SUDBURY,
ON, July 14, 2023 /CNW/ - Frontier Lithium
Inc. (TSXV: FL) (FRA: HL2) (OTCQX: LITOF) ("Frontier" or "the
Company"), Ontario's leading
lithium developer, has filed the "Pre-Feasibility Study for the PAK
Project " technical report (the "Technical Report"). As
communicated in a news release dated May 31, 2023, this
Technical Report outlines the preliminary feasibility assessment of
the 100% owned PAK Project, located north of Red Lake in Ontario, and a proposed hydrometallurgical
plant that would convert spodumene concentrate feedstock into
lithium chemicals. The Technical Report confirms the vertically
integrated project could be North
America's largest and lowest-cost producer of lithium
hydroxide, supplying the rapidly growing electric vehicle industry
on the continent.
The Technical Report is effective as of the 31st day
of May 2023, the summary press
release is located at
https://us13.campaign-archive.com/?u=4007c765f4181d2d87e755530&id=cf13300efd.
The full Technical Report is available on SEDAR (www.sedar.com) and
can be located at
https://www.sedar.com/DisplayCompanyDocuments.do?lang=EN&issuerNo=00008434.
Pre-Feasibility Study Highlights: A 24-year total project
life, with after-tax pay back of capital expenditures in less than
5 years following commercial production
- Life of Project Cash Flow (unlevered) of US$8.07
billion over 24-year total project life;
- Total initial capital expenditure estimate of US$468
million for the technical grade concentrator and expansion
capital of US$576 million for
the chemical grade concentrator and chemical plant with a
contingency of 20% included.
- Sustaining Capital of US$90 million ;
- Post-tax Net Present Value at an 8% base case discount rate
("NPV 8 ") of US$1,739 million and
IRR of 24.1% [see Tables and Figures below];
- Post-tax net "undiscounted" Cash Flow (before initial capital
expenditures) of US$5.98 billion ;
- Annual Average EBITDA of US$251.3 million ;
- Chemical plant producing 12,520 tonnes of battery-quality
Lithium Hydroxide Monohydrate (LiOH-H 2 O) per
year with an average selling price of US$22,000 per tonne
and a 7,360 tonnes of battery-quality Lithium Carbonate per year
with an average selling price of US$20,500 per
tonne;
- PAK and Spark deposits are open along strike and to depth;
- All-in cash costs of US$7,433 per tonne of Lithium
Carbonate Equivalent; and
- After-Tax Pay Back of Capital Expenditures is 4.9 years after
the start of commercial operations.
In addition, with regard to this particular release, the Company
hereby presents the following sensitivity analysis tables and
figures that were hitherto undisclosed. The sensitivity analysis
reveals that the USD:CAD exchange rate and battery grade ("BG")
lithium hydroxide price have the most significant influence on both
the Net Present Value ("NPV") and Internal Rate of Return ("IRR")
compared to the other parameters, based on the ranges evaluated.
Overall, the NPV and IRR of the Project is positive over the range
of values used for the sensitivity analysis when the sensitivities
are analyzed individually.
Table 1: Summary of NPV Sensitivity
Results
Item
|
Results
|
Discount Rate:
|
8 %
|
After-Tax Net Present Value (NPV)
@ 8% (CAD M)
|
-30 %
|
-20 %
|
-10 %
|
0 %
|
10 %
|
20 %
|
30 %
|
Chemical
Grade
|
1,151
|
1,521
|
1,891
|
2,261
|
2,631
|
3,001
|
3,371
|
Technical
Grade
|
1,939
|
2,046
|
2,154
|
2,261
|
2,369
|
3,662
|
3,811
|
Metal Price (USD)
Chemical Grade (CG) 6%
|
2,261
|
2,261
|
2,261
|
2,261
|
2,261
|
2,261
|
2,261
|
Metal Price (USD)
Technical Grade (TG) 7.2%
|
1,939
|
2,046
|
2,154
|
2,261
|
2,369
|
2,476
|
2,583
|
Metal Price (USD) BG
LiOH
|
1,544
|
1,783
|
2,022
|
2,261
|
2,500
|
2,739
|
2,979
|
Metal Price (USD) BG
Li2CO3
|
1,869
|
2,000
|
2,130
|
2,261
|
2,392
|
2,523
|
2,653
|
Exchange Rate (USD:
CAD)
|
829
|
1,306
|
1,784
|
2,261
|
2,738
|
3,216
|
3,693
|
Capital
Costs
|
2,580
