muriate, and co-disposal
stockpiles surrounding the halite ponds and will cover a total area
of approximately 300 ha for Stage 1 and 600 ha for Stage 2.-The
project has fulfilled the required environmental and social
assessments to progress into construction of Stage 1. The project
is permitted by the provincial mining authorities and has
provincial and federal permits. The project reflects positive,
social and socio-economic benefits for local communities. Expansion
Stage 2 permitting application process is still to commence. |
Bulk density |
- Whether assumed or determined. If assumed, the basis for the
assumptions. If determined, the method used, whether wet or dry,
the frequency of the measurements, the nature, size and
representativeness of the samples.
- The bulk density for bulk material must have been measured by
methods that adequately account for void spaces (vugs, porosity,
etc), moisture and differences between rock and alteration zones
within the deposit.
- Discuss assumptions for bulk density estimates used in the
evaluation process of the different materials.
|
- Density measurements were taken as part of the drill core
assessment. This included determining dry density and particle
density as well as field measurements of brine density. Note that
no mining of sediments is to be carried out, as brine is to be
extracted by pumping. Consequently, sediments are not mined but the
lithium and potassium are extracted by pumping.
- No bulk density was applied to the estimates because resources
are defined by volume, rather than by tonnage.
- The salt unit can contain fractures and possibly voids which
host brine and add to the drainable porosity.
|
Classification |
- The basis for the classification of the Mineral Resources into
varying confidence categories.
- Whether appropriate account has been taken of all relevant
factors (ie relative confidence in tonnage/grade estimations,
reliability of input data, confidence in continuity of geology and
metal values, quality, quantity and distribution of the data).
- Whether the result appropriately reflects the Competent
Person’s view of the deposit.
|
- The Mineral Resource has been classified in Measured, Indicated
and Inferred Mineral Resource categories based on the confidence in
the estimation and specific information available. For Measured and
Indicated Mineral Resources, the following factors are considered:
Level of understanding and reliability of the basin stratigraphy
and the local hydrogeologic characteristics of the aquifer system,
density of drilling and testing in the salar and uniformity of the
results within the area, and available pumping test and historical
production information.
- The CP believes that the amount of exploration information and
understanding of the deposit supports the Mineral Resource
classification. The CP also believes that there is substantial
upside potential for increasing both the Mineral Resource
categories, and also by increasing the total Mineral Resource
volume by drilling in unexplored areas, and by drilling
deeper.
|
Audits or reviews |
- The results of any audits or reviews of Mineral Resource
estimates.
|
- A preliminary audit was conducted by SRK Consultants in
2022.
|
Discussion of relative accuracy/ confidence |
- Where appropriate a statement of the relative accuracy and
confidence level in the Mineral Resource estimate using an approach
or procedure deemed appropriate by the Competent Person. For
example, the application of statistical or geostatistical
procedures to quantify the relative accuracy of the Mineral
Resource within stated confidence limits, or, if such an approach
is not deemed appropriate, a qualitative discussion of the factors
that could affect the relative accuracy and confidence of the
estimate.
- The statement should specify whether it relates to global or
local estimates, and, if local, state the relevant tonnages, which
should be relevant to technical and economic evaluation.
Documentation should include assumptions made and the procedures
used.
- These statements of relative accuracy and confidence of the
estimate should be compared with production data, where
available.
|
- Main uncertainties of the Mineral Resource include the location
of aquifer boundaries and shallower than anticipated bedrock near
hard rock outcrops. Furthermore, uncertainties include the lateral
continuity of key aquifer zones, presence of fresh and brackish
water that have the potential to dilute the brine in the wellfield
area and assumed uniformity of average aquifer parameters within
specific aquifer units. Even though these uncertainties exist, the
CP conservatively assigned resource categories in a manner aligned
with industry practices for lithium brine projects.
- The level of understanding and reliability of the basin
stratigraphy, level of understanding of the local hydrogeologic
characteristics of the aquifer system, density of drilling and
testing in the Salar and general uniformity of results within an
area are the main factors that could support an upgrade of the
Mineral Resource categories.
