Rock Tech Lithium (TSXV: RCK) released a prefeasibility study for its Georgia Lake lithium project in northern Ontario showing lower resource grades and a reduced net present value, while dropping a plan to build a refinery.
The updated indicated resource comes to 10.6 million tonnes grading 0.88% lithium oxide, inferred resources of 4.2 million tonnes grading at 1% lithium oxide, the company announced on Wednesday. The study also included a first probable mineral reserve for Georgia Lