Piedmont Lithium Inc‘s (ASX:PLL) (NASDAQ:PLL) (OTCMKTS:PDDTF) updated scoping study has confirmed the integrated Carolina Lithium Project in the US will be one of the world’s largest and lowest-cost sustainable producers of lithium hydroxide.
The latest report is based on a mineral resource estimate, updated in April 2021, indicating that the project contains 39.2 million tonnes of resource at 1.09% lithium hydroxide.
A by-product estimate, released earlier this week, suggests 7.4 million tonnes of quartz, 11.1 million tonnes of feldspar and 1.1 million tonnes of mica are also contained within the project.
Based on a 20-year project lifespan, the scoping study estimates Carolina Lithium can produce 30,000 tonnes of lithium hydroxide every year – up from the projected 22,000 tonnes tabled in a 2020 scoping study.
Emphasis on sustainability
Piedmont Lithium president and CEO Keith Phillips said the company was “exceedingly pleased” with the updated scoping study results.
“The economics of our project continue to impress, but I and particularly proud of the project’s sustainability profile.
“Customers, investors and neighbours are increasingly focused on businesses that are ‘doing things the right way’.
“It is critical that raw material supply chains do not detract from the overall sustainability of our transition to electric vehicles.
“Our project will have a far lower environmental footprint than alternative suppliers and we expect that to position Piedmont well with all stakeholders.”
To enhance Carolina Lithium’s sustainability profile, Piedmont is working with a solar developer to construct a solar farm that can supply all of the company’s electricity needs.
Piedmont also intends to utilise electric equipment where possible, especially in ore transportation – an activity that is particularly reliant on fossil fuel.
Piedmont’s North Carolina lithium asset, situated in Gaston County, is estimated to bring in US$401 million every year in earnings before interest, taxes, depreciation and amortisation (EBITDA). In the last scoping study, the project was forecast to bring in US$218 million in EBITDA annually.
A table indicating the change in scoping study values between 2020 and 2021.
Carolina Lithium’s after-tax net present value (NPV) has also jumped considerably, now at US$1.92 billion. It’s almost double the US$1.07 billion after-tax NPV tabled in the previous study.
The US project carries a 31% after-tax internal rate of return and a 2.9-year payback period, with lithium hydroxide production to set the developer back US$2,943 per tonne.
Overall, the estimated initial capital costs required to bring the project into operation total US$836.6 million.
This is up from the US$545 million tabled in 2020, and Piedmont chalks the jump up to changes in the project’s scale, its environmental, social and governance initiatives and inflation adjustments.
Change in estimated project capital cost between 2020 and 2021.
Now, with a revitalised resource estimate and scoping study in tow, Piedmont will focus on preparing the Carolina Lithium project’s definitive feasibility study.
The company is also targeting a final investment decision in December 2021.
From there, Piedmont hopes to kick off design engineering and construction at Carolina in 2022, with mechanical completion slated for October the following year.
If all goes to plan, the project will undergo a commissioning start in December 2023.
Piedmont intends to broaden its leadership team and investigate partnership opportunities to ready the Carolina Lithium Project for production to progress its plans.
Phillips said: “As we move forward to complete a definitive feasibility study for Carolina Lithium later in 2021, Piedmont has engaged Evercore and JP Morgan as financial advisors to evaluate potential strategic partnering and financing options for its North Carolina project.
“Given the project’s unique position as the only American spodumene project, with world-class scale, economics and sustainability, we expect strategic interest to be robust.”