- It is recommended that a resource block model be created
instead of the polygon method to estimate the Lithium Brine Mineral
Resource.
- To the extent known by the CP, there are no known
environmental, permitting, legal, title, taxation, socioeconomic,
marketing, political or other relevant factors that could affect
the Mineral Resource estimate which are not discussed.
|
Section 4 Estimation and Reporting of Ore
Reserves
Criteria |
JORC Code explanation |
Commentary |
Mineral Resource estimate for
conversion to Ore Reserves |
- Description of the Mineral Resource estimate used as a basis
for the conversion to an Ore Reserve.
- Clear statement as to whether the Mineral Resources are
reported additional to, or inclusive of, the Ore Reserves.
|
- The Mineral Resource used as the basis for the Ore Reserve
Estimate was based on the information in Section 3 of this Table
1.
- Mineral Resources are reported inclusive of Ore Reserves.
|
Site visits |
- Comment on any site visits undertaken by the Competent Person
and the outcome of those visits.
- If no site visits have been undertaken indicate why this is the
case.
|
- Consulting firm Montgomery & Associates Consultores
Limitada is assigned as Qualified Persons and have supervised the
technical report and take responsibility for its contents.
- Consulting firm Montgomery & Associates Consultores
Limitada is responsible for the Ore Reserves Estimates and they
have visited the site in numerous occasions, from 2010 to the
present, where they have reviewed the exploration activities. The
last visit was conducted from July 31 to August 02, 2023, where the
pumping wells and pilot ponds were also reviewed.
|
Study status |
- The type and level of study undertaken to enable Mineral
Resources to be converted to Ore Reserves.
- The Code requires that a study to at least Pre-Feasibility
Study level has been undertaken to convert Mineral Resources to Ore
Reserves. Such studies will have been carried out and will have
determined a mine plan that is technically achievable and
economically viable, and that material Modifying Factors have been
considered.
|
- The Sal de Vida Project in Stage 1 is based on a Feasibility
Study. The Stage 2 considers an expansion of the Project, and it is
under a current Pre-Feasibility Study.
|
Cut-off parameters |
- The basis of the cut-off grade(s) or quality parameters
applied.
|
- A cut-off grade of 300 mg/L was conservatively applied based on
a long-term estimated LCE price of US$20,000 per tonne. Results for
Proved and Probable Ore Reserves indicate an average extracted
grade of 757 mg/L throughout the life of the project, which far
exceeds the 300 mg/L cut-off grade, demonstrating that production
is economically viable.
|
Mining factors or
assumptions |
- The method and assumptions used as reported in the
Pre-Feasibility or Feasibility Study to convert the Mineral
Resource to an Ore Reserve (i.e. either by application of
appropriate factors by optimisation or by preliminary or detailed
design).
- The choice, nature and appropriateness of the selected mining
method(s) and other mining parameters including associated design
issues such as pre-strip, access, etc.
- The assumptions made regarding geotechnical parameters (eg pit
slopes, stope sizes, etc), grade control and pre-production
drilling.
- The major assumptions made and Mineral Resource model used for
pit and stope optimisation (if appropriate).
- The mining dilution factors used.
- The mining recovery factors used.
- Any minimum mining widths used.
- The manner in which Inferred Mineral Resources are utilised in
mining studies and the sensitivity of the outcome to their
inclusion.
- The infrastructure requirements of the selected mining
methods.
|
- The life of mining is project to 40 years. Mining production
for the years 1 and 2 is taken from Stage 1 in the East wellfield,
and for the following years 3-40, production will incorporate Stage
2 from the SW, SE and N well areas. Currently, well depths are down
to approximately 200m only and this can change when new deeper
exploration wells are drilled. All production wells will be
connected through pipelines to centrally positioned booster ponds.
The East Wellfield (Stage 1) is designed with 8 operating wells
plus one on standby.
- Projections for Ore Reserves indicates that average annual rate
production of brine from the east is set in 315 L/s and 191 L/s
from the southwest. The initial average grade is expected to be
roughly 805 mg/L and 815 mg/L, respectively.