|
2,473
|
2,367
|
2,261
|
2,155
|
2,049
|
1,943
|
Sustaining
Capital
|
2,272
|
2,269
|
2,265
|
2,261
|
2,257
|
2,254
|
2,250
|
Operating
Cost
|
2,640
|
2,514
|
2,387
|
2,261
|
2,135
|
2,008
|
1,882
|
Table 2: Summary of IRR Sensitivity
Results
Item
|
Results
|
Discount Rate:
|
8 %
|
After-Tax Net Present NPV)
@ 8 % (CAD M)
|
-30 %
|
-20 %
|
-10 %
|
0 %
|
10 %
|
20 %
|
30 %
|
Chemical
Grade
|
17.6 %
|
20.0 %
|
22.1 %
|
24.1 %
|
25.9 %
|
27.6 %
|
29.2 %
|
Technical
Grade
|
21.6 %
|
22.4 %
|
23.2 %
|
24.1 %
|
24.9 %
|
25.7 %
|
26.6 %
|
Metal Price (USD)
Chemical Grade (CG) 6%
|
24.1 %
|
24.1 %
|
24.1 %
|
24.1 %
|
24.1 %
|
24.1 %
|
24.1 %
|
Metal Price (USD)
Technical Grade (TG) 7.2%
|
21.6 %
|
22.4 %
|
23.2 %
|
24.1 %
|
24.9 %
|
25.7 %
|
26.6 %
|
Metal Price (USD) BG
LiOH
|
20.1 %
|
21.5 %
|
22.8 %
|
24.1 %
|
25.3 %
|
26.4 %
|
27.5 %
|
Metal Price (USD) BG
Li2CO3
|
22.0 %
|
22.7 %
|
23.4 %
|
24.1 %
|
24.7 %
|
25.4 %
|
26.0 %
|
Exchange Rate
(USD:CAD)
|
14.8 %
|
18.2 %
|
21.3 %
|
24.1 %
|
26.7 %
|
29.2 %
|
31.5 %
|
Capital
Costs
|
31.2 %
|
28.4 %
|
26.1 %
|
24.1 %
|
22.4 %
|
20.9 %
|
19.5 %
|
Sustaining
Capital
|
24.2 %
|
24.1 %
|
24.1 %
|
24.1 %
|
24.1 %
|
24.0 %
|
24.0 %
|
Operating
Cost
|
26.3 %
|
25.5 %
|
24.8 %
|
24.1 %
|
23.3 %
|
22.6 %
|
21.8 %
|
Pre-Feasibility Study Overview
1. LITHIUM CHEMICALS FOR THE NORTH AMERICAN ELECTRIC
VEHICLE MARKET
- The PAK Project has the ability to produce 7,360 metric tonnes
of lithium carbonate and 12,520
m.t. of lithium hydroxide annually. This production tonnage
meets the specific requirements of original equipment manufacturers
(OEMs), such as automotive companies operating in the North
American electric vehicle market. As the electric vehicle market
continues to evolve and expand, the ability to adapt and meet
changing customer demands becomes crucial. The lithium chemicals to
be produced by Frontier Lithium will be tailored to the needs of
the industry, supporting the growth of electric vehicles
manufacturing in the region and building in optionality for the
future demand profiles through adjustments in production capacity
and product mix to align with future market trends and customer
preferences.
2. A PHASED APPROACH
- The development of the PAK project and hydromet chemical plant
will be completed in phases to allow for efficient resource
allocation, to minimize upfront capital expenditure, and de-risk
project execution. The first phase will focus on the production of
spodumene concentrate to generate revenue and support the
concurrent development of necessary infrastructure to build the
proposed mine-to-lithium hydroxide chemical plant facility.
Implementing a phased approach also enables a more streamlined and
controlled project development process, enabling a thorough
understanding of the resource base and an optimization of the
refining process in advance of chemical plant construction. This
approach ensures that the subsequent refinery build-up is
well-informed, efficient, and aligned with market demand.
3. GROWING REGIONAL DEMAND
- The North American electric vehicle market is experiencing
significant growth, with strong commitments of over CAD$25
billion to build Ontario battery capacity by 2030. This
strong regional growth provides a favorable market environment for
the lithium project. The project can capitalize on its strategic
North American location, the growing demand for electric vehicles
and the need for lithium chemicals to support battery
production.
- The commitments to build Ontario battery
manufacturing capacity indicate a long-term future in sustainable
transportation and the development of the electric vehicle
ecosystem. By supplying locally produced lithium chemicals, the
project can contribute to the regional supply chain, reduce
dependence on imports, and strengthen the overall resilience and
competitiveness of the North American electric vehicle market.
4. OPPORTUNITIES FOR FURTHER UPSIDE
- The project offers opportunities for further upside through the
potential conversion of additional mineral resource to mineral
reserves. The PFS reserve calculation includes only one-third of
the identified resources. None of the 32.4 million tonne of
inferred mineral resources were included in the PFS mineral
reserves. This indicates significant exploration potential and the
possibility of scaling the project.
- Frontier has a strong track record in resource exploration and
development, and the continued exploration efforts within the PAK
Lithium Project could uncover additional mineral resources. The
potential to tap into additional resources ensures the project will
be responsive to future market demands and supports long-term
sustainability.
Due Diligence
All scientific and technical information in this release has
been reviewed and approved by Todd
McCracken , P.Geo., Director – Mining & Geology –
Central Canada , BBA E&C Inc.,
the qualified person (QP) and Garth
Drever , P.Geo., VP Exploration for Frontier Lithium Inc.
the qualified person (QP) under the definitions established by
National Instrument 43-101. Under Frontier's QA/QC procedures, all
drilling was completed by Chenier Drilling Ltd. of Val Caron, ON using thin-walled BTW drill rods
(4.2 cm core diameter) and a Reflex ACT III oriented core system.
Using the Reflex system, the drill core was oriented and marked as
it was retrieved at the drill. The core was boxed and delivered to
the Frontier core shack where it was examined, geologically logged
and marked for sampling. The core was photographed prior to
sampling. Using a rock saw, the marked sample intervals were halved
with one halve bagged for analysis. Sample blanks along with
lithium, rubidium and cesium certified reference material was
routinely inserted into the sample stream in accordance with
industry recommended practices. Field duplicate samples were also
taken in accordance with industry recommended practices. The
samples were placed in poly sample bags and transported to
Red Lake by Frontier employees and
then shipped to AGAT Laboratories Ltd. (AGAT) in Mississauga, ON for quantitative multi-element
analysis. AGAT is an ISO accredited laboratory. The core is stored
on site at the Pakeagama Lake exploration camp.
About Frontier Lithium
Frontier Lithium is a preproduction business with an objective
to become a strategic domestic supplier of spodumene concentrates
for industrial users as well as battery-grade lithium hydroxide and
other chemicals to the growing electric vehicle and energy storage
markets in North America. The
Company maintains the largest land position and resource in a
premium lithium mineral district located in Ontario's Great Lakes region.
About the PAK Lithium
Project
The PAK lithium project contains North
America's highest-grade lithium resource and is the second
largest in North America by size.
The project encompasses close to 27,000 hectares and remains
largely unexplored; however, since 2013, the company has delineated
two premium spodumene-bearing lithium deposits (PAK and Spark),
located 2.3 kilometres apart. Exploration is continuing on the
project through two other spodumene- bearing discoveries: the Bolt
pegmatite (located between the PAK and Spark deposits), as well as
the Pennock pegmatite (25 kilometres northwest of PAK deposit
within the project claims). A 2023 Pre-Feasbility Study "National
Instrument 43-101 Technical Report PFS PAK Lithium Project" by BBA
E&C Inc., delivered post-tax NPV(8) of
US$1.74 billion and IRR of 24.1% as
per the press release disseminated on May
31, 2023, and was filed on Sedar.com.
Forward-looking
statements
Neither the TSX Venture Exchange nor its Regulation
Services Provider (as that term is defined in the policies of the
TSX Venture Exchange) accepts responsibility for the adequacy or
accuracy of this news release. This news release includes certain
statements that may be deemed "forward-looking statements". All
statements in this release, other than statements of historical
fact constitute forward-looking statements. Forward looking
statements contained in this news release include, but are not
limited to, statements with respect to: estimated mineral
resources, estimated capital costs to construct mine facilities,
estimated operating costs, the duration of payback periods,
estimated amounts of future production, estimated cash flows, net
present value (NPV) , and statements that address future
production, reserve potential, exploration drilling, exploitation
activities and events or developments that the Company expects.
Although the Company believes the expectations expressed in such
forward-looking statements are based on reasonable assumptions,
such statements are not guarantees of future performance and actual
results may differ materially from those expressed in the
forward-looking statements.
Forward-looking statements involve inherent risks and
uncertainties. Risk factors that could cause actual results to
differ materially from those in forward looking statements include:
market prices for commodities, increases in capital or operating
costs, construction risks, availability of infrastructure including
roads, regulatory and permitting risks, exploitation and
exploration successes, continued availability of capital and
financing, financing costs, and general economic, market or
business conditions. Investors are cautioned that any such
statements are not guarantees of future performance and those
actual results or developments may differ materially from those
projected in the forward-looking statements. For more information
on the Company, Investors should review the Company's registered
filings available at sedar.com.
SOURCE Frontier Lithium Inc.