Vision pegs Sirmac pretax NPV at $183.6M, IRR at 839%
2023-02-21 10:30 ET – News Release
Mr. Yves Rougerie reports
VISION LITHIUM PEA ON SIRMAC BOASTS A PRE-TAX 839% IRR, C$183M PRE-TAX NPV5% AND LESS THAN ONE YEAR PAYBACK
Vision Lithium Inc. has received the results of a positive preliminary economic assessment (PEA) for the Sirmac No. 5 lithium dike deposit from the company’s independent consultants GoldMinds Geoservices of Quebec, Canada. The No. 5 Dike is located 160 km by road North of Chibougamau, Quebec, Canada. The PEA presents a robust quarry/open pit mining operation for direct shipping of mineralized material (“DSO”) with very attractive economics at discounted lithium prices.
The Company will host a webinar to discuss the results of the PEA in greater detail on Tuesday, February 21, 2023, at 10:00AM ET / 7:00AM PT. A Q&A will follow the presentation.
Preliminary Economic Assessment Highlights:
- Pre-Tax net present value (“NPV”) (discount rate 5%) of C$183.6M, internal rate of return (“IRR”) of 839% and payback less than 1 year
- After-Tax net present value (“NPV”) (discount rate 5%) of C$104.8M, internal rate of return (“IRR”) of 484% and payback less than 1 year
- Assumed DSO selling price of US$591 per tonne / C$797 per tonne 4 years of mine life with 321,000 tonnes of DSO at 1.33 % Li2O
- Revenue of C$253.4M Life of Mine capital of C$3.1M Operation cost per tonne of DSO at C$142
Yves Rougerie, President & CEO commented, “The PEA clearly demonstrates the low cost and very high return of the Sirmac Lithium Project using a Direct Shipping mining scenario without prior beneficiation. The Sirmac deposit has unique and compelling features which make it amenable to early development and extraction. As a result of strong demand and low supply, elevated lithium prices are projected for several years into the future. The PEA focuses on the lithium resource of the #5 Dike alone. We know there are multiple additional dikes, of which several are lithium-bearing, elsewhere on the Sirmac Project which have yet to be drill-tested or fully explored. This offers us tremendous blue sky upside potential and room for expansion from an exploration perspective on the Sirmac Project.” PEA Overview, Description and Location
The Sirmac lithium project (the “Sirmac Project”) is located in the Eeyou Istchee/James Bay region (NTS 32J11 mapset), in the northwest region of the province of Quebec. The property is approximately 160 km northwest of the town of Chibougamau and 170 km southeast of the community of Nemaska. The Sirmac Project is accessible by the Route du Nord (Northern Road) that starts in Chibougamau.
The project calls for the direct shipping of mineralized material. The base case is EXW Chibougamau (stockpiled in Chibougamau for client pickup). An alternative scenario is also presented herein, the FOB Saguenay scenario where mineralized material is transported to the port of Saguenay and loaded onto ships.
The PEA considers a conventional truck and shovel open-pit/quarry mining operation, where mineralized material is blasted and then loaded onto trucks and transported to the railhead in Chibougamau, Quebec 160 km away. The PEA is based on the mineral resource estimate presented in a technical report titled “NI 43-101 Technical Report: Preliminary Economic Assessment on Pegmatite Dike #5 Lithium-Tantalum Deposit; Sirmac Property, Quebec” dated February 15, 2023 and prepared in accordance with National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”) by GoldMinds Geoservices Inc. (“GMG”) of Quebec City, Quebec, Canada (the “Technical Report”).
The Technical Report relating to the PEA will be filed on SEDAR at www.sedar.com and Vision Lithium’s website www.visionlithium.com within 45 days of the issuance of this news release. Readers are encouraged to read the PEA in its entirety, including all qualifications, assumptions and exclusions that relate to the details summarized in this news release. The PEA is intended to be read as a whole, and sections should not be read or relied upon out of context.
The PEA is preliminary in nature, includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral or ore reserves. There is no certainty that the preliminary economic assessment in the PEA will be realised.
Mineral Resources Estimate
The information gathered by SGS Canada – Geostat in 2014 was used for the new resource estimation with updated economic variables as GMG is of the opinion that the additional data collected in 2018 and 2022 confirm the model or, in some cases, do not concern the Dike studied here, the #5 Dike. The data has been verified in its form, grades, interpretation as well as interpolation parameters and classification and the block model is considered current. As there is no material change in that aspect, GoldMinds’ qualified persons endorse the work done by SGS’ qualified persons.
Considering the blocks limited to the optimized pit shell and a cut-off grade of 0.50% Li2O, the pit constrained mineral resources including ramp design of the Sirmac deposit are 192,000t of measured resources at 1.38% Li2O, 81,000t of indicated resources at 1.39% Li2O and 49,000t of inferred resources at 1.05% Li2O (Table 1). The tantalum (“TaO5”) values are given from the block values inside the lithium mineralized solids and have yet to demonstrate extractability and economic potential.
These mineral resources do not represent mining reserves since they have not shown economic viability and include inferred material.
Table 1 : Mineral Resources for the Sirmac Project with Li2O Cut-off Grade of 0.50% (2023) Cut-Off Grade Li2O % Category Tonnage t Average Grade Li % Average Grade Li2O % Average Grade TaO5 % 0.50 Measured 192,000 0.639 1.38 0.0074 0.50 Indicated 81,000 0.647 1.39 0.0081 0.50 Inferred 49,000 0.487 1.05 0.0062
Notes: (1) The mineral resource estimate has been calculated using the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Definitions Standards for mineral resources in accordance with NI 43-101. Mineral resources that are not mineral reserves do not have demonstrated economic viability. Inferred mineral resources are exclusive of the Measured and Indicated resources. (2) Bulk density of 2.70 t/m3 is used. (3) Effective date January 23, 2023. (4) Tonnage rounded to the nearest thousand.
Mining & Processing
The PEA assumes conventional open pit truck and shovel mining. Production is designed to use a turnkey contractor where 1,194,000 metric tonnes, including 321,000 tonnes of mineralized material at a grade of 1.33% Li2O, will be mined in four years. The contractor will operate on a 6-month quarry operation basis with a schedule of 7 days per week, 12 hours a day.
Supporting infrastructure on site will include a small administrative building, warehouse, fuel tank, generator and various sea can for material storage. Employees will stay at an existing logging camp located about 20 kilometres by road from for the site.
Transport of mineralized material from mine site to Chibougamau will be performed by a contractor. Forestry roads joining the property to the Chibougamau railhead can accommodate heavy load trucks up to 150 tonnes.
As the mineralized material is to be sold as a Direct Shipping mineralized material, the effective recovery will depend on the company and plant which will process the material.
Nonetheless, previous metallurgical testing programs demonstrated the Sirmac pegmatite #5 Dike is suitable to produce a spodumene concentrate grading 6% Li2O and above.
Environment, Permitting and Social
The site is located within the Eeyou Istchee Territory of the Mistissini Cree First Nation, and on the traditional trapping territories of the tallymen who live on the territory. Vision Lithium intends to develop good relations with the Cree Nation of the Eeyou Istchee James Bay Region, and in particular the Cree Nation of Mistissini, the First Nations community whose traditional land use and economic activities may be most directly impacted by the Vision Lithium’s development. Vision Lithium views this development in terms of its benefits to the Quebec economy, as well as the Cree communities and the local Chibougamau – Chapais Jamesian communities.
As the project is located in Eeyou Istchee / Baie James territory, the development of a mine would fall under the Northern Quebec Regime for Environmental Evaluation. It is mandatory for a mine project to undergo the Environmental Evaluation Process under the James Bay Agreement. It is a 5 steps process involving consultations and collaboration with the Cree Nation. These steps are: Project Notice, Evaluation, Redaction of the Environmental and Social Impact Assessment, Review and Decision.
Vision Lithium continues to work with its environmental consultants to develop a plan for permitting the Project. The Company will need to develop various environmental studies which are mainly divided as Biophysical Environment: (topography, water quality, air quality, soil and rock characteristics, etc.), Biological Environment (Fauna and Flora) and Human Environment (Socio-Economical impacts and Opportunities). Other planned evaluations for the permitting strategy will necessarily consider mine design, processing, and reclamation plan development.
Capital Costs
The PEA is based on a capital cost summary, in accordance with AACE Class 5 guidelines with an estimated accuracy of +/- 35%, which is shown in the table below:
Table 2: Capital costs EXW Chibougamau (Base Case) Description Cost (C$) Mine capital costs 500,000 Transfer station dome Chibougamau 250,000 Infrastructure capital costs 1,000,000 Closure costs 500,000 Contingency (15%) 337,500 Owner costs (10%) 225,000 EPCM costs (5%) 112,500 Total initial capex 2,925,000
Operating Costs
Mine operating costs by activity area are shown in the table below.