- Extraction using wells is the appropriate extraction choice in
salt lakes, as the lithium is dissolved in brine (fluid) and mining
of unconsolidated sediments is not contemplated.
- Geotechnical parameters for brine extraction are different to
hard rock mining, thus detailed geotechnical studies are not
required. Due to the fact that the mining of this type of deposit
does not involve excavations or underground workings (as with hard
rock deposits), it is not necessary to carry out detailed
geotechnical studies of the soil and rock strength parameters.
- Pit slope is not relevant for brine mining.
- Dilution of brine during pumping is simulated within the
numerical model for the conversion of Mineral Resources into Ore
Reserves.
- There are no minimum mining widths, as brine mining is not a
selective mining method.
- The Inferred Mineral Resources are not included in current
mining studies but are considered a possible source of future brine
extraction when their resource classification is upgraded.
- Brine mining requires the provision of electricity and
pipelines to the sites of wells from which brine is extracted. The
pipelines pump brine to centralised collection ponds, from where it
is pumped to the evaporation pond network. The brine is subject to
the addition of lime in the evaporation ponds. Pumps are required
to move brine between ponds and pump brine into the plant, where
lithium carbonate product is produced. Electricity generators for
wellfields and boosters will be used during the pre-production (1
year) and then will be fed by a power line.
|
Metallurgical factors or assumptions |
- The metallurgical process proposed and the appropriateness of
that process to the style of mineralisation.
- Whether the metallurgical process is well-tested technology or
novel in nature.
- The nature, amount and representativeness of metallurgical test
work undertaken, the nature of the metallurgical domaining applied
and the corresponding metallurgical recovery factors applied.
- Any assumptions or allowances made for deleterious
elements.
- The existence of any bulk sample or pilot scale test work and
the degree to which such samples are considered representative of
the orebody as a whole.
- For minerals that are defined by a specification, has the Ore
Reserve estimation been based on the appropriate mineralogy to meet
the specifications?
|
- The metallurgical process utilised for the production of
lithium carbonate is based on solar evaporation of brine, prior to
reacting lithium with carbon dioxide in the plant to produce
lithium carbonate. In this way, much of the energy required for the
process is provided naturally by the sun. Lithium preferentially
remains within the brine, and other elements precipitate from the
brine in response to their increasing concentration and saturation
in the brine. Lime is added to the ponds to facilitate the
precipitation of magnesium from the brine. Although more recent
direct extraction processing techniques are more widely available
pond evaporation provides a cost-effective processing method.
- The Sal de Vida process design is approximated from previously
completed Allkem operated Olaroz Project test work, results and
performance. The Olaroz process design has been successfully proven
to produce lithium carbonate since 2015.
- Modifications to the Olaroz process technology mean that salts
will be drained and harvested in all ponds. Transfer pumps will be
used to transfer concentrated brine from a lower grade pond into a
higher-grade pond. A second liming stage will be installed to
maximise magnesium ion removal before brine enters the production
facilities and an ion-exchange stage will be installed to remove
remaining calcium and magnesium ions before precipitating battery
grade lithium carbonate.
- Lithium Carbonate is sold as both battery and technical grade
product, depending on the concentration of impurities. The project
produces both grades of product.
- Pilot testing was conducted during 2020 and 2021; purpose-built
pilot ponds and pilot plant validate laboratory test work and
explore operational considerations. Future drilled production wells
showed a higher concentration grade and lower impurity than pilot
testing.
- Deleterious elements have been identified and measurement will
be taken to mitigate the risks. Sodium carbonate will be ionized
captured before being fed into the crystallisation circuit and
magnets will be used to capture are remove impurities related to
iron equipment.
|
Environmental |
- The status of studies of potential environmental impacts of the
mining and processing operation. Details of waste rock
characterisation and the consideration of potential sites, status
of design options considered and, where applicable, the status of
approvals for process residue storage and waste dumps should be
reported.
|
- - The project has an approved DIA (Impact Assessment
Declaration) from 2014 being the legal instrument to explore,
construct and perform exploitation activities. This document is
subject and based on a series of commitments and obligations and
has been updated every 2 years.
