ProjectsAuthier Lithium Project
Authier Lithium Project
Sayona Mining acquired 100% of the Authier project in July 2016 for CAD$4 million. The Company’s primary strategy is to focus on completing the studies required to commence the development of the project. Authier is a near-term development project and cash-flow generation opportunity. The Company believes it will create significant share value-uplift potential for shareholders as the project is advanced towards development.
The key attractions of the Authier lithium project, include:
- Advanced, near term development potential – the Company is targeting completion of a Definitive Feasibility Study in early 2018, and first production in 2019 to capitalise on the high price lithium concentrate pricing forecast over the next five years. In parallel, studies on producing a premium value-added lithium carbonate product are progressing.
- Pre-Feasibility Study demonstrating technical and economic viability – PFS completed in February 2017 demonstrating strong investment case for a low capital expenditure and operating cost project selling lithium concentrates. PFS results include pre-tax NPV8 of C$140 million, IRR 39% and payback 2.2 years, based on a start capital expenditure of C$66 million.
- Maiden Ore Reserve – JORC Ore Reserves totalling 10.2Mt @ 1.02% Li20 based on a JORC Mineral Resource of 13.75Mt @ 1.07% Li20 at 0.5% Li20 cut-off grade.
- JORC Resource expanded – In May 2017, based on 4,100 metres of new drilling, the JORC Mineral Resource was expanded to 17.4Mt @ 1.02% Li20.
- PFS optimisation program underway – an updated PFS is being prepared based on the expanded JORC Resource, and metallurgical and geotechnical optimisations programs.
- Simple deposit and processing – resources defined in one spodumene bearing pegmatite based on 20,000 metres of diamond drilling. Deposit amenable to low-cost open pit mining techniques. Processing based on a conventional crush, grind and flotation flowsheet.
- Excellent infrastructure – situated in close proximity to mining support services, low-cost electricity, gas, and road networks to export ports.
The project area comprises 19 mineral claims totalling 653 hectares, and extends 3.4 kilometres in an east-west, and 3.1 kilometres in a north-south direction, respectively. The mineral claims are located over Crown Lands.
The Authier project is situated 45 kilometres northwest of the city of Val d’Or, a major mining service centre in the, Province of Quebec. Val d’Or is located approximately 466 kilometres north-east of Montreal. The project is easily accessed by a rural road network connecting to a national highway a few kilometres east of the project site.
Val d’Or and other nearby cities have experienced mining work forces and other mining related support services. Regional support services, include:
- 5 kilometres by dirt road to a sealed highway connecting to Val d’Or;
- 5 kilometres from an electricity grid supplied by hydro-electric power; and
- 20 kilometres to rail facilities connecting to an export port.
The deposit is hosted in a spodumene-bearing pegmatite intrusion. The deposit is 825 metres long, striking east-west, with an average thickness of 25 metres, minimum 4 metres and maximum 55 metres, dipping at 40 degrees to the north. The current pit optimisation has the mineralisation extending down to 200 metres depth but the deposit remains open in all directions.
Isometric views of the Authier pit with the mineralised envelope on the left from the February 2017 PFS
The project has more than 20,000 metres of diamond drilling in 153 holes. The project was initially drilled between 1991 and 1999, and then by Glen Eagle between 2010 and 2012. Sayona has completed more than 8,000 metres of drilling during 2016 and 2017. Holes were typically drilled perpendicular to the strike of the mineralised pegmatite to provide high confidence in the grade, strike and vertical extensions of the mineralisation. The HQ/NQ size diamond core was halved, 1.5 metre sections were assayed for Li20 content at an ALS laboratory in Vancouver using Inductively Coupled Plasma Mass Spectrometry. The Company has a rigorous quality control process, including routine assaying of standards, duplicates and blanks.
Following the completion of the Phase 2 drilling program in May 2017, the Company announced an expanded, JORC 2012 compliant Mineral Resource estimate, tabulated below. The Measured and Indicated Mineral Resource categories represent 88% of the total Mineral Resource estimate.
Authier JORC Mineral Resources Estimate (0.45% Li2O cut-off grade)
|Category||Tonnes (Mt)||Grades % Li2O||Contained Li2O|
Following the completion a Pre-feasibility Study in February 2017, the Company has adopted a 0.45% Li20 cut-off grade compared to the 0.5% Li20 cut-off used in historical resource estimates.
Drill hole collar location plan, updated resource classification block model, pit contour at 300 m RL (PFS February 2017) and significant intercepts from the 2017 drilling.
The Mineral Resource has been estimated and reported in accordance with the guidelines of the Australasian Code for the Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code 2012). A summary of the estimation methodology and competent person statement is included in this announcement.
