Alpha Lithium Corporation (NEO: ALLI) (OTC: APHLF) (German WKN: A3CUW1) a company developing a portfolio of highly prospective lithium assets in Argentina, today announced the results of an updated Preliminary Economic Assessment for its wholly owned Tolillar lithium brine project in the Salta Province of Argentina. This recent PEA is an update to last month’s PEA (see July 10, 2023 news release), which now includes additional resources identified less than one month ago (see July 17, 2023 news release). This PEA provides an independent, third-party economic assessment of the potential value of Tolillar, based on the latest estimation of lithium resources.
The PEA evaluated a 25,000 tonnes per annum commercial-scale operation to produce battery-grade lithium carbonate chemicals. Importantly, the study does not include the planned 25,000 tpa second phase expansion. Instead, the Company opted for a update to the previous PEA, simplifying and dramatically accelerating the report’s delivery time, which will be more useful for the Company’s ongoing and expanded strategic review process (the strategic review process is more fully described in the June 23, 2023 news release).
Brad Nichol, President & CEO of Alpha commented, “The results of the PEA demonstrate that Alpha’s Tolillar project is an exceptionally robust lithium carbonate project, even with conservative assumptions. Tolillar represents one of the last, large, independent, wholly-owned lithium brine salars globally, and once the latest technical work is incorporated, Tolillar should become an even larger and longer-lived operation. Additionally, with its substantial fresh-water source on site, it is not difficult to understand why Tolillar is such a sought-after target.” Nichol added, “I am very pleased with the speed at which Alpha’s team has advanced the Tolillar project from a greenfield site to PEA. To demonstrate the viability and significant economic potential of such a project speaks to the abilities of our unique team of experienced lithium specialists.”
The PEA was prepared by Ausenco Chile Limitada, a global engineering firm, experienced in the lithium industry. Ausenco has prepared multiple economic assessments and feasibility studies, specifically for, but not limited to, South American lithium brine extraction companies over the past several years. In addition to being DLE and production process experts, Ausenco’s knowledge was invaluable for assessing current and conservative operating and capital costs, which incorporated the latest global cost estimates. All values are reported in US dollars, unless otherwise noted. References to CDN$ have been converted at 1.35 x US$.
Economic Analysis and Summary:
Lithium chemicals produced from brines are almost universally less expensive than those produced from hard rock, giving brine operations a significant competitive advantage. Specifically, the Tolillar project benefits meaningfully from the following:
The Discounted Cash Flow Model, generated independently by Ausenco, with an outside consultant providing tax estimate advice, demonstrates an attractive economic result from the potential production of lithium carbonate chemicals from the Tolillar project. As a result, the Company expects to continue construction of its 120 tpa pilot plant, which will provide the necessary data to support the design and feasibility study for the 50,000 tpa lithium carbonate chemicals plant envisioned by Alpha.
|Discount Rate||NPV (after tax)
|IRR (after tax)||NPV (pre-tax)
(NPV) Net present value – (IRR) Internal rate of return
The PEA NPV results take into account royalties that are specifically applicable to the Tolillar project.
Alpha has a strong technical team with extensive lithium experience leading its efforts in Argentina.
Initial Capital Costs:
|Brine Extraction Wells||$35.7|
|Dry Product Handling||$27.5|
|Direct Costs Subtotal||$399.8|
|Total Initial Capital Costs||$776.6|
Total estimated initial capital costs are $776.6 million for the first phase (25,000 tpa) of lithium carbonate chemicals. Contingency costs are estimated at 30% of total direct and indirect costs. Capital costs for the second phase (a second 25,000 tpa) are not included in this PEA analysis; however, management expects those to be approximately 35% lower than the capital costs for the first phase by utilizing economies of scale.
To expedite the completion of this PEA, management elected to utilize Ausenco’s previous capital estimates for a 25,000 tpa lithium chemicals plant. The additional of a second 25,000 tpa phase was considered, but Ausenco could not commit to completing a PEA that included a full-scale 50,000 tpa production scenario within the time constraints of Alpha’s enhanced strategic review process.
|DIRECT Operating Costs:|
|Chemical Reactives and Reagents||$73,397,431||$2,936.20|
|Catering and Camp Services||$4,556,033||$182.24|
|Site Vehicle Costs||$286,750||$11.47|
|Resin and Membrane Replacement||$11,728,817||$469.15|
|Sub Total DIRECT Costs*||$128,742,823||$5,149.94|
|Sub Total INDIRECT Costs||$2,915,500||$116.62|
|TOTAL Processing Cost (excluding Transportation)*||$128,783,323||$5,151.56|
|TOTAL Production Cost (including Transportation)*||$131,658,323||$5,266.56|
*Numbers may not add up due to rounding.
