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Piedmont Lithium Limited 31.10.2019

 

Piedmont Lithium Limited (ASX: PLL; NASDAQ: PLL) (“Piedmont” or “Company”) is pleased to present its September 2019 quarterly report. Highlights during and subsequent to the quarter were:

 

-          Completed an updated Scoping Study for the fully-integrated Project, which was managed by independent consultants, Primero Group Limited, and delivered outstanding results including:

-          a 25-year mine life and compelling economics including an NPV of US$1.45 billion and an after-tax IRR of 34%, due to attractive capital and operating costs;

-          a chemical plant producing 22,700tpa of lithium hydroxide supported by an open pit mine and concentrator producing 160,000tpa of 6% spodumene concentrate; and

-          by-product quartz (86,000tpa), feldspar (125,000tpa), and mica (13,000tpa) providing credits to the cost of lithium production;

-          In response to strong interest from prospective lithium hydroxide customers, the Company has decided to accelerate development of its lithium chemical plant by compressing its project timeline into a single-stage, effectively accelerating chemical plant development by one year while deferring the mine/concentrator construction start date by one year, resulting in integrated operations from day one.

-          Completed PFS-level metallurgical test work demonstrating high quality spodumene concentrate product with a grade above 6.0% Li2O, iron oxide below 1.0%, and low impurities from representative samples using a combination of Dense Medium Separation (“DMS”) and flotation technology;

-          Continued the 25,000-meter Phase 4 drill program, where a total of 103 holes have been completed to date for a total of 17,187 meters;

-          Completed Mineral Resource estimates and bench-scale metallurgical testwork for by-product quartz, feldspar and mica as by-products of spodumene concentrate from the Project. The Mineral Resource estimates were prepared by independent consultants, CSA Global Pty Ltd;

-          Continued numerous preliminary off-take, financing and strategic conversations, including companies from the lithium, mining, chemicals, battery, automotive and private equity sectors;

-          Completed an institutional placement of 145 million shares at A$0.145 per share to raise gross proceeds of A$21 million, led by cornerstone investor, Fidelity International (“Fidelity”) and the Company’s largest shareholder, AustralianSuper.

 

Next steps:

 

-          Complete permitting to commence mining and processing operations at the Project;

-          Commence permitting for the chemical plant in Q4 2019;

-          Commence lithium hydroxide testwork in Q4 2019;

-          Complete pre-feasibility study (“PFS”) for the chemical plant in Q2 2020;

-          Continue offtake discussions for lithium hydroxide with participants in the global battery supply chain; and

-          Continue to evaluate strategic partnering options.

 

For further information, contact:

 

Keith D. Phillips

President & CEO

T: +1 973 809 0505

E: keith@piedmontlithium.com

 

Anastasios (Taso) Arima

Executive Director

T: +1 347 899 1522

E: taso@piedmontlithium.com

 

Project Overview

 

Piedmont Lithium Limited (ASX: PLL; NASDAQ: PLL) holds a 100% interest in the Piedmont Lithium Project (“Project”) located within the TSB and along trend to the Hallman Beam and Kings Mountain mines, which historically provided most of the western world’s lithium between the 1950s and the 1980s.  The TSB has been described as one of the largest lithium regions in the world and is located approximately 25 miles west of Charlotte, North Carolina.

 

 

Figure 1: Piedmont Lithium Project located within the TSB

 

In August 2019 the Company published an updated Scoping Study for an integrated lithium hydroxide business, which featured a 25-year project life, NPV8 of US$1.45 billion, a US$3,105 per tonne lithium hydroxide cash operating cost, and a US$199 per tonne spodumene concentrate cash operating cost.

 

Expanded Scoping Study

 

During the quarter, the Company announced the results of its updated Scoping Study (“Scoping Study”) for its vertically integrated Piedmont Lithium Project located within the Carolina TSB in North Carolina, USA. This updated Scoping Study incorporates the expanded Mineral Resource update published in June 2019 which has extended the overall project life to 25 years.

 

The Project includes a lithium hydroxide chemical plant (“Chemical Plant”) supplied with spodumene concentrate from an open pit mine and concentrator (“Mine” or “Mine/Concentrator”).  The Project has compelling projected economics due to attractive capital and operating costs, long mine life, significant by-product credits, short transportation distances, minimal royalties and low corporate income taxes.

 

The Scoping Study includes a steady-state 22,700 tonnes per year (“t/y”) lithium hydroxide (“LiOH”) Chemical Plant supported by a Mine/Concentrator producing 160,000t/y of 6% Li2O spodumene concentrate (“Concentrate” or “SC6.0”).  By-products quartz, feldspar, and mica will provide credits to the cost of lithium production. 