The Company believes there is further potential to optimise the main resource area including:
- Infill drilling within the main deposit where there is no resource due to lack of drilling density (shown as block circles on Figure 1), especially in the east and west, and to add the resource base; and
- Converting inferred resources into a higher resource classifications by further higher density drilling (shown as blue on the diagram).
Black circles represent areas where further density of drilling is required to increase the resource. Additionally, some of the blue Inferred Resource areas have the potential to be converted to higher resource categories with further drilling
The mineralisation remains open in all directions (see Figure 2). Currently, the Company is not looking to expand the current Mineral Resource estimate given the current resource provides more than 20 years mine life. However, future target areas to expand the resource could include:
- Testing for further mineralisation in the east and west strike extensions;
- Defining further mineralisation at depth; and
- Assessing the resource potential of Authier North.
Lithium solid showing the location of all the historical drill holes and the potential areas for expansion of the resource in future drilling programs.
Pre-Feasibility Study (completed 2017)
The Pre-Feasibility Study (“PFS”) has been completed to an accuracy of +/-25% and has contributions from a number of leading industry service providers including, SGS Canada and Bumigeme Inc. All of the metallurgical testing has been undertaken at SGS Lakefield. The SGS Lakefield facility has been operating for over 70 years in metallurgical testing and design, and employees have considerable experience in the Canadian lithium industry. Bumigeme Inc is a Canadian firm of consulting engineers based in Montreal, working mainly in the mining and metallurgical sector. Dr Gustavo Delendatti was the Competent Person for the Mineral Resource estimate.
The PFS has confirmed the technical and financial viability of constructing a simple, low-strip ratio, open-cut mining operation and processing facility producing spodumene concentrate. The positive PFS demonstrates the opportunity to create substantial long-term sustainable shareholder value at a low capital cost.
The PFS was based on the November 2016 JORC Mineral Resource outlined below. The JORC Resource was subsequently upgraded in May 2017 following a 4,100 metre diamond drilling program.
Authier JORC Mineral Resources Estimate (0.5% Li2O cut-off grade)
|Category||Tonnes (Mt)||Grades % Li2O||Contained Li2O|
Key outcomes of the PFS include a pre-tax Net Present Value (“NPV”) of C$140 million over an initial 13-year mine life, based on the current Proven and Probable Ore Reserve estimate of 10.2Mt @ 1.02% Li20 at a 0.45% Li20 cut-off grade.
Authier Lithium Project PFS Highlights
|Average Annual Ore Feed to the Plant||tonnes||700,000|
|Annual Average Spodumene Production||tonnes||99,000|
|Life-of-Mine and processing operations||years||13/15|
|Life-of-Mine Strip Ratio||waste to ore||6:1|
|Average Spodumene Price based on 5.75% Li20||US$/tonne||515|
|Development Capital Costs||C$ million||66|
|Total Life of Mine Capital Costs||C$ million||113|
|Total Net Revenue (real terms)||C$ million||978|
|Total Project EBITDA (real terms)||C$ million||449|
|Average Life of Mine Cash Costs (Montreal Port FOB basis)||C$/tonne||367|
|Net Present Value (real terms @ 8% discount rate)||C$ million||140|
|Pre-Tax Internal Rate of Return||%||39|
|Project Payback Period||years||2.2|
|Exchange Rate||CAD : USD||0.76|
The Authier deposit will be mined by open cut methods enhanced by the shallow and thick nature of the mineralisation, allowing spodumene ore to be processed from the commencement of mining. The PFS demonstrated a LOM strip ratio of 6:1 (waste to ore) providing a low mining cost. The Company believes with further drilling it can expand the size of the resource, provide better definition of the orebody, and lower the overall waste to ore ratio.
Bumigeme have designed a concentrator plant to process 700,000 tpa of ore feed using conventional flotation technology suitable for a pegmatite orebody. The plant will produce a 5.75% Li20 concentrate suitable for feedstock to lithium carbonate conversion plants. Further studies will be undertaken to potentially reduce the iron content of the Authier lithium concentrate for sale to the glass or ceramics industries.
The PFS pricing is based on the May 2016 Deutsche Bank Lithium Industry Study and assumes that concentrates are delivered FOB to an export ship at the Port of Montreal. The LOM average price assumption is US$515/tonne for a 5.75% Li20 concentrate. The modelled price for the PFS is a significant discount to the current market and is considered conservative.
Key outcomes of the PFS included the reporting of a maiden Proven and Probable Ore Reserve estimate of 10.2Mt @ 1.02% Li20 at a 0.45% Li20 cut-off grade.
Authier Hydrometallurgical Results
|Category||Tonnes (Mt)||Grades % Li2O||Contained Li2O|
Note: The Ore Reserve estimate is based on the details published in a separate ASX release “Authier JORC Ore Reserve Estimate”, 16 February 2017.