-An Environmental Impact Assessment report is currently underway,
with the aim of the Regulatory submission in August 2023 to renewal
of the Stage 1 environmental mining permit (DIA).-A series of
approvals and permits relate to environment, chemicals, groundwater
and freshwater use, waste management, hazardous and others, are
finished and others underway. |
Infrastructure |
- The existence of appropriate infrastructure: availability of
land for plant development, power, water, transportation
(particularly for bulk commodities), labour, accommodation; or the
ease with which the infrastructure can be provided, or
accessed.
|
- The project is located in a flat plain at an altitude of about
4,000m above land surface. The main route to the Project site is
from the city of Catamarca via national route 40 to Belen, and
provincial Route 43 through Antofagasta de la Sierra to Salar del
Hombre Muerto. The road is paved all the way to Antofagasta de la
Sierra and continues unpaved for the last 145 km to Salar del
Hombre Muerto. The shortest route to the Project site is from Salta
via San Antonio de los Cobres. The access road is paved for the
first 75 km to San Antonio de los Cobres and continues unpaved for
215 km to Salar del Hombre Muerto. The total distance between the
city of Salta and the Sal de Vida Project is 390 km.
- Site infrastructure will consist of the main processing
facilities including brine well fields and pumping, evaporation
ponds, process plant and waste storage. Allkem’s current operations
at the Olaroz Project are of similar nature and process. Internal
company policies, standard operating procedures, management systems
and structures will allow sufficiently rigid establishment of
initial operations at the Project site and reduce commissioning and
ramp-up risk.
- The brine production wellfields will be located on two sectors
of the Salar de Hombre Muerto, one in the East wellfield for Stage
1 where production will start, and a subsequent stage called the
Stage 2 Expansion. This Stage 2 will expand the original area of
Stage 1 to the west, south and north. Brine wells will be connected
through pipelines to centrally positioned booster ponds. The wells
will be equipped with pumps and manifolds to the distribution
pipeline.
- The evaporation ponds for Stage 1 will cover 450 ha while the
halite evaporation pond of Stage 2 will cover approximately 850 ha
while Muriate evaporation ponds for this Stage 2 will cover 50
ha.
- The processing plant will consist of a liming plant to support
evaporation pond processes, and a lithium carbonation plant to
produce final product. The processing plant will be supported by
service infrastructure such as reagents mixing, fuel and storage
facility, sulfuric acid preparation, compressors and boilers, water
treatment plants and workshops.
- The Project’s accommodation camp will be built next to the
process plant area. The camp building will be based on
prefabricated material to accommodate up to 900 people. The process
facility, support services and accommodation infrastructure are
deemed adequate to support the planned facility operation and
production rate.
- Electricity for the Plant involves diesel independent
generators for electricity and connection to a power line. Shift
from diesel generation to natural gas will be available in case
natural gas is available for the future. The camp will also have
renewable energy.
- The Project support infrastructure has been reviewed and is
deemed adequate by the CP to support the processing infrastructure
and process operations described in this report.
|
Costs |
- The derivation of, or assumptions made, regarding projected
capital costs in the study.
- The methodology used to estimate operating costs.
- Allowances made for the content of deleterious elements.
- The derivation of assumptions made of metal or commodity
price(s), for the principal minerals and co- products.
- The source of exchange rates used in the study.
- Derivation of transportation charges.
- The basis for forecasting or source of treatment and refining
charges, penalties for failure to meet specification, etc.
- The allowances made for royalties payable, both Government and
private.
|
- Capital and operating cost estimates were prepared using AACE
International guidelines. The cost estimate was compiled by Allkem
management team.
- Commodity price is based on market studies conducted by
well-known international consultancy Wood McKenzie.
- Provincial mining royalty is considered based on the mine head
value of the extracted ore. In addition, the Federal Argentine
government receives an export duty on the FOB while the company
exports lithium products.