 

The Scoping Study is based on the updated Mineral Resource Estimate for the Piedmont Lithium Project reported in June 2019, of 27.9Mt at a grade of 1.11% Li2O and the By-Product Mineral Resource Estimates comprising 7.4Mt of quartz, 11.1Mt of feldspar and 1.1Mt of mica reported in July 2019.

 

Highlights of the Scoping Study are as follows:

 

-          Integrated project to produce 22,700t/y of LiOH;

-          25-year project life with 2 years of concentrate-only sales and 23 years of integrated operations;

-          More than 100% increase in life-of-project LiOH production compared with prior studies;

-          1st quartile operating costs:

-          Lithium hydroxide cash costs of US$3,105/t (AISC of US$3,565/t);

-          Spodumene concentrate cash costs of US$199/t (AISC of US$238/t);

-          Exceptional project economics:

-          NPV8% of US$1.45B;

-          After-tax IRR of 34%;

-          Steady-state annual average EBITDA of US$298M;

-          Mine/Concentrator engineering and metallurgical testwork completed to PFS-level; and

-          Conventional technology selection in all project aspects.

 

First-Quartile Operating Costs

 

The integrated Piedmont project is projected to have an average life of project all-in sustaining cost (“AISC”) of approximately $3,565/t, including royalties and net of by-product credits, positioning Piedmont as the industry’s lowest-cost producer as reflected in the 2028 lithium hydroxide cost curve[i] (see Figure 2).

 

 

Figure 2: Lithium Hydroxide 2028 Cost Curve (Source – Roskill Lithium Cost Service)

 

Please follow the link to view entire original news in English language:

https://www.asx.com.au/asxpdf/20191031/pdf/44b3ckr2zdgrdh.pdf

 

Comparison to Prior Studies

 

In comparison to the prior Scoping Study published in September 2018, every year of additional project life is a year of ‘integrated operation’, resulting in higher levels of cash flow than in the early ‘concentrate only’ years. 

 

Life-of-project LiOH production has thus more than doubled vs. the prior study, and EBITDA and NPV have correspondingly increased significantly.  The project IRR has declined largely due to a more conservative assumption about the timing of initial capital spending and production ramp-up at the Mine/Concentrator. 

 

Operating costs have remained in the first quartile after detailed scrutiny at a PFS-level, while capital expenditures at the Mine/Concentrator have increased by ~$38M to reflect the increased scale of the Company’s land position and more rigorous assessment of the Project’s infrastructure requirements.

 

Table 1: Updated Scoping Study Comparative Results

Unit

2019 Study

2018 Study

% Change

Mineral Resource Estimate

Mt

27.9Mt

@ 1.11% Li2O

16.2Mt

@ 1.12% Li2O

72%

Project Life

years

25

13

92%

LOM Lithium Hydroxide Produced

kt

489

216

126%

LOM Spodumene Concentrate Produced

kt

3,810

1,960

94%

After-Tax Net Present Value (NPV8)

US$M

$1,447

$888

63%

Average Steady State EBITDA

US$M/y

$298

$235

27%

Internal Rate of Return (IRR)

%

34

46

-26%

Initial Capex – Integrated Project

US$M

512

470

9%

Lithium Hydroxide Cash Costs

US$/t

3,105

3,112

-

 

Scoping Study Results

 

The Scoping Study contemplates a 25-year project life, with the downstream lithium hydroxide chemical plant commencing in year 3 of mining operations.  The ramp up period for Chemical Plant operations is estimated to achieve nameplate capacity after a 3 year ramp up period.  The mining production target is approximately 25.6Mt at an average run of mine grade of 1.11% Li2O (undiluted) over the 25-year project life.

 

The following table provides a summary of production and cost figures for the integrated project.

 

Table 2: Piedmont Lithium Project – LOM Integrated Project

Unit

Estimated Value

PHYSICAL – MINE/CONCENTRATOR

Mine life

years

25

Steady-state annual spodumene concentrate production

t/y

160,000

LOM spodumene concentrate production

t

3,805,000

LOM quartz by-product production

t

1,920,000

LOM feldspar by-product production

t

2,795,000

LOM mica by-product production

t

275,000

LOM feed grade (excluding dilution)

