E3 Metals (TSXV: ETMC) announced on Monday the results of a preliminary economic assessment (PEA) on its Clearwater lithium project, outlining an estimated production of 20,000 tonnes of battery-quality lithium hydroxide per year over a 20-year period.
The Clearwater resource area is located below surface in the depleted oil reservoirs of the Leduc Formation in south-central Alberta, which are full of lithium-enriched brine. The project area, totaling more than 250,000 acres, contains one of the largest lithium resources in the industry, E3 Metals says.
Over its project life, Clearwater would produce 400,000 tonnes of lithium hydroxide, leaving room for expansion across the resource area and in the adjacent Exshaw and Rocky resource areas.
The project has a pre-tax NPV of $1.1 billion at an 8% discount rate and an IRR of 32%. Initial capital expenditure is estimated at $602 million, inclusive of both direct and indirect capital costs and $79.8 million in contingency.
“E3 Metals is very encouraged by the results of this preliminary economic assessment that incorporates a significant amount of data and work completed over the past few years to develop both the processes and
technology,” CEO Chris Doornbos said in a press release.
Based on geological data available from oil and gas operations, it is expected that lithium grade is consistent throughout the Clearwater resource area and that a series of wells, drilled specifically for the production of brine, would be capable of delivering 3,300 m³/day per well.
At an average grade of 74.6 mg/L lithium, the project will move just over 128,000 m³/day of brine, with additional well production capacity in excess of this.
To extract lithium from the brine, the company will use its proprietary direct lithium extraction (DLE) process, which produces a highly
concentrated lithium solution with a low level of impurities.
In September 2019, E3 Metals partnered with US-based lithium producer Livent Corp (NYSE : LTHM) to assist in the development of its DLE process. The joint development agreement has Livent contributing up to $5.5 million to fund this development and the pilot plant construction and operation.
Meanwhile, E3 has also updated the inferred mineral resource estimate for the Clearwater resource area to 410,000 tonnes of elemental lithium. This represents an increase of 14% over the previous estiamte and equates to 2.2 million tonnes of lithium carbonate equivalent (LCE).
Shares of E3 Metals surged 41.8% to an all-time high at Monday’s market open. The Calgary-based lithium explorer has a market capitalization of C$42.9 million.