Table 3: Operating costs detailed EXW Chibougamau
(Base Case)
Items Cost Cost
(C$) (C$/t ore mined)
Mine operating costs 18,901,000 58.88
Shipping Quarry to Chibougamau 21,995,000 68.52
G&A 4,815,000 15.00
Total 45,711,000 142.40
Table 4: Operating costs detailed FOB Port Saguenay
(Alternate scenario)
Items Cost Cost
(C$) (C$/t ore mined)
Mine operating costs 18,901,000 58.88
Shipping quarry to Chibougamau 21,995,000 68.52
Shipping Chibougamau to Saguenay port 28,457,000 88.65
G&A 4,815,000 15.00
Total 74,168,000 231.05
*Numbers may not add due to rounding
Economic Model
The main assumptions for the economic analysis and the results are summarized in the following tables:
Table 5: Main assumptions of Economic Analysis Items Units Values Li2O spodumene concentrate US$/mt 4,100 DSO selling price US$/mt 591 Mining (mineralized material) tonnage over LOM metric tonne 321,000 Royalty on sales % 1.00 Federal tax % 15.00 Provincial tax % 11.50 Mining tax % 16.00
*DSO Selling price calculated as follow = Li2O concentrate sell price x ((%Li2O Grade)/ 6.0% Li2O concentrate) x 65% payable
Table 6: Base Case economics
Items Value
(C$)
Total revenue of sales 253,366,000
Total operating costs 45,711,000
Before-tax discounted (5.0%) NPV 183,576,500
After-tax discounted (5.0%) NPV 104,752,000
*Numbers rounded
Table 7: FOB Saguenay economics
Items Value
(C$)
Total revenue of sales 253,366,000
Total operating costs 74,167,590
Before-tax discounted (5.0%) NPV 167,095,046
After-tax discounted (5.0%) NPV 99,961,526
*Numbers rounded
Notes: (1) There has been no mineral or ore reserve estimate developed. The PEA is based on low-level technical and economic assessments that are not sufficient to support the estimation of mineral or ore reserves. Although almost 90% of the Mineral Resources are in the Measured and Indicated categories, there is no certainty that further exploration work will result in the determination that the production targets underlying the PEA will be realised. Further evaluation work and appropriate studies are required to establish sufficient confidence that any PEA production targets or financial forecasts contained in the PEA will be met. (2) Vision Lithium recently repurchased the underlying net smelter return royalty on the Sirmac Project. The economic analysis was completed before the repurchase transaction and has not yet been adjusted.
Additional information is provided in the Technical Report.
Recommendations and Opportunities
The project has good grade and positive metallurgy, moreover the material is mostly above ground and uphill away from creeks and lakes which makes it a favorable environment for rapid development.
GoldMinds suggests proceeding with the extraction of a 50,000t bulk sample while preparing a pre-feasibility study or a feasibility study to obtain permits and a mining lease for the entire deposit.
Reader should note that the #5 Dike area of the property is not affected by a recently proposed protection zone for woodland Caribou.
Attention should also be placed on valuation and testing of Rubidium in pegmatite Dike #5 as the amount is significant and could add significant value to the project. (Rubidium 1-gram ampoule 93.40 US$ in 2021 source USGS report). Average Rubidium in the assays of the #5 mineralized dike is 943 g/t. More work is required to identify the distribution of Rubidium. It is not included in the Mineral Resources at this stage, nor is Tantalum which deserves attention as well.
QA/QC
The database received by Vision from SGS Geostat contained assay results for 1,747 samples. Added to the total assays, there are 60 standards (3.4 % of the samples), 79 duplicates (4.5 % of the samples) and 78 blanks (4.5 % of the samples). Standards of high and low-grade lithium were used with blanks. These results were verified by GoldMinds. Moreover, analysis of independent samples from Desharnais et al. were also verified and there was no bias as well. GoldMinds took independent samples in the field on channel samples and on new core of Vision Lithium as well. Results were in line with expected values and have not shown bias. The data has been verified in its form, grades, interpretation as well as interpolation parameters and classification and the block model is considered current, as there is no material change in that aspect. GoldMinds’ qualified persons endorse the work done by SGS’ qualified persons. The verifications of GoldMinds allow the disclosure of this study and news release.
Qualified Person
The technical content of this news release has been reviewed and approved by Claude Duplessis, P.Eng., and Daniel Dufort, P.Eng., both of GoldMinds Geoservices Inc. and qualified persons as defined by NI 43-101.
About Vision Lithium Inc.
Vision Lithium Inc. is a junior exploration company focused on exploring and developing high quality mineral assets including lithium and copper in Canada. The Company is led by skilled and qualified mineral exploration experts and business professionals with a deep understanding of the battery materials market, which is driven by lithium-ion batteries. Vision Lithium is committed to discovering new, world-class assets and bringing these assets to production, starting with its advanced Sirmac lithium property in Quebec and Godslith lithium property located in Manitoba; its greenfield Cadillac lithium and Decelles lithium properties in Quebec, and a group of base metal rich Ni-Cu-Co and/or Cu-Zn-Ag-Au properties in Eastern Quebec and New Brunswick.
We seek Safe Harbor.
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