Tuesday, January 12, 2010

Western Lithium’s Positive Scoping Study Results Support Major USA Based Lithium Production WLC.v, TNR.v, CZX.v, RM.v, LMR.v, LI.v, CLQ.v, FMC, SQM

Western Lithium is the largest Canadian company in Lithium space. Just few short weeks ago total market cap of Top Five Canadian Lithium companies was at 190 million dollars. Now with Obama proclaiming Clean Energy focus and funding; auto makers acquiring stakes in Lithium development companies all sector is on the move. Western Lithium is almost like a Major in this sector due to the fact that other lithium players - current producers like FMC, SQM and ROC, are involved in other chemical businesses and Lithium is only a part of their revenue stream. Investors are interested in explosive growth, which could become reality with Electric Avenue in Detroit merging into the American highway.
This opportunity will be provided by focused Lithium development and exploration plays. Today Western Lithium puts Nevada on the map for investment community confirming its Preliminary Economic Assessment. Important note will be to remind that nobody is producing Lithium from clay in the world at the moment and technical challenges will remain until the production, but company will enjoy its valuation growth with investment community recognising the underlining fundamentals.
We expect that it will put all Lithium sector on the investment radar screen and Lithium Juniors will enjoy increase in comparable valuations. Mostly interesting for us will be Nevada Lithium brines plays, with known chemistry and developed production cycle, here discovery of economic deposit will bring a more straight forward road to production development.
TNR Gold TNR.v with its coming spin out of International lithium and Rodinia Minerals RM.v will be the beneficiaries of Nevada Area Lithium play.
As you know, we are investing in the sector and biased, nothing should be taken as an investment advise here.
"Majors like SQM, FMC and ROC are presenting only part of the compelling investment story with high market caps and only part of the revenue connected to Lithium. Rapid expansion will happen with aggressive juniors engaged in Lithium Exploration and Development play and new focused plays will get part of excitement here. We are looking here for the areas driven by Big Investment Trend, but to be small enough, so that money will be squeezed in among a few small aggressive players.
Here is our
first investment bottleneck: 190,000,000 Market Cap of Top 5 Canadian Lithium exploration companies."

Western Lithium’s Positive Scoping Study Results Support Major USA Based Lithium Production

January 12, 2010
Reno, Nevada, USA: Western Lithium Corporation (TSX-V: WLC; PK: WLCDF) is pleased to announce the results of a National Instrument 43-101 (NI 43-101) compliant Preliminary Assessment and Economic Evaluation (PAEE) on its Kings Valley Lithium Project in Nevada, USA. The assessment was prepared by a collaboration of several major engineering firms and independent consultants. Highlights• Planned Stage I nominal production of 27,700 tonnes per year of lithium carbonate equivalent (LCE) and 115,000 tonnes per year of potassium sulphate (SOP).• Stage I average revenue estimated at US$263 million per year.• Stage I pre-tax net present value (NPV) discounted at 8% of US$714 million(1).• Pre-tax internal rate of return (IRR) is 28%.• Cash operating costs estimated to be US$1,967 per tonne (US$0.89/pound) of lithium carbonate, after potassium sulphate by-product credit.• Initial 18 year operating life with potential scalability to expand to multiple stages. • Total capital costs estimated to be US$427 million.• Chemistry and process selection indicative of high quality, low impurity product.• Located near major transportation hubs in western United States.“As we enter this decade, we see considerable momentum behind electric transportation using lithium-ion batteries”, said Jay Chmelauskas , Western Lithium’s President. “Our company is positioning itself to become a USA-based, major global supplier of high-quality lithium to meet the projected growth in demand from the electric and hybrid vehicle sector.”
The PAEE, or Scoping Study, is based on the NI 43-101 compliant Stage I lithium resource and supports a nominal production rate of 27,700 tonnes per year of lithium carbonate equivalent (LCE) for approximately 18 years. The proposed production rate compares favorably with the top two global LCE producers, both located in South America, that reported production of 32,600 tonnes and 22,500 tonnes of LCE in 2008, respectively. In addition, the study indicates the potential to produce a nominal 115,000 tonnes per year of by-product potassium sulphate (SOP), primarily used as agricultural fertilizer. The proposed project is expected to compete as a low-cost LCE producer with an estimated cash operating cost of US$1,967 per tonne (US$0.89/pound) LCE net of SOP by-product credit, under base case economics (cash operating costs estimated to be US$4,463 per tonne LCE with cash credit of (US$2,496) per tonne LCE derived from the sale of by-product potassium sulphate). The company notes, however, that no reliance should be placed on its current ability to sell the potassium sulphate by-product, as a result of imprecision in the United States Bureau of Land Management’s (BLM) regulatory process for allowing the company’s sale of the by-product. The company is proposing to pursue a negotiated contractual or regulatory resolution of this issue with the BLM.
For the Stage I development, the base case economic analysis, using a price of US$6,614 per tonne of LCE, and a price of US$600 per tonne of SOP, indicates a pre-tax net present value (NPV) discounted at 8% of US$714 million. The projected pre-tax internal rate of return (IRR) is 28%. Average revenue for Stage I is estimated at US$263 million with pre-tax nominal cash flow (EBITDA) of approximately US$130 million. Capital costs, estimated to be US$427 million, have a payback period of 4 years.
Western Lithium’s Kings Valley property has one of the largest known lithium deposits in the world, based on a historical resource estimate done by Chevron Resources of 11 million tonnes of LCE(2). The NI 43-101 compliant PAEE results for Stage I considers only 8% of the historical near-surface lithium deposit. Successful development of Stage I will allow the company to consider further expansion of production to meet anticipated growth of the lithium-ion battery industry. In December 2009, drilling was completed on the Stage II lithium historical resources and results are expected later in 2010. The company believes that its Nevada property has the potential to become a major USA-based global supplier of high quality lithium carbonate that can economically compete with other global producers of LCE.
Following the positive results of the PAEE, Western Lithium is now planning to proceed with further engineering and pilot plant studies to advance the project to prefeasibility. These studies are expected to be funded from the existing treasury. Western Lithium has approximately US$ 20 million in cash and no debt. The company is in discussions with various major lithium buyers to define product quality specifications, long-term supply requirements and expects to work with these groups through the piloting program. To download the entire news release in PDF format, please click here.
(1) The preliminary assessment is preliminary in nature, and 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 reserves, and there is no certainty that the preliminary assessment will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability.(2) A qualified person has not done sufficient work to classify the historical estimate as current mineral resources, Western Lithium is not treating the historical estimate as current mineral resources and the historical estimate should not be relied upon. The Chevron Resources historical resource estimate of 11 million tonnes of LCE is at average grades ranging from 0.31% to 0.37% Li, March 1985. There is insufficient information regarding the categories used in the historical estimates to make a meaningful comparison to current resource categories under CIM Definition Standards of Mineral Resources and Mineral Reserves."
Post a Comment