A detailed environmental study was completed for Authier in 2013 by Dessau. The study reviewed available information across a number of disciplines, including geology and soils, hydrogeology, hydrology, air quality and noise, flora and fauna, socio-economic setting and archaeology. Following recent discussions with the environmental authorities, it was recommended that the biological environment species inventory and baseline surface water quality programs be updated given the lengthy period of time since the last survey.
An update of the environmental study commenced in June 2017 aimed at gathering the relevant information about the fauna and the flora with the aim of mitigating the environment risks attributable to the operation which could be considered low. The program, coordinated by SNC-Lavalin, will continue over the second half of 2017 and will focus on the following items:
- Vegetation inventory, including wetlands and species with special status;
- Inventory of fish and fish habitat;
- Inventories of wildlife species with special status; and
- Assessment of surface water quality.
At the social level, a stakeholder survey has been completed and a communication strategy to present the project to the local community and First Nations has been developed.
A community relations program has commenced. The program will address governmental consultation obligations and make sure environmental, social and economic issues to be raised by stakeholders are integrated into the project development. A list of potential constraints to the mining development, both from an objective perspective and based on the consultant’s experience in the area will be prepared. Finally, a working sequence will also be developed in order to start building relationships with relevant stakeholders and rights holders (municipalities, municipality, Abitibiwinni First Nation, neighbours, and land users).
During the quarter, the Company completed an initial hydrometallurgical testing program on Authier lithium concentrates.
The program, performed by SGS Lakefield in Canada, demonstrated that the conversion of Authier lithium concentrate into traditionally extractable beta spodumene (a form of spodumene amenable to further processing) was achievable, at high conversion rates.
Three flotation concentrate samples were transformed from alpha to beta spodumene in a decrepitating kiln. The lithium was the extracted from lithium sulphate through sulphuric acid roasting and then leached with water to be transformed into aqueous lithium sulphate – further purification is required to produce a lithium carbonate end product. Up to 96.8% of the lithium was recovered in the process (Table 1) from a 5.98% Li20 concentrate.
Authier Hydrometallurgical Results
|Lithium Concentrate Grade (% Li2O)||Lithium Extraction (%)||Benchmarked Lithium Concentrate* (%)|
* Theoretical recovery based on concentrate grade from a sample set of other spodumene projects in Canada
The results compare favourably with benchmark data generated from other hard-rock spodumene projects in Canada with similar testing conditions (i.e. decrepitation temperature and time). The testing was performed on concentrates that have been upgraded as part of the Company’s on-going metallurgical optimisation program (see ASX release, Authier Update, 28 June 2017).
The results increase the confidence that battery grade lithium carbonate can be produced from Authier lithium concentrates. The Company has now commissioned an evaluation of the technical and economic viability of building a lithium carbonate and/or hydroxide production conversion facility in Quebec to enhance the Authier project value, and improve the long-term competitive position of the project.
The study is being prepared by Wave International (Wave), a highly experienced resource industry development consulting group with over a decade of experience in the lithium industry. Wave are one of only a handful of consultants globally who have successfully studied, designed and delivered spodumene concentration plants, as well as having successfully delivered studies and detailed design for downstream lithium conversation plants. The experience of Wave and its key personnel includes projects such as James Bay (Canada), Greenbushes, Mt Cattlin and Bald Hill.
The study will assess the alternative processing options, process flow sheet selection, operating and capital cost estimates, financial analysis, and recommendations for the next phase of development.
The Company believes that Quebec is uniquely positioned with a number of significant commercial and market advantages for value-adding concentrates, including:
- High quality infrastructure, including roads, rail, and port access;
- Globally competitive, low-cost gas and electricity prices. Electricity is sourced from renewable energy;
- Skilled, competitive cost labour force;
- Sulphuric acid availability from a copper smelter at Rouyn Noranda, 80 kilometres west of the Authier project site;
- Road and rail transport networks connecting to export ports;
- Supportive government that invests directly into mineral development projects (e.g. Nemaska and North American Lithium); and
- Located in close proximity to the US markets including, the Tesla Giga factory in Nevada, and other planned battery factories in the United States.
In addition, currently all the world’s hard-rock lithium concentrates are imported and processed into value-added products in China. China’s policy incentives for investment into battery manufacturing for electric vehicles and storage systems, and export tax regime for lithium products, is restricting supply of battery raw materials to western battery manufacturers like Korea, Japan and Europe. The Company believes it can be an alternative, stable source of lithium new supply to China.
The study is expected to take between 3 and 4 weeks and compliments to the current metallurgical optimisation program currently underway.
Corporate Head Office
SAYONA MINING LIMITED
+61 7 3369 7058
Suite 68, 283 Given Tce, Paddington QLD 4064
PO Box 1357, Milton QLD 4064