Century Li FS pegs Clayton posttax NPV at $3B (U.S.)

May 2, 2024

2024-04-29 10:15 ET – News Release

Mr. Bill Willoughby reports

CENTURY LITHIUM ANNOUNCES POSITIVE FEASIBILITY STUDY FOR THE CLAYTON VALLEY LITHIUM PROJECT, NEVADA

Century Lithium Corp. has released the results of a National Instrument 43-101 feasibility study (FS) completed on its 100-per-cent-owned Clayton Valley lithium project in Nevada, United States. The feasibility study was prepared by Wood Group USA Inc. and Global Resource Engineering Ltd. (GRE). All currency amounts in this news release are presented in United States dollars.

“Century Lithium is proud to present our feasibility study. The study indicates our project has robust economics, made possible with our unique chlor-alkali and DLE [direct lithium extraction] processes,” commented Bill Willoughby, president and chief executive officer. “Completion of the study marks a major milestone for the company, and is the result of the dedicated work and efforts of our team of employees and consultants.

“Our process technology was developed by way of many trials and successes at our pilot plant in Amargosa Valley. As one of the few lithium-focused pilot plants in North America, we continue to operate safely and recently passed two years of testing. The data generated to date supports the feasibility study, and we continue to test various conditions and ideas to improve our process flowsheet,” said Bill Willoughby.

With the feasibility study completed, the company will now direct its focus on engineering and permitting. The company is concurrently advancing discussions with government agencies, strategic partners and other interested parties to provide financing to advance the project and maximize the value to the company’s shareholders that is reflected in the FS.

Feasibility study summary

The information in the tables entitled “Production summary” and “Economic summary” highlight the project’s production and economic summaries.

Resource and reserves

The mineral resource and reserve estimates for the project were updated for the feasibility study, and were built using geologic data and 1,318 lithium assays from 45 core holes drilled between 2017 and 2022. The constrained measured and indicated resource estimate is 1,207.33 million tonnes (Mt) with an average grade of 957 parts per million (ppm) lithium (Li) and contains 1,155,000 tonnes of Li, or 6,148,000 tonnes of LCE (lithium carbonate equivalent). The proven and probable mineral reserve estimate was derived from the constrained mineral resources and contains 287.65 Mt with an average grade of 1,149 ppm lithium and contains 330,000 tonnes of Li, or 1,759,000 tonnes of LCE, and reflects an increase of 74.6 Mt and 480,000 tonnes LCE compared with the 2021 mineral reserve estimate. The mineral resources were generated with a pit shell that encompasses all mineralized material within the property, excluding all areas that will be used for project infrastructure and placement of tailings, waste and low-grade material.

Process metallurgy and chlor-alkali plant

Metallurgical testing through 2020 focused on using sulphuric acid (H2SO4) to extract lithium from the clay. In late 2020, testing shifted to hydrochloric acid (HCl) for its improved compatibility with the deposit’s chemistry. These benefits included higher lithium extractions, lower reagent consumptions, significantly better filtration of solids, and the ability to utilize certain DLE technologies in the recovery and concentration of lithium from the leach solutions.

A key component of the project with chloride-based leaching is a chlor-alkali plant. The chlor-alkali plant provides the ability to produce the key reagents HCl and NaOH on site from the electrolysis of a sodium chloride (NaCl) solution. A chlor-alkali plant represents a greater capital investment relative to that of a sulphuric acid plant, but has important environmental and economic benefits for the sustainability of the project. These benefits include replacing the purchase and transportation of sulphur with regionally sourced salt, and a reduction in emissions and the physical footprint of the operation with dryer, non-sulphate tailings.

Additionally, the chlor-alkali plant will generate significant quantities of NaOH surplus to the project’s operational needs and, therefore, available for sale. The chlor-alkali plant will utilize modern electrochemical cell technology, thereby producing membrane-grade sodium hydroxide without the energy consumption and environmental problems of older technologies. The surplus amounts of NaOH are inherent to the operation of the plant and the sales represent a significant offset to the project’s operating costs.

Pilot plant

In 2021, Century Lithium constructed a pilot plant in Nevada to leach one tonne per day (tpd) of lithium clay and produce a high-grade lithium chloride solution, which is processed off site at Saltworks Technologies Inc., at its Richmond, B.C., processing plant to make battery-quality Li2CO3 (lithium carbonate). To maximize lithium recovery, the company purchased the license rights and pilot-stage equipment to DLE an ion-exchange-based process and incorporated it into the pilot plant. The DLE licence is held in perpetuity and royalty-free by the project.