- Corporate tax rate is set at 35%.
- All estimates disclosed herein are expressed in US dollars.
Allkem uses US dollars as reporting currency in all statements and
reports. Allkem’s subsidiaries use US dollars as reporting currency
and operational currency. Argentine Peso is used as a transactional
currency for local payments within the country.
- Transportation charges are estimates based on historical
actuals.
- Lithium Carbonate is sold as a final product to end users. The
pricing is based upon the projections of production for the three
product types, Prime (close to battery grade specification),
Purified (exceeds battery grade) and Micronized.
|
Revenue factors |
- The derivation of, or assumptions made regarding revenue
factors including head grade, metal or commodity price(s) exchange
rates, transportation and treatment charges, penalties, net smelter
returns, etc.
- The derivation of assumptions made of metal or commodity
price(s), for the principal metals, minerals and co-products.
|
- The lithium cut-off grade set at 300 mg/L is based on a
projected LCE price of US$20,000 per tonne.
- During the 40-year Ore Reserve simulation, extracted lithium
grades from individual production wells vary between approximately
815 and 520 mg/L due to dilution over the LOM. The average lithium
grade of the Proved and Probable Ore reserves corresponds to 757
mg/L and represents the flux-weighted composite brine collected
before processing. Extracted grades at individual production wells
and the average Proved and Probable Ore reserve concentration are
well above the 300 mg/L cut-off grade, demonstrating the production
is economically viable.
|
Market assessment |
- The demand, supply and stock situation for the particular
commodity, consumption trends and factors likely to affect supply
and demand into the future.
- A customer and competitor analysis along with the
identification of likely market windows for the product.
- Price and volume forecasts and the basis for these
forecasts.
- For industrial minerals the customer specification, testing and
acceptance requirements prior to a supply contract.
|
- Lithium is a commodity with a strong growth profile and
increasing demand. The growth trend for Lithium carbonate demand
for compound annual growth rate (CAGR) of 14% until 2033 supporting
strong market dynamics until at least 2033.
- The company expects to sell the lithium carbonate combing Stage
1 with a 15,000 tpa of production and Stage 2 will incorporate
30,000 tpa more, begin maximum of production 45,000 tpa. Sell
considers a combination of long- and short-term contacts, based
around forecasts of price provided by industry consultants Wood
McKenzie.
- As of the date of this Technical Report, Allkem has no existing
formalized commercial agreements in place for the sale of lithium
carbonate from the Sal de Vida Project. Allkem remains in
discussions with potential customers. In line with the Project
execution schedule, these discussions are expected to advance to
negotiations throughout the course of the Project.
|
Economic |
- The inputs to the economic analysis to produce the net present
value (NPV) in the study, the source and confidence of these
economic inputs including estimated inflation, discount rate,
etc.
- NPV ranges and sensitivity to variations in the significant
assumptions and inputs.
|
- The inputs to the financial model are based on the construction
and operating economics parameters for the project and evaluation
of deviation from budgeted costs.
- NPV ranges and sensitivity to variations shows that the
commodity price has the most significant impact on the Sal de Vida
Project’s NPV, followed by production levels, OPEX, and CAPEX.
Variation of 10% on Lithium price has an impact of 18% in NPV. This
analysis considers only Stage 1.
- Financial considers 100% equity and is reported on a 100%
project owner basis.
|
Social |
- The status of agreements with key stakeholders and matters
leading to social licence to operate.
|
- -Allkem has been actively involved
in community relations. Although there are minimal inhabitants in
the area of the Salar, Allkem has consulted extensively with the
local communities and employs members of these communities in the
current exploration activities.
-The
company has performed continuous surveys on social perception with
local communities, social economics baseline updates, survey of
local suppliers and study of local
competencies. -The
company has evaluated positive and negative impacts of the project
within the company. Based on social commitments and compliance with
local mining authority, SDV has participated in training and
improve skills of people from local communities, prioritize the
hiring of local operators and technicians in the area of influence,
work with the university of Catamarca and technical schools to
develop professionals for future positions, consider gender and
diversity perspectives in the processes of hiring local labour and
in community projects.
