Volt Lithium Corp. (TSXV: VLT) ("
Volt" or the
"
Company") is pleased to announce the summary
results from the Company’s Preliminary Economic Assessment
(“
PEA”) for the Rainbow Lake Lithium Project (the
“
Rainbow Lake Project”), a lithium brine project
in northwest Alberta, Canada, where the Company owns lithium rights
across 430,000 acres of land. The PEA outlines the estimated
production scaling from 1,000 to over 23,000 metric tonnes per year
of battery-grade lithium hydroxide monohydrate ("
lithium
hydroxide" or "
LHM") over a 19-year
period. Volt’s completed NI 43-101 PEA Technical Report is expected
to be filed on SEDAR+ within 45 days.
All dollar values in this press release are
stated in US dollars unless otherwise noted.
“We are very pleased with the results of the
PEA” commented Alex Wylie, President & CEO of Volt. “Volt’s
focus on extracting lithium from oilfield brines allows for
significant project returns and economics that will allow Volt to
grow its lithium production in a measured and responsible way.”
Rainbow Lake PEA
Highlights1
- Production
growing from 1,000 to over 23,000 metric tonnes per year (average
over years 5 to 19) of battery grade LHM2 spanning a 19-year
period;
- Pre-tax $1.5
Billion NPV at 8% discount rate
(“NPV8") and IRR of 45%;
- After-tax $1.1
Billion NPV8 and IRR of 35%;
- Volt has entered
into a capital expenditure recovery program and cost sharing
arrangement with a private oil and gas company (the
“E&PCo”), which is expected to allow Volt to
significantly enhance overall project economics3;
- OPEX of
approximately $3,276/tonne LHM in the Muskeg formation, with an
average grade of 92 mg/L and approximately $4,545/tonne in the Keg
River formation with an average grade of 49 mg/L; and
- Project
economics assumed $25,000/tonne LHM and provides strong leverage to
higher lithium prices.
_________________1 Readers are cautioned that
reliance on information in this announcement without reference to
the Technical Report may not be appropriate. The forthcoming
Technical Report is meant to be read as a whole, and sections
should not be read or relied upon out of context2 23,000 metric
tonnes lithium hydroxide monohydrate (“LHM”) is equivalent to
20,240 metric tonnes lithium carbonate equivalent (“LCE”)3 Volt’s
cost sharing arrangement with the E&PCo treated as Other
Revenue in the cash flow statement for the IRR Analysis
Rainbow Lake PEA
Introduction
The Rainbow Lake PEA was compiled by Sproule
Associates Limited (“Sproule”) integrating the
work of Sproule and other consultants each having the
qualifications necessary to author their respective sections of the
PEA.
Volt is a lithium brine exploration and
development company focused on advancing its Rainbow Lake Project
in northern Alberta, Canada. The Rainbow Lake Project is based on a
LHM plant with an assumed 19-year production life.
Volt will target production growth in three
phases:
- Phase
1: Production is targeted at 1,000 tonnes per annum
(“tpa”) focused on the Muskeg formation with an
average lithium grade of 92 mg/L.
- Phase
2: Volt intends to expand production to 5,000 tpa of LHM
primarily focused on the Muskeg formation.
- Phase
3: Volt intends to expand production to an average of
approximately 23,000 tpa of LHM focused on the Muskeg and Keg River
formations.
During the production ramp-up, Volt will
maintain an ongoing exploration program to further its
understanding of the reservoirs in the Rainbow Lake Area with the
goal of targeting lithium production from brines in the Muskeg and
Keg River formations offering the highest lithium
concentrations.
The PEA contemplates brines will be treated
using the Company’s proprietary direct lithium extraction
(“DLE") technology (“IES-300”)
that has been proven to selectively extract lithium from brine.
This IES-300 technology was successfully tested during the
Company’s Pilot Program conducted during the second quarter of 2023
and was used as the basis for the PEA. After passing through the
extraction process, the concentrated lithium brine stream will
undergo further processing steps including purification,
concentration and conversion in order to produce commercial battery
grade LHM.
Economic Analysis
The base case analysis assumes a long-term LHM
price of $25,000/tonne. Using this price assumption, the Rainbow
Lake Project generates a positive NPV8 of $1.5 billion pre-tax and
$1.1 billion after-tax.
Key indicators and PEA Highlights are shown
below in Table 1.