The estimated operating costs are current as of Q1 2023 and reflect 100% year-on-year cost increases in some cases, such as for chemical reagents, which dramatically increased due to ongoing COVID-19 related global supply chain constraints. Management supports the use of potentially temporarily inflated costs and believes the cost estimates are appropriately conservative in light of many reported cost overruns in the industry. Finally, the second largest cost center is “Energy,” accounting for 18% of the total operating cost. Alpha management has previously investigated and utilized solar power to provide energy to similar and larger projects in the past; however, solar power was not incorporated into the PEA at this time. Utilization of solar power should dramatically decrease the estimated operating cost.
Lithium Markets and Price:
Alpha consulted industry experts at Global Lithium LLC for estimates of long-term market and pricing dynamics. Recently, the price of lithium carbonate has been volatile, ranging from $5,000/tonne in 2018 to over $80,000/tonne in China’s spot market in 2022, before moderating in 2023. Even during the most recent period of spot market volatility, long-term contract prices outside of China remained relatively constant in the $60,000/tonne range, on average, through April 2023.
For estimating future cash flows from new projects, Global Lithium LLC and Alpha recommended a conservative approach, using a price significantly below (approximately 50% of) the upper end of the expected long-term marginal cost curve, yielding conservative project economics that leave room for significant upside. While most forecasters do not forecast prices beyond 2030, Global Lithium LLC recommended using a price of $22,500/tonne from 2031 to 2035 and a price of $23,500/tonne from 2036 and beyond.
|Year||Li2CO3 Price (US$/tonne)|
|2030 – 2035||$22,500|
|2036 – beyond||$23,500|
|Average price for 35-year production life of Tolillar project||$23,146|
The PEA is based upon brine grades across the company’s Measured, Indicated and Inferred Mineral Resources only. Mineral resources that are not mineral reserves do not have demonstrated economic viability. There is no certainty that the Tolillar project envisioned by the PEA will be realized. The PEA 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.
A Technical Report prepared in accordance with NI 43-101* in support of the PEA will be filed on SEDAR (www.sedar.com) and on the Company’s website (www.alphalithium.com) within 45 days. The PEA Technical Report is intended to be read as a whole, and sections should not be read or relied upon out of context. Scientific and technical information related to the PEA contained in this news release has been reviewed by:
These persons, above, have the ability to verify the authenticity of this data and are independent from the Company.
Dr. Mark King, PhD, FGC, PGeo, of Groundwater Insight, Inc., is a qualified person (QP) as defined by NI 43-101. Dr. King has extensive experience in salar environments and has been a QP on many lithium brine projects. Dr. King is independent from the Company and has reviewed and approved the technical information mentioned in this press release. A Technical Report prepared in accordance with NI 43-101 in support of the resource estimate will be filed on SEDAR (www.sedar.com) and on the Company’s website (www.alphalithium.com) within 45 days.
All operations and assets of the Company are in Argentina and are fully managed by Alpha Lithium Argentina SA utilizing local employees and consultants. Since initiating the first steps of an exploration program in 2020, Alpha SA has drilled more than 20 holes, constructed an in-house brine chemistry research laboratory, developed a proprietary Lithium Carbonate production process that successfully works in Tolillar, started construction of a pilot plant, and employed dozens of highly skilled Argentinian technologists, engineers, geologists, geophysicists and chemists, in addition to several students, accounting, managerial and HR professionals. The Company is grateful for, and reliant upon, the significantly large Argentinian team that has proven instrumental at generating value for shareholders.
About Alpha Lithium
Alpha Lithium is a team of industry professionals and experienced stakeholders focused on the development of the Tolillar and Hombre Muerto Salars. In Tolillar, we have assembled 100% ownership of what may be one of Argentina’s last undeveloped lithium salars, encompassing 27,500 hectares (67,954 acres), neighboring multi-billion-dollar lithium players in the heart of the renowned “Lithium Triangle”. In Hombre Muerto, we continue to expand our 5,000+ hectare (12,570 acres) foothold in one of the world’s highest quality, longest producing, lithium salars. Other companies in the area exploring for lithium brines or currently in production include Orocobre Limited, Galaxy Lithium, Allkem Ltd., Livent Corporation, and POSCO in Salar del Hombre Muerto; Orocobre in Salar Olaroz; Eramine SudAmerica S.A. in Salar de Centenario; and Gangfeng and Lithium Americas in Salar de Cauchari.
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