Vamos Argentina!

Vamos Argentina!

Minera Exar SA – Cauchari-Olaroz Project

On March 28, 2016 Lithium Americas announced a strategic investment by SQM to advance the Cauchari-Olaroz project in Jujuy, Argentina.
Sociedad Química y Minera de Chile S.A (SQM) and Lithium Americas created a Joint Venture with equal shareholder interests. Development plan work commenced immediately after the announcement to advance Cauchari-Olaroz project with target production of 50,000 tpa of LCE.  The Joint Venture brings competitive advantages that include technical and commercial expertise, local relationships, proximity of Atacama and Cauchari-Olaroz, track record and experience of successful joint ventures and collaboration.

Location

Jujuy, Argentina

Property Size

~70,000 ha

Project Details

Cauchari-Olaroz is located in Jujuy Province in north-west Argentina. The Project is situated in the Salar de Olaroz and Salar de Cauchari, adjacent to Orocobre Ltd.’s Olaroz facility, which has been in production since 2015. The Project is approximately 270 km east of SQM’s Salar de Atacama brine operation, accessible via an international highway. Cauchari-Olaroz is well serviced by nearby infrastructure including major paved highways, a national and international rail link which connects to the port of Antofagasta in Chile, a high-voltage power grid, and a gas pipeline.

The production process involves two distinct steps and is generally consistent with other established brine operations. The first step uses a solar evaporation process to concentrate lithium in the brine and precipitate competing salts in large-scale ponds. The ponds at Cauchari-Olaroz are based on SQM’s pond design criteria used in their existing Atacama operation and involve the use of shallow ponds where the precipitated salt is annually harvested from the flat pond base. The second step uses the processing facilities that transform the concentrated lithium brine into battery-grade lithium carbonate while ensuring the removal of impurities from the end-product.

Permitting Status

Minera Exar has an approved Environmental Impact Statement (“EIS”) permit issued by the Province of Jujuy on July 11, 2012.  Minera Exar’s permitting status was recently affirmed by a letter from the Secretary of Mining and Hydrocarbons of the Province of Jujuy on March 21, 2017 confirming that Cauchari-Olaroz has the necessary permits to commence construction and operate in accordance with the EIS.

Stage 1 DFS – March 2017

Minera Exar is pursuing a development plan at Cauchari-Olaroz for production capacity of 50,000 tonnes per annum (“tpa”) of battery-grade lithium carbonate (“Li2CO3”) in two stages, with each stage consisting of 25,000 tpa of Li2CO3.  The first stage definitive feasibility study (“Stage 1 DFS”) covers the first stage (“Stage 1”) and the plant for Stage 1 has been engineered to integrate production from the second stage (“Stage 2”). No estimated financial results or reserve estimate associated with Stage 2 are included in the Stage 1 DFS.

The results of the Stage 1 DFS are provided in Table 1 on a 100% equity project basis:

*All figures in US dollars and on a 100% project equity basis unless otherwise noted.

Table 1: Cauchari-Olaroz Stage 1 DFS Results

Stage 1 DFS
Lithium Carbonate Price $12,000/t Li2CO3
Average Annual Production 25,000 tpa Li2CO3
Expected Project Life 40 years
Project capital costs $425 million
Operating costs $2,495/t Li2CO3
Average annual EBITDA $233 million
Pre-tax NPV 10% discount $1,266 million
After-tax NPV 10% discount $803 million
Pre-tax IRR 34.0%
After-tax IRR 28.4%
Payback period 3 years, 5 months

Operating Costs

The operating and capital cost estimates have been reviewed and confirmed by Andeburg Consulting Services Inc. (“ACSI”) in accordance with NI 43-101 Standards of Disclosure for Mineral Projects.  The Project cost estimates are based on an exchange rate of 16:1 Argentine pesos to the U.S. dollar. The average operating costs were calculated for a facility with production of 25,000 tpa of battery-grade Li2CO3, and are presented below in Table 2. Additional work through engineering refinements and contract negotiation will continue in an effort to reduce the operating expenditures.

Table 2: Operating Costs

Category Operating Cost Li2CO3 % of Total
Reagents $991 40%
Pond Harvesting & Tailing Management $345 14%
Maintenance $210 8%
Electric Power $187 7%
Labour $166 7%
Product Transportation $135 5%
Catering, Security & Third Party Services $97 4%
Natural Gas $85 3%
G&A $76 3%
Diesel $69 3%
Consumables $51 2%
Water Treatment System $38 2%
Bus-In / Bus-Out Transportation $35 1%
E&C $10 <1%
Total Operating Costs $2,495 100%

Capital Costs

The construction capital cost estimates are based on current Argentine costs for labor and materials. The Stage 1 construction capital cost is estimated at $425 million inclusive of a 15% contingency. Construction and commissioning will take approximately two years. Detailed capital cost estimates are presented in Table 3 and are exclusive of VAT and working capital. During construction, VAT and working capital are expected to total $51.1 million and $12.5 million, respectively. The VAT is refundable with an average repayment period of 2 years.

