Galaxy Resources Limited advised that it has completed an update of the Definitive Feasibility Study (“DFS”) for the Sal de Vida lithium project (“Sal de Vida” or “the Project”) located on the Salar del Hombre Muerto in northwest Argentina. The updated DFS economics reaffirm the potential for a long-life, low cost and highly profitable operation.
The revised post-tax net present value (“NPV”) of Sal de Vida is estimated to be US$1.48 billion at an 8% discount rate. Sal de Vida has the potential to generate average annual revenues of US$360 million and average annual operating cash flow (EBITDA) of US$270 million.
Average operating costs to produce battery grade lithium carbonate have been estimated at US$3,144 per tonne after potash credits and US$3,410 per tonne, before potash credits (FOB Antofagasta, Chile), clearly evidencing the low cost nature of Sal de Vida.
The revised total capital cost for the Project is estimated at US$474 million (US$443 million excluding the potash circuit). The capital costs that relate to the optional potash plant and related infrastructure are approximately US$31 million and the Company has flexibility to defer a decision to build the potash production circuit as construction progresses, depending on market conditions.
The Mineral Reserve estimate of 1.1 million tonnes of recoverable LCE and 4.2 million tonnes of potassium chloride (“potash” or “KCI”) equivalent for the Project supports a long initial project life with annual production of 25,000 tonnes of lithium carbonate and 94,000 tonnes of potash. The Project also holds significant potential for future upside from further resource definition and subsequent reserve upgrade. The DFS models an operation with an initial 3-year ramp up to full planned lithium carbonate production. Potash production is deferred for two years after the commencement of lithium carbonate production.
Galaxy Managing Director Anthony Tse commented: “We are very pleased that the formal revision to the economics of Sal de Vida continue to reinforce a world class asset, as well as a Project with a robust financial profile. Galaxy has appointed JP Morgan Australia as financial advisor to assist in evaluating potential strategic partnership and/or offtake opportunities to advance the development of Sal de Vida. With the updated economics now complete, Galaxy will now proceed with the next stage of this process.”
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