%

1.11

LOM average concentrate grade

%

6.0

LOM average process recovery

%

85

LOM average strip ratio

waste:ore

10.4:1

PHYSICAL – LITHIUM CHEMICAL PLANT

Steady-state annual lithium hydroxide production

t/y

22,700

LOM lithium hydroxide production

t

489,000

LOM concentrate supplied from Piedmont mining operations

t

3,100,000

Chemical Plant life

years

23

Commencement of lithium hydroxide chemical production

year

3

OPERATING AND CAPITAL COSTS – INTEGRATED PROJECT

Average LiOH production cash costs using self-supplied concentrate

US$/t

$3,105

Mine/Concentrator – Direct development capital

US$M

$106.2

Mine/Concentrator – Owner’s costs

US$M

$11.3

Mine/Concentrator – Land acquisition costs

US$M

$28.3

Mine/Concentrator – Contingency

US$M

$22.1

Mine/Concentrator – Total initial capex

US$M

$167.9

Mine/Concentrator – Sustaining and deferred capital

US$M

$147.9

Mine/Concentrator – Working Capital

US$M

$20.0

Chemical Plant - Direct development capital

US$M

$252.6

Chemical Plant – Owner’s costs

US$M

$12.1

Chemical Plant – Contingency

US$M

$79.4

Chemical Plant – Total initial capex

US$M

$344.1

Chemical Plant – Sustaining and deferred capital

US$M

$86.5

FINANCIAL PERFORMANCE – INTEGRATED PROJECT – LIFE OF PROJECT

Annual steady state EBITDA

US$M/y

$240-$340

Annual steady state after-tax cash flow

US$M/y

$195-$260

Net operating cash flow after tax

US$M

$5,370

Free cash flow after capital costs

US$M

$4,630

After tax Net Present Value (NPV) @ 8% discount rate

US$M

$1,447

After tax Internal Rate of Return (IRR)

%

34

 

Phase 4 Drilling Program

 

To date, 103 exploration holes have been completed totaling 17,187 meters as part of the Company’s 25,000-meter Phase 4 drill program at the Project. Table 4 below outlines the details for the Phase 4 program.

 

Table 4:  Phase 4 Drill Program Details

Property

Holes Completed

Meters Completed

Holes - Reported

Core

79

13,397

78

Central

24

3,790

15

Total

103

17,187

93

 

Separately, the Company has drilled 6 sterilization holes totaling 925m on the proposed concentrator and waste rock stockpile sites.  Assays are pending for those 6 holes.

 

Metallurgical Test Work

 

During the quarter, Piedmont announced positive results from pre-feasibility study (“PFS”) level metallurgical test work conducted on composite samples of ore from the Project performed at SGS testing laboratories in Lakefield, Ontario.

 

Dense Medium Separation (“DMS”) and flotation Locked-Cycle Tests (“LCT”) test work results showed high quality spodumene concentrate product with a grade above 6.0% Li2O, iron oxide below 1.0%, and low impurities from composite samples.  Piedmont test results compare favorably in several quality categories with the reported shipments of three emerging Australian spodumene producers.

 

Table 6:  Results of Dense Medium Separation + Locked Cycle Flotation Test Results (Composite Sample 1)

Sample

Feed Grade Li2O (%)

Concentrate Grade Li2O (%)

Fe2O3 (%)

Na2O (%)

K2O (%)

CaO+ MgO +

MnO (%)

P2O5 (%)

Piedmont Composite Sample 1

1.11

6.35

0.93

0.63

0.49

0.96

0.32

Australian Producer 1

NR

6.00

1.20

NR

NR

NR

NR

Australian Producer 2

NR

5.90

1.50

NR

NR

NR

NR

Australian Producer 3

NR

6.10

0.61

0.80

0.76

0.79

0.30

NR: Not Reported

 

The composite samples were prepared to approximate the average grade of the Project’s ore body.  Overall lithium recovery during testwork for the preferred flowsheet was 77% at a grade of 6.35% Li2O. Simulations based on the testwork results support an overall plant design recovery of 85% when targeting a 6.0% Li2O spodumene concentrate product.  Further optimization will be undertaken in a future feasibility level pilot testwork program.

 

The Company’s forthcoming Scoping Study update will incorporate the updated flow sheet developed during this test work program. The benefit of incorporating DMS technology into the flow sheet will be reduced operating costs and accelerated ramp-up.

 

Figure 3 shows photographs of the coarse and fine DMS concentrates produced using the preferred process flow diagram.  Piedmont spodumene concentrate is generally light green to white colored.

 

 

 

Figure 3.  Coarse and fine final DMS concentrates produced from Piedmont composite samples

 

Based on the results of composite DMS and locked cycle flotation testwork the preferred process flow block diagram for the Project is shown in Figure 4.

