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Financial Viability Confirmed for North American Lithium Operation and Authier Lithium Project

Apr 17, 2023

North American lithium producer Sayona Mining Limited’s definitive feasibility study report (DFS) confirmed the long term financial and technical viability of its flagship North American Lithium operation and the nearby Authier Lithium Project. NAL and Authier are part of Sayona Québec, owned 75% by Sayona Mining and 25% by Piedmont Lithium Inc. 

This DFS replaces the information provided in the May 2022 PFS.

The estimated, pre‐tax net present value (NPV) of A$2.2 billion (C$2B) (at 8% discount rate) (C$1 = A$1.11) represents a substantial rise in project NPV compared with NAL's PFS (refer ASX release 23 May 2022). The operation is expected to generate estimated total net revenue of A$7.6 billion with earnings before interest, taxes, depreciation and amortization (EBITDA) of A$3.7 billion.

Improvements in estimated project financial returns have been driven by the accelerated restart program, increased estimated head grade of 1.04% Lithium2O, high initial recovery rate (70.2%) and expanded Life of Mine average annual concentrate production of around 190,000t (up 16% compared to the PFS), together with higher spodumene concentrate pricing.

NAL’s production capacity will comprise 226,000 tonnes per annum (TPA) for the next four years until the commencement of downstream operations, subject to joint venture approval.

A strategic review of Mineral Resources and Ore Reserves was undertaken as part of the NAL restart to create opportunities to improve project NPV. This revised Ore Reserve estimate has created the opportunity to improve project economics and has allowed Sayona to enhance its understanding of the mine’s block model.

The revised block model has resulted in a reduction in Ore Reserves and certain Indicated Resources have been reclassified as Inferred based on new model interpretation. While Ore Reserves and Indicated Resources have been reduced or reclassified in the near term, potential exists to convert current Inferred Resources to the Measured and Indicated categories through new drill programs currently underway.

The current LOM has been estimated at 20 years; however, there is high potential for extension of the mine life with a 50,000m drilling campaign scheduled for 2023. The first phase of this program, (16,000m) will primarily target conversions of Inferred resources to Indicated within the current area designated for mining. A component for exploration along the northwest and southeast strike extensions of the NAL deposit is also part of the program.

The DFS financial model treats the acquisition costs and restart capital invested prior to 31 March 2023 as sunk costs for the purposes of calculating financial returns. To date, Sayona Québec has invested C$98M in NAL acquisition costs and C$55M in restart expenses.

NAL’s restart has tracked on schedule and within budget, with the operation already having produced more than 3,000 tonnes of saleable spodumene (lithium) concentrate as of 31 March 2023. The first lithium shipment is expected to occur in July 2023, with Sayona targeting total production between 85,000 and 115,000 tonnes during the first half of fiscal 2024 (refer to ASX release of 17 February 2023).

The positive DFS reaffirmed the Company’s confidence in the long‐term value of the NAL operation.

“This DFS demonstrates the benefits of our hub strategy in Abitibi, with NAL proving to be one of the lowest cost and highest returning investments in the lithium industry,” Sayona’s Managing Director, Brett Lynch said. “We are now in the process of successfully de-risking the NAL operation, which will generate long‐term, sustainable returns for shareholders together with providing new jobs and investment for Québec,” 

“Furthermore, we intend to expand upon this strong foundation as we now approach the move towards downstream processing. Sayona aims to become the first and the only, fully integrated, lowest carbon footprint lithium chemical producer for delivery into North America. Lynch added.

“The growing number of battery and EV investments planned for Québec demonstrate the strategic location of our operation, which benefits from access to sustainable, low‐cost hydropower together with world‐class infrastructure, skilled labour and proximity to key battery markets,” Lynch explained.

The NAL operation will represent the most significant source of hard rock lithium production in North America, boosting Québec’s plans for the development of a local battery sector, from mining to manufacturing.


Image Sayona Map 1

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