Piedmont Lithium: Updated Scoping Study Improves Project Economics

(firmenpresse) - Piedmont Lithium: Updated Scoping Study Improves Project Economics

Piedmont Lithium Limited (Piedmont or Company) is pleased to report the results of the Companys updated Scoping Study for its vertically-integrated Piedmont Lithium Project (Project) located within the Carolina Tin-Spodumene Belt in North Carolina, USA (TSB). The Project includes a lithium hydroxide chemical plant (Chemical Plant) supplied with spodumene concentrate from an open pit mine and concentrator (Mine/Concentrator).

The Project has compelling projected economics due to attractive capital and operating costs, significant by-product credits, short transportation distances, minimal royalties and low corporate income taxes.

This updated Scoping Study incorporates the production of by-product quartz, feldspar and mica. The addition of these by-product credits to the Projects economics are made possible by Piedmonts location within the industrial heartland of the mid-Atlantic United States. The benefits which by-product credits convey onto the Project will ensure Piedmonts highly competitive cost position within the growing lithium chemical industry.

Updated Scoping Study Parameters - Cautionary Statements

The updated Scoping Study referred to in this announcement
has been undertaken to determine the potential viability
of an open pit mine,

spodumene concentrator and lithium hydroxide plant
constructed in North Carolina, USA and to reach a decision
to proceed with more definitive studies. The Scoping Study
has been prepared to an accuracy level of ±35%. The
results should not be considered a profit forecast or
production forecast.



The updated Scoping Study is a preliminary technical and
economic study of the potential viability of the
vertically-integrated Piedmont Lithium Project. In
accordance with the ASX Listing Rules, the Company advises

it is based on low-level technical and economic
assessments that are not sufficient to support the
estimation of

Ore Reserves. Further evaluation work including infill
drilling and appropriate studies
are
required before Piedmont will be able to estimate any Ore
Reserves
or to provide any assurance of an economic development
case.



Approximately 55% of the total production targets are in
the Indicated

Mineral Resource category with 45% in the Inferred Mineral
Resource
category. 100% of the production targets in years 1-2 and
70% of the production
target
s in years 3-6 are in the Indicated Mineral Resource categor
y.
The Company has concluded that it has reasonable grounds
for disclosing a production target which includes an
amount of Inferred material. However, there is a low level
of geological confidence associated with Inferred

Mineral Resources and there is no certainty that further
exploration work (including infill drilling) on the
Piedmont deposit will result in the determination of
additional Indicated

Mineral Resources or that the production target itself will
be realised.



The updated Scoping Study is based on the material
assumptions outlined elsewhere in this announcement. These
include assumptions about the availability of funding.
While Piedmont considers all the material assumptions to
be based on reasonable grounds, there is no certainty that
they will prove to be correct or that the range of
outcomes indicated by the Scoping Study will be achieved.



To achieve the range outcomes indicated in the updated Scopi
ng Study, additional funding will likely be required.
Investors should note that there is no certainty that
Piedmont will be able to raise funding when needed. It is
also possible that such funding may only be available on
terms that dilute or otherwise affect the value of the
Piedmonts existing shares. It is also possible that
Piedmont could pursue other value realisation strategies
such as sale, partial sale, or joint venture of the
Project. If it does, this could materially reduce
Piedmonts proportionate ownership of the Project.



The Company has concluded it has a reasonable basis for
providing the

forward-looking statements included in this announcement
and believes that it has a reasonable basis to expect it
will be able to fund the development of the Project. Given
the uncertainties involved, investors should not make any
investment decisions based solely on the results of the
Scoping
Study.

EXECUTIVE SUMMARY

Piedmont is pleased to report the results of the updated Scoping Study for its vertically integrated lithium hydroxide chemical project located in the Carolina Tin-Spodumene Belt in North Carolina, USA. The updated Scoping Study includes a 22,700 tonne per year Chemical Plant supported by a Mine/Concentrator producing 170,000 tonnes per year (tpy) of 6% Li2O spodumene concentrate. By-products quartz (99,000 tpy), feldspar (125,000 tpy), and mica (15,500 tpy) will provide credits to the cost of lithium production.
http://www.irw-press.at/prcom/images/messages/2018/44573/180913 - Scoping Study Update_FINALPRcom.001.jpeg


- Integrated project to produce 22,700 tonnes per year of lithium hydroxide
- Initial 13-year mine life with 2 years of spodumene concentrate sales and 11 years of integrated operations
- Staged development to minimise up-front capital requirements and equity dilution
- Stage 1 initial capex of US$109mm for the Mine/Concentrator and by-product circuits (excluding contingency)
- Stage 2 capex for Chemical Plant funded largely by internal cash flow
- Estimated 1st quartile spodumene concentrate costs of US$193/t and lithium hydroxide costs of US$3,112/t, both net of by-product credits and inclusive of royalties
- Conventional technology selection in all project aspects
- Steady-state annual EBITDA of US$225-245mm and after-tax cash flow of US$180-190mm
- Estimated NPV8% of US$888mm and after-tax IRR of 46% with ~2-year payback
- Potential mine and project life extension provide the opportunity for further economic upside

The updated Scoping Study contemplates a staged development approach to minimise start-up risk and up-front capital requirements, with revenue from open-market spodumene concentrate and by-product sales in the Projects initial years helping defray capital requirements for the Chemical Plant.