Table 3: Capital Costs

Category Capital Costs ($ millions)
Direct Costs
Evaporation ponds $129
Lithium carbonate plant $121
On site infrastructure $26
Offsite infrastructure $41
Brine extraction wells and piping $15
Total Direct Cost $333
Total Indirect Cost $37
Contingency (15%) $55
Total Capital Costs $425

The sustaining capital requirement is estimated at an average of $4.7 million per year (approximately $190/t Li2CO3 produced).

Lithium Americas will be responsible for contributing 50% of capital expenditures for development of the project, amounting to approximately $212.5 million.

Project Economics

The financial results are derived from inputs based on an annual production schedule included in the Stage 1 DFS. A sensitivity analysis on the unlevered economic results for the 25,000 tpa of Li2CO3 over a 40-year operating period are summarized in Table 4 and 5 and reported on a 100% equity project basis.

Table 4: After-Tax NPV and IRR Sensitivity Analysis

Discount Rate

(%)

Low Case NPV

$10,000/t Li2CO3 ($ millions)

Base Case NPV

$12,000/t Li2CO3 ($ millions)

High Case NPV

$14,000/t Li2CO3 ($ millions)

6% $1,204 $1,609 $2,015
8% $807 $1,113 $1,420
10% $564 $803 $1,042
IRR (%) 23.5% 28.4% 33.0%

Table 5: EBITDA Sensitivity Analysis

Lithium Carbonate Price ($/t Li2CO3) Average Annual EBITDA ($ millions)
$6,000 $86
$8,000 $135
$10,000 $184
$12,000 $233
$14,000 $282
$16,000 $331

Economic Benefits to Jujuy Province and Argentina

The Stage 1 DFS demonstrates that Cauchari-Olaroz will provide substantial economic benefits to Argentina at the local, provincial, and national levels, including:

  • -Direct employment by Minera Exar of at least 800 people during the 2-year construction period;
  • -Direct employment by Minera Exar of at least 260 people in permanent positions during the 40 year operations;
  • -Several hundred indirect jobs with suppliers of products and services to support mine operations;
  • -Annual payments to the government totaling approximately $63 million in the form of income tax, corporate tax, and royalties (based on a price of $12,000/t of Li2CO3);
  • -Training and skills development programs aimed at maximizing local employment at the Project;
  • -Expected improvement of local and regional infrastructure; and
  • -Continuation and future expansion of existing community investment programs, small business development, and support of cultural development.

Lithium Mineral Reserve Summary (effective date March 5, 2017)

Description Brine (m3) Average Lithium Concentration (mgéL) Lithium Carbonate Equivalent (tonnes) Lithium
Proven Reserves (years 1-5)1,2,3,4 4.93 x 107 712 187,149 35,159
Probable Reserves (years 6-40)1,2,3,4 3.54 x 108 695 1,311,982 246,474

Lithium Mineral Resource Summary (effective date July 11, 2012)

Cut-off 354 mg/l
Description Brine (m3) Average Lithium Concentration (mgéL) Lithium Carbonate Equivalent (tonnes) Lithium
Measured Resources2,3,4,5,6 9.14 x 108 630 3,039,000 576,000
Indicated Resources2,3,4,5,6 2.89 x 109 570 8,713,000 1,650,000
Notes:
  1. 1.Ratios of lithium to other metals include: K:Li of 8.2, Mg:Li of 2.4, B:Li of 1.6, SO4:Li of 28.5.
  2. 2.LCE is calculated based the following conversion factor: Mass of LCE = 5.323 x Mass of lithium metal
  3. 3.The conversion is direct and does not account for estimated processing losses.
  4. 4.The values in the columns on Lithium Metal and Lithium Carbonate Equivalent above are expressed as total contained metals.
  5. 5.Mineral Resources have a cut-off grade of 354 mg/L of lithium.
  6. 6.Mineral Resources are not mineral reserves and do not have demonstrated economic viability. There is no certainty that all of any part of the mineral resource will be converted to mineral reserves.
For additional details about the Cauchari-Olaroz Project, please refer to the technical report entitled “Feasibility Study – Reserve Estimation and Lithium Carbonate and Potash Production at the Cauchari-Olaroz Salars, Jujuy Province, Argentina”, effective date July 11, 2012.

 

Construction Timetable
    The construction timetable is targeted to follow:

  • – H1 2017 – Site preparation and camp construction
    – H2 2017 – Pond construction and wellfield installation commences
    – 2018 – Plant construction; offsite infrastructure
    – 2019 – Commissioning and first production
Infrastructure
  • – Natural gas pipeline 50 km
    – Paved highway
    – Deep sea port 550 km
    – Ready access to fresh water

Salt-Lake-Brine-550x301

Technical Report

Cauchari-Olaroz Technical Report

Sign up for the latest news and updates


CASL Compliant Opt-In Group
By clicking submit, you consent to receive electronic messages from Lithium Americas Corp, including news releases, financial documents, invitations to programs and events and other notifications.

I want to receive email(s) from your company!