Throughout its pilot plant program, the company has sought improvement in its process methods. The company obtained a provisional patent in 2023 with the United States Patent and Trademark Office, U.S. Department of Commerce. The provisional patent is titled “System and method for extracting lithium from clay and other materials in a chloride solution using individualized pretreatments.” The patent-pending process encompasses the company’s flowsheet, and protects its methods of leaching lithium-bearing solids and handling solutions, precipitates and residues.

Lithium extraction, recovery and Li2CO3 production

A lithium recovery of 78 per cent is used in the feasibility study, based on the data collected in over two years of operations at the pilot plant:

Feed material grades averaged 1,100 ppm;
Leach solution samples varied from 200 ppm to 320 ppm Li;
Lithium extractions averaged 88 per cent and varied from 80 per cent to 95 per cent;
DLE lithium recoveries were typically above 90 per cent;
10 per cent of the lithium in solution is retained in the moisture remaining in the tailings.

Extraction rates do not account for losses downstream and are only indicative of the potential overall recovery. Work at the pilot plant continues to focus on reducing losses of lithium to tailings. A small loss of lithium from processing the DLE product solutions into Li2CO3, and the recycling of process solutions to the DLE and leach areas, is anticipated.

During 2022 and 2023, Saltworks processed the DLE product solutions from the pilot plant and made battery-quality Li2CO3 at greater than 99.5-per-cent purity. Modifications at the pilot plant in mid-2023 increased lithium solution grades to over 14 grams per litre (g/L), which simplified the flowsheet and eliminated the evaporation stage for production of Li2CO3.

Production plan

The project’s production plan comprises three equal phases of production rate increases, phase 1 and phase 2 production rates are maintained over five years each, and phase 3 is maintained for 30 years. This approach was selected to reduce capital exposure and risk by dividing the project’s production schedule into realistic phases of construction and equipment installation. The plan fully utilizes the project’s mineral reserve.

Phase 1 includes all work required to implement the initial project plan, including all necessary mining and processing infrastructure. The phase 2 cost estimate focuses on an expansion within the footprint of phase 1. Phase 3 development includes an additional processing plant and facilities not built in the previous phases, and allows for a fourth phase of expansion.

Lithium carbonate and sodium hydroxide sales prices

A price of $24,000/tonne of Li2CO3 is used in the feasibility study as the project base case. This price is selected as a conservative mid-point between current market prices, which are under $20,000/tonne Li2CO3, and forecast prices obtained from Benchmark Mineral Intelligence, which are in the range of $23,000/tonne to $39,000/tonne Li2CO3, during phase 1, and $29,000/tonne to $31,000/tonne Li2CO3 thereafter (Benchmark Mineral Intelligence, lithium forecast Q1 2024). The sales price is free on board (FOB) the project site for battery-quality Li2CO3.

NaOH is a product of the chlor-alkali process and a sales price of $600/dmt (dry metric tonne) FOB the project is used in the feasibility study as the project base case. Based on the material mass balance, it is expected that surplus NaOH will be available for sale at rates of 120,000 dmt to 360,000 dmt per annum, depending on project phase. This price is based on a February, 2023, market study by Global Exchange and Trading Inc., where it was determined the project’s surplus NaOH can be readily sold in the Western United States, which currently relies heavily on imports arriving at West Coast ports.

Capital cost estimate

The basis for the capital cost estimate follows AACE Class 3 for feasibility studies. Contributors to the estimates are GRE (mining), Wood (process plant and infrastructure), ThyssenKrupp Nucera (chlor-alkali plant) and Century Lithium (property information and owners’ costs). The capital cost estimates by phase are summarized as shown in the associate table.

The phase 2 capital costs represent the expansion of the process facilities and infrastructure established in phase 1. The phase 3 capital costs support an additional processing plant and facilities not built in the previous phases. In the project schedule, a two-year period is allocated for the time to construct and commission each phase.

Sustaining capital over the life of the project is estimated at $315-million for tailings facility expansion and equipment replacements. These costs are in addition to the expansion capital costs shown in the associated table.

Operating cost estimates

The information in the associated table highlights the operating cost estimates for each phase in dollars per tonne of Li2CO3, before and after deducting sales of surplus NaOH.

Economic model and sensitivity

The cash flow model is developed using base prices of $24,000/tonne for Li2CO3 and $600/dmt for NaOH.

Lithium carbonate sales are the average over each phase, including ramp-up to the stated production rate. Gross sales are revenues from Li2CO3 and NaOH sales, before operating costs and after royalty. Before-tax cash flow is gross sales minus operating costs. Taxes are applied at federal, state and county rates after allowances for amortization, depletion and depreciation only. Possible tax credits under the U.S. Inflation Reduction Act or other programs are not included.