 

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Figure 4.  Potential concentrator block diagram showing dense medium and flotation circuits

 

Corporate

 

Placement

 

During the quarter, the Company successfully completed an institutional placement of 145 million shares at an issue price of A$0.145 per share to institutional investors to raise gross proceeds of A$21 million (“Placement”).

 

The Placement was led by cornerstone investor, Fidelity International (“Fidelity”), a global asset manager, and the Company’s largest shareholder, AustralianSuper, the largest industry super fund in Australia. The remaining Placement shares were issued to a number of high-quality Australian and Asian institutions, including some existing shareholders and others new to the Piedmont story.

 

Strategic Discussions

 

Piedmont has been engaged in numerous preliminary off-take, financing and strategic conversations over the past several months.  Interested parties are of a global nature, and include companies from the lithium, mining, chemicals, battery, automotive and private equity sectors. 

 

Exploration Interests

 

As at September 30, 2019, the Company owns or has entered into exclusive option agreements or land acquisition agreements with local landowners, which upon exercise, allow the Company to purchase (or in some cases long-term lease) approximately 2,279 acres of surface property and the associated mineral rights from the private landowners. During the quarter, the Company entered into exclusive option agreements and/or land acquisition agreements with local landowners for an additional approximately 72 acres of surface property and the associated mineral rights from the private landowners.

 

Forward Looking Statements

 

This announcement may include forward-looking statements. These forward-looking statements are based on the Company’s expectations and beliefs concerning future events. Forward looking statements are necessarily subject to risks, uncertainties and other factors, many of which are outside the control of the Company, which could cause actual results to differ materially from such statements. The Company makes no undertaking to subsequently update or revise the forward-looking statements made in this announcement, to reflect the circumstances or events after the date of that announcement.

 

Cautionary Note to United States Investors Concerning Estimates of Measured, Indicated and Inferred Resources

 

The Project’s Core Property Mineral Resource of 25.1Mt @ 1.13% Li2O comprises Indicated Mineral Resources of 12.5Mt @ 1.13% Li2O and Inferred Mineral Resources of 12.6Mt @ 1.04% Li2O.  The Central Property Mineral Resource of 2.80Mt @ 1.34% Li2O comprises Indicated Mineral Resources of 1.41Mt @ 1.38% Li2O and 1.39Mt @ 1.29% Li2O.

 

The information contained in this announcement has been prepared in accordance with the requirements of the securities laws in effect in Australia, which differ from the requirements of U.S. securities laws. The terms "mineral resource", "measured mineral resource", "indicated mineral resource" and "inferred mineral resource" are Australian terms defined in accordance with the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the “JORC Code”).  However, these terms are not defined in Industry Guide 7 ("SEC Industry Guide 7") under the U.S. Securities Act of 1933, as amended (the "U.S. Securities Act"), and are normally not permitted to be used in reports and filings with the U.S. Securities and Exchange Commission (“SEC”). Accordingly, information contained herein that describes Piedmont’s mineral deposits may not be comparable to similar information made public by U.S. companies subject to reporting and disclosure requirements under the U.S. federal securities laws and the rules and regulations thereunder. U.S. investors are urged to consider closely the disclosure in Piedmont’s Form 20-F, a copy of which may be obtained from Piedmont or from the EDGAR system on the SEC’s website at http://www.sec.gov/.

 

Competent Persons Statements

 

The information in this report that relates to Exploration Results, Exploration Targets, Mineral Resources, Metallurgical Testwork Results, Process Design, Process Plant Capital Costs, and Process Plant Operating Costs, Mining Engineering and Mining Schedule was extracted from our ASX announcement dated August 7, 2019 entitled “Updated Scoping Study Extends Project Life and Enhances Exceptional Economics” which is available to view on the Company’s website at www.piedmontlithium.com.

 

Piedmont confirms that: a) it is not aware of any new information or data that materially affects the information included in the original ASX announcements; b) all material assumptions and technical parameters underpinning Mineral Resources, Exploration Targets, Production Targets, and related forecast financial information derived from Production Targets included in the original ASX announcements continue to apply and have not materially changed; and c) the form and context in which the relevant Competent Persons’ findings are presented in this report have not been materially modified from the original ASX announcements.

 

To view entire original news including Appendix 5B, please follow this link:

https://www.asx.com.au/asxpdf/20191031/pdf/44b3ckr2zdgrdh.pdf

 


[i] AISC includes all direct and indirect operating costs including feedstock costs (internal AISC or external supply), refining, on-site G&A costs and selling expenses. It does not include costs associated with corporate-level G&A

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