- The company has implemented a
Community Relations Plan (PRC) between SDV and the communities to
develop programs to maximise positive effects of the project and
optimize relationship, to minimize the risks of misunderstandings,
to encourage families, residents, and institutions to take
advantage of sustainable opportunities and to establish an
information and consultation system open to the community.
- The company has increased new
programs internal procedures to improve community management, has
implemented a territorial community management approach and has
been developing a Completion of Education with the Ministry of
Education of Catamarca. As of March 31, 2022, more than 70% of
local employees are from Catamarca and Stage 1 will create
approximately 900 full-time positions at peak construction and 170
full-time positions during stable Stage 1 operations.
- Other successful community programs
include: Implementation programs of University Technique in Lithium
Brine, strengthening program for local rural producers, community
medical visits program, community infrastructure program and
community infrastructure program.
- Agreements with communities have
been set in place, which include internet system installation and
hiring of people currently working in various areas of SDV.
- Allkem has a strong commitment to
hiring local labour, which favours the socioeconomic development of
populations near the SDV Project. The growing activity derived from
the construction and operation of the Project will have a positive
impact on the revitalization of the local and regional economy.
Local communities in the area of influence will be able to access
jobs with social benefits, medical services, retirement
contributions and good contracting conditions.
|
Other |
- To the extent relevant, the impact of the following on the
project and/or on the estimation and classification of the Ore
Reserves:
- Any identified material naturally occurring risks.
- The status of material legal agreements and marketing
arrangements.
- The status of governmental agreements and approvals critical to
the viability of the project, such as mineral tenement status, and
government and statutory approvals. There must be reasonable
grounds to expect that all necessary Government approvals will be
received within the timeframes anticipated in the Pre-Feasibility
or Feasibility study. Highlight and discuss the materiality of any
unresolved matter that is dependent on a third party on which
extraction of the Ore Reserve is contingent.
|
- For surface rights, SDV is located within fiscal lands owned by
the Province of Catamarca with no private land holders. For water
rights, the Governor of the Province agrees to grant the relevant
water concession. For third parties’ rights, all the mining
concessions for the Sal de Vida Project were secured under
purchasing agreements with pre-existing owners and claimants.
- Easement acquirements by the company include water, camp,
infrastructure and services.
- Presently, Allkem is the operating joint venture partner of the
Sales de Jujuy Olaroz lithium carbonate facility and operator of
the Mt Cattlin spodumene mine and concentration project.
- As of the date of the reproduction of this JORC Table 1, Allkem
has no existing commercial offtake agreements in place for the sale
of lithium carbonate from the Sal de Vida Project.
- Allkem’s Galaxy Lithium Sal de Vida S.A. (GLSSA) provides to
pay a royalty to the Province of Catamarca based on a Mining
Royalty, and Additional Contribution and a CSR Contribution.
|
Classification |
- The basis for the classification of the Ore Reserves into
varying confidence categories.
- Whether the result appropriately reflects the Competent
Person’s view of the deposit.
- The proportion of Probable Ore Reserves that have been derived
from Measured Mineral Resources (if any).
|
- The Ore Reserves are classified as a both Proved and Probable.
Projected production wells were all placed in Measured Resource
zones.
- Proved Ore Reserves are specified for the first 7 years of
operation (years 1-7) in the Stage 1 East Wellfield and years 3-9
for the Stage 2 Expansion Wellfield given that short-term model
results have higher confidence due to the current model
calibration, and also the initial portion of the projected LOM has
higher confidence due to less expected short-term changes in
extraction, water balance components, and hydraulic
parameters.
- Probable Ore Reserves are conservatively assigned after 7 years
of operation (years 8-40 in the Stage 1 East Wellfield and years
10-40 for the Stage 2 Expansion Wellfield) because the numerical
model will need to be recalibrated and improved in the future due
to potential changes in neighbouring extraction, water balance
components, and hydraulic parameters.