The project base case generates a 17.1-per-cent after-tax internal rate of return (IRR) and net present value (NPV) at an 8-per-cent discount of $3.01-billion. These results are sensitive to changes in operating assumptions including the sales price of Li2CO3:

At 75 per cent of the base case, or $18,000/tonne LCE, the after-tax NPV at an 8-per-cent discount is $1.52-billion, and the after-tax IRR is 12.9 per cent.
At 125 per cent of the base case, or $30,000/tonne LCE, the after-tax NPV at 8-per-cent discount is $4.47-billion, and the after-tax IRR is 20.9 per cent.
For every $1,000/tonne change in the price of lithium carbonate, the after-tax NPV at 8-per-cent discount changes by about $250-million.

Project advancement

The company has completed multiple environmental studies in advance of permitting, and is examining ways to optimize power requirements and incorporate alternative energy solutions.

The recommendations of the FS include continuing the permitting process, engaging with governmental agencies and other parties, and proceeding with detailed engineering to further advance the project.

Among these steps, the company has contacted the United States Department of Energy’s (DOE) loan programs office (LPO) and plans to initiate the preapplication process under the Title Seven Clean Energy Financing program when the feasibility study report is complete.

Conference call

Century Lithium will host a live webcast and conference call for analysts and investors on Monday, April 29, 2024, at 11 a.m. Eastern Time (8 a.m. Pacific Time), followed by a question-and-answer session.

A replay of the webcast will be available on the company’s website shortly following the conclusion of the conference call.

Quality assurance

The data in this news release were prepared in accordance with National Instrument 43-101 standards by the following qualified persons (QP):

Terre Lane, principal mining engineer, GRE, is an independent QP as defined by NI 43-101, and has reviewed and approved the contents of this news release, and verified by site visits and personal examination the information and original documents that relate to preparation of the mineral resource estimate, mineral reserve estimate, mine plan, mine capital and operating cost estimation, economic analysis, and marketing.
Hamid Samari, principal geologist, GRE, is an independent QP as defined by NI 43-101, and has reviewed and approved the contents of this news release, and verified by site visits and personal examination the information and original documents that relate to preparation of the description of the deposit, geological setting and mineralization, deposit type, exploration, drilling, sample preparation, analyses and security, and data verification.
Todd Fayram, senior vice-president of metallurgy, Century Lithium, is a non-independent QP as defined by NI 43-101, and has reviewed and approved the contents of this news release, and verified by site visits and personal examination the information and original documents that relate to preparation of the description of metallurgical testing, lithium recovery, and design operation and results of the pilot plant.
Alan Drake, manager of process engineering, Wood, is an independent QP as defined by NI 43-101, and has reviewed and approved the contents of this news release, and verified by site visits and personal examination the information and original documents that relate to preparation of the description and estimates related to recovery methods.
Haiming (Peter) Yuan, PE, PhD, principal geotechnical engineer, WSP USA Environment & Infrastructure Inc., is an independent QP as defined by NI 43-101, and has reviewed and approved the contents of this news release, and verified by site visits and personal examination the information and original documents that relate to preparation of the description related to infrastructure, environment and permitting.
Paul Baluch, technical director of civil, Wood, is an independent QP as defined by NI 43-101, and has reviewed and approved the contents of this news release, and verified by personal examination the information and original documents that relate to preparation of the description and estimates of infrastructure.
Farzad Kossari, cost estimating manager, Wood, is an independent QP as defined by NI 43-101, and has reviewed and approved the contents of this news release, and verified by personal examination the information and original documents that relate to preparation of the description and summary of capital and operating cost estimates.

Further information about the project, including a description of the key assumptions, parameters, description of sampling methods, data verification and quality assurance/quality control (QA/QC) programs, methods relating to mineral resources and mineral reserves, and factors that may affect those estimates, will be contained in an NI 43-101 technical report on the feasibility study of the Clayton Valley lithium project. Following Section 3.4 of NI 43-101, the report will be available on SEDAR+ and on the company’s website within 45 days of the date of this news release.

About Century Lithium Corp.

Century Lithium is an advanced-stage lithium company, focused on developing its 100-per-cent-owned Clayton Valley lithium project in west-central Nevada, U.S. Century Lithium recently completed a feasibility study on its Clayton Valley lithium project and is currently in the permitting stage, with the goal of becoming a domestic producer of lithium for the growing electric vehicle and battery storage market.

We seek Safe Harbor.

https://centurylithium.com/