The Scoping Study demonstrates the compelling economics of the prospective integrated Project, highlighted by low operating costs, high after-tax margins and strong free cash flow.
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First-Quartile Operating Costs

The integrated Piedmont project is projected to have an average life of project cash operating cost of approximately US$3,112 per tonne including royalties and net of by-product credits, positioning Piedmont as one of the industrys lowest-cost producer as reflected in the 2023 lithium hydroxide cost curve in Figure 1.
http://www.irw-press.at/prcom/images/messages/2018/44573/180913 - Scoping Study Update_FINALPRcom.003.png


Figure 1 - Lithium hydroxide 2023 cost curve (Source - Roskill)

Low operating costs and the application of by-product credits to Piedmonts expected spodumene concentrate cash costs places Piedmont as one of the lowest cost producers of spodumene concentrate as reflected in the 2023 spodumene concentrate cost curve in Figure 2.
http://www.irw-press.at/prcom/images/messages/2018/44573/180913 - Scoping Study Update_FINALPRcom.004.png


Figure 2 - Spodumene concentrate 2023 cost curve (Source - Roskill)

Attractive After-Tax Margins and Free Cash Flow

Low operating costs, low royalties, and low corporate tax rates potentially allow Piedmont to achieve after-tax margins approaching US$9,500 per tonne, or approximately 68%. The Project generates an estimated US$9,270 per tonne of free cash flow during life-of-mine operations after construction of the Chemical Plant.
http://www.irw-press.at/prcom/images/messages/2018/44573/180913 - Scoping Study Update_FINALPRcom.005.png


Figure 3 - After tax free cash flow on lithium hydroxide sales during life-of-mine operations

Similarly, when evaluated on a stand-alone basis, the spodumene concentrate business delivers exceptional margins through low operating costs, by-product credits, favourable tax treatment, and low royalties (Figure 4).
http://www.irw-press.at/prcom/images/messages/2018/44573/180913 - Scoping Study Update_FINALPRcom.006.png


Figure 4 - After tax free cash flow on spodumene concentrate sales as a stand-alone business

Staged Development Approach Minimises Equity Dilution

The Scoping Study contemplates a staged development approach to minimise start-up risk and up-front capital requirements, with revenue from open-market sales of spodumene and by-product concentrates in the Projects initial years helping defray capital requirements for the Chemical Plant. After-tax free cash flow of approximately US$163 million is expected to be generated prior to completion of construction of the Chemical Plant, and an additional US$158 million of operating cash flow from concentrate and by-product sales is expected to be generated during the Chemical Plants ramp-up.

The establishment of positive cash flow from spodumene and by-product concentrate sales will position Piedmont to attract financing on terms not available to greenfield developments, including access to the US corporate bond market. This is expected to lead to lower costs of capital when financing the Chemical Plant, and to allow Piedmont to minimise equity dilution to the Companys shareholders.

Conclusions and Next Steps

The Scoping Study demonstrates the integrated Projects strong commercial potential, centred on very low operating and capital costs, and the staged development puts Piedmont in a strong position to engage in discussions around future financing of the Project, including with prospective strategic and off-take partners.

Piedmont will now move forward with a Pre-Feasibility Study (PFS) targeted for completion in 2019. The Company will undertake the following work in developing the PFS:

- Additional drilling on the Core property to potentially extend mine and project life by converting the previously announced current Exploration Target into a Mineral Resource;
- Metallurgical studies including the evaluation of the potential for a Dense Medium Separation (DMS) before the flotation circuit to further enhance operating costs in the Concentrator;
- Continued expansion of the Companys land position in the TSB with a focus on areas of high mineral prospectivity;
- Continued permitting activities related to the Companys Core property; and
- Ongoing discussions with potential strategic partners.

Keith D. Phillips, President and Chief Executive Officer, said, We are very pleased with the results of the updated Scoping Study, which incorporate the substantial economic benefits of recovering and selling the by-products quartz, feldspar and mica that is inherent in our ore body. The economic benefit of developing an integrated lithium chemical business in North Carolina, USA is clear, driven by the exceptional infrastructure and human resource advantages of our location, as well as the competitive royalty and tax regime offered in the United States. We will now focus on continued growth in our land position and resource base, advancing toward permit submittals in late-2018, and refining project economics as part of a pre-feasibility study targeted for Q2 2019.

For further information, contact:

Keith D. Phillips
President & CEO
T: +1 973 809 0505
E: kphillips(at)piedmontlithium.com

Anastasios (Taso) Arima
Executive Director
T: +1 347 899 1522
E: tarima(at)piedmontlithium.com

To view entire original news, please follow the link:
https://www.asx.com.au/asxpdf/20180913/pdf/43y92nzplbq3wj.pdf

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Datum: 13.09.2018 - 13:46 Uhr
Sprache: Deutsch
News-ID 580975
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