- From the point of reference of brine pumped to the evaporation
ponds, the Ore Reserves correspond to 0.44 million tonnes of LCE
for the Proved Ore category and 2.04 million tonnes of LCE for the
Probable Ore category, with a total of 2.48 million tonnes of
LCE.
- The total estimated Proved and Probable Ore Reserves represent
about 38% of the total Measured and Indicated Resources.
- Given that projected production wells were placed in Measured
Resource zones, a majority of the Probable Ore Reserves
(approximately 80%) have been derived from Measured Mineral
Resources. However, uncertainties in the modifying factors were
considered when classifying the Ore Reserves, namely model updates
which will be needed as mining progresses.
- The Competent Person (CP) believes that the Proved and Probable
Ore Reserves were adequately categorized based on industry
standards for lithium brine projects and the reliability of the
model projections.
|
Audits or reviews |
- The results of any audits or reviews of Ore Reserve
estimates.
|
- A preliminary audit was conducted by SRK Consultants in 2022.
Minor additional monitoring points were recommended to improve
baseline water levels and chemistry.
|
Discussion of relative accuracy/
confidence |
- Where appropriate a statement of the relative accuracy and
confidence level in the Ore Reserve estimate using an approach or
procedure deemed appropriate by the Competent Person. For example,
the application of statistical or geostatistical procedures to
quantify the relative accuracy of the reserve within stated
confidence limits, or, if such an approach is not deemed
appropriate, a qualitative discussion of the factors which could
affect the relative accuracy and confidence of the estimate.
- The statement should specify whether it relates to global or
local estimates, and, if local, state the relevant tonnages, which
should be relevant to technical and economic evaluation.
Documentation should include assumptions made and the procedures
used.
- Accuracy and confidence discussions should extend to specific
discussions of any applied Modifying Factors that may have a
material impact on Ore Reserve viability, or for which there are
remaining areas of uncertainty at the current study stage.
- It is recognised that this may not be possible or appropriate
in all circumstances. These statements of relative accuracy and
confidence of the estimate should be compared with production data,
where available.
|
- In the opinion of the CP, each phase of the Project was
conducted in a logical manner, and results were supportable using
standard analytical methodologies. In addition, calibration of the
numerical model against long-term pumping tests provides solid
support for the conceptual hydrogeologic model developed for the
Project. Thus, there is a reasonably high-level confidence in the
ability of the aquifer system to yield the quantities and grade of
brine estimated as Proved and Probable Ore Reserves.
- The estimated Brine Mineral Resources and Brine Ore Reserves
summarized in this Report may have upside potential for tonnage
increases based on results from the ongoing production well
drilling, and aquifer testing of the recently constructed Eastern
wellfield production wells.
- Two of the already-drilled production wells have reached
bedrock at about 220 meters below land surface (m bls), and one has
been drilled to over 300 m bls without reaching bedrock. Previous
exploration drilling allowed for a maximum depth of the Brine
Resource to about 170 m bls. These deeper drill holes have upside
potential to extend the limit of the Brine Resource estimates at
depth.
- To the extent known by the CP, there are no known
environmental, permitting, legal, title, taxation, socioeconomic,
marketing, political or other relevant factors that could affect
the Ore Reserve estimate which are not discussed.
|
Figures accompanying this announcement are available
at
https://www.globenewswire.com/NewsRoom/AttachmentNg/7079632d-3093-4295-ae80-88fecc0020a8
https://www.globenewswire.com/NewsRoom/AttachmentNg/e2085809-f5b0-4b3e-ad95-2c2cafd297e2
https://www.globenewswire.com/NewsRoom/AttachmentNg/1ddc8e9b-2a0e-4761-aef9-bb9ceeb1ea22
https://www.globenewswire.com/NewsRoom/AttachmentNg/0af8f48d-3b18-4e20-b565-fce004fd73e6
https://www.globenewswire.com/NewsRoom/AttachmentNg/8cfa8dbe-3fee-4110-afba-28895f2f7a21
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