Table 1 – PEA Highlights
Initial Annual Production LHM |
tpa(1) |
1,020(2) |
Average Production Yrs 3-4 LHM |
tpa |
5,028 |
Average Production Yrs 5 – 19 LHM |
tpa |
23,031 |
Average Annual Production LHM |
tpa |
18,906 |
Plant Operating Life |
years |
19(3) |
Total Capital Expenditures |
$ millions |
1,549(4)(5) |
Annual Operating Cost – Muskeg |
$/t |
3,276(6) |
Annual Operating Cost – Keg River |
$/t |
4,545(6) |
Selling Price |
$/t |
25,000 |
Net Present Value – Pre-Tax |
$ millions |
1,469 |
Net Present Value – After-Tax |
$ millions |
1,063 |
Internal Rate of Return (IRR) Pre Tax |
% |
45 |
Internal Rate of Return (IRR) After Tax |
% |
35 |
Notes:
All model outputs are expressed on a 100%
project ownership basis with adjustments for project financing
assumptions.
- Tonnes (1,000
kg) per annum.
- Initial annual
production figure represents Year 2 production, following a ramp-up
period in Year 1.
- Plant design and
financial modelling based on 19-year economic life.
- Capital
Expenditures include 15% contingency for facility capital and 10%
contingency for total development capital.
- No inflation or
escalation has been carried for the economic modelling.
- Includes
operating expenditures and sustaining capital.
- Selling price of
battery-quality LHM based on a flatline price of $25,000/t over
total project lifetime.
- Assumes a
corporate tax rate of 23% and Royalty Tax rate of 1%, prior to
project payout and 12% post project payout.
- Any
discrepancies in the totals are due to rounding effects.
Capital Expenditures and Operating
Costs
The capital expenditure
(“CAPEX”) estimate was prepared in accordance with
the Association for the Advancement of Cost Engineering
(“AACE”) Class 5 Study standards, and has an
approximate accuracy of +50% / -30%.
Assuming average production over 19 years of
18,906 tpa of LHM, the direct capital costs are estimated at $1.4
billion, with indirect costs of $95 million. A contingency of 10%
was applied to total development program costs and 15% was applied
to the facilities and indirect costs, yielding an estimated all-in
capital cost of $1.55 billion.
The total estimated CAPEX for the project is
presented in Table 2 below, inclusive of contingency.
Table 2 – CAPEX
|
|
CAPEX ($ million) |
Area Operations – Phase 1 |
|
|
DLE Facilities |
|
21 |
Drilling and Pipeline Costs |
|
33 |
Indirect Costs |
|
5 |
Admin and Power Generation |
|
1 |
Subtotal |
|
60 |
Area Operations – Phase 2 |
|
|
DLE Facilities |
|
60 |
Drilling and Pipeline Costs |
|
152 |
Indirect Costs |
|
24 |
Admin and Power Generation |
|
6 |
Subtotal |
|
242 |
Area Operations – Phase 3 |
|
|
DLE Facilities |
|
398 |
Drilling and Pipeline Costs |
|
465 |
Indirect Costs |
|
66 |
Admin and Power Generation |
|
17 |
Subtotal |
|
946 |
Central Processing Facility |
|
|
Lithium Processing Plant |
|
165 |
Administrative Plan |
|
3 |
Onsite Infrastructure |
|
15 |
Subtotal |
|
183 |
Total Direct Costs |
|
1,431 |
Contingency - Facility Contingency |
|
118 |
Total Project Costs |
|
1,549 |
The operating expenditure
(“OPEX”) estimate for the project was also
prepared in accordance with the AACE Class 5 Study standard. The
total OPEX is presented in Table 3 below.
Table 3 – OPEX
|
Average Annual Cost ($/t)(1) |
|
Muskeg |
Keg River |
Reagents |
1,769 |
2,597 |
Consumables |
272 |
513 |
Power |
244 |
444 |
Labour(2) |
250 |
250 |
Maintenance Materials and Services(3) |
300 |
300 |
Transport and Logistics |
115 |
115 |
General and Administrative |
326 |
326 |
Total Annual OPEX |
3,276 |
4,545 |
Notes:
- Operating costs
are calculated based on average annual production of 19,299 tonnes
of LHM.
- Approximately 65
full time equivalent positions.
- Includes
contract maintenance, solids waste disposal, and external lab
services.
Processing Overview & Cost
Arrangements
As outlined above, Volt will deploy a
three-phase strategy to grow its operations at Rainbow Lake. This
is expected to facilitate a measured roll-out that allows for
continued exploration of the reservoir, which ensures the Company
is focused on area operations with the highest lithium grades,
while minimizing dilution to shareholders as Volt anticipates using
debt and other financing strategies to support growth while in
commercial operations.
The capital cost arrangement with the E&PCo
(the “Cost Arrangement”) is structured to allow
Volt to recover all capital expenditures it incurs for the
recompletion and drilling of production wells
(“Wells”) to a total payout up to 200% of the
original capital cost of the Wells. For the disposal wells, Volt’s
capital cost arrangement is as follows: a) In Phase 1 Volt will pay
50% of the capital costs associated with the disposal wells and
will receive a total payout of up to 200% of the capital costs paid
by Volt for the disposal wells; and (b) In Phases 2 and 3, Volt
will pay 100% of the capital costs associated with the disposal
wells and will receive a total payout of up to 200% of the capital
costs of the disposal wells. The Company has also entered into an
operating agreement with the E&PCo (the “OPEX
Agreement”) whereby the E&PCo will pay Volt operating
costs to manage shared wells and facilities on behalf of both the
E&PCo and the Company. The Cost Arrangement and the OPEX
Agreement significantly improve overall project economics for Volt
at Rainbow Lake.
Volt’s proprietary IES-300 process produces a
high-quality lithium chloride solution which will be further
purified and concentrated by means of reverse osmosis, chemical
softening and ion exchange. After purification and concentration of
the raw lithium chloride, a conventional, two-stage, lithium
carbonate crystallization process will be deployed for final
conversion of the polished lithium chloride to battery-quality
LHM.
Project Economics
The financial results described above are
derived from inputs based on the annual production schedule as set
forth in the PEA and summarized in Table 1 above. Sensitivity
analysis on the economic results over a 19-year operating life are
summarized in Table 4 below.
Table 4: Sensitivity Analysis
|
After Tax NPV Discountedat 8% (MM$US) |
After Tax IRR (%) |
LHM Price |
|
|
-20% |
616 |
23.1 |
0% |
1,063 |
34.9 |
+20% |
1,506 |
48.9 |
Production |
|
|
-5% |
952 |
31.8 |
0% |
1,063 |
34.9 |
+5% |
1,175 |
38.2 |
Capital Costs |
|
|
+20% |
901 |
26.3 |
0% |
1,063 |
34.9 |
-20% |
1,221 |
50.4 |
Operating Costs |
|
|
+20% |
980 |
32.8 |
0% |
1,063 |
34.9 |
-20% |
1,145 |
37.1 |
About Volt
Volt is a lithium development and technology
company aiming to be North America’s first commercial producer of
lithium hydroxide and lithium carbonates from oilfield brine. Our
strategy is to generate value for shareholders by leveraging
management’s hydrocarbon experience and existing infrastructure to
extract lithium deposits from existing wells, thereby reducing
capital costs, lowering risks and supporting the world’s clean
energy transition. With four differentiating pillars, and a
proprietary Direct Lithium Extraction (“DLE”)
technology and process, Volt’s innovative approach to development
is focused on allowing the highest lithium recoveries with lowest
costs, positioning us well for future commercialization. We are
committed to operating efficiently and with transparency across all
areas of the business staying sharply focused on creating
long-term, sustainable shareholder value. Investors and/or other
interested parties may sign up for updates about the Company’s
continued progress on its website: https://voltlithium.com/.
Contact Information
For Investor Relations inquiries or further
information, please contact:
Alex Wylie, President &
CEOawylie@voltlithium.comM: +1.403.830.5811
Forward-Looking Statements
This news release includes certain
“forward-looking statements” and “forward-looking information”
within the meaning of applicable Canadian securities laws. When
used in this news release, the words “anticipate”, “believe”,
“estimate”, “expect”, “target”, “plan”, “forecast”, “may”, “would”,
“could”, “schedule” and similar words or expressions, identify
forward-looking statements or information. Statements, other than
statements of historical fact, may constitute forward looking
information and include, without limitation, statements about the
qualification of the FT Units as “flow-through shares” under the
Tax Act, which is subject to the risks set out in the Prospectus
Supplement; the use of proceeds from the Offering and the
Concurrent Private Placement; the ability of the Company to incur
qualified Canadian Exploration Expenses with the gross proceeds of
the sale of the FT Units; the conduct of the Company’s preliminary
economic assessment for the Rainbow Lake project; the Company’s
continued exploration of its mineral properties; and general
business and economic conditions. With respect to the
forward-looking information contained in this news release, the
Company has made numerous assumptions. While the Company considers
these assumptions to be reasonable, these assumptions are
inherently subject to significant uncertainties and contingencies
and may prove to be incorrect. Additionally, there are known and
unknown risk factors which could cause the Company’s actual
results, performance or achievements to be materially different
from any future results, performance or achievements expressed or
implied by the forward-looking information contained herein
including those known risk factors outlined in the Company’s
amended and restated annual information form and the Shelf. All
forward-looking information herein is qualified in its entirety by
this cautionary statement, and the Company disclaims any obligation
to revise or update any such forward-looking information or to
publicly announce the result of any revisions to any of the
forward-looking information contained herein to reflect future
results, events or developments, except as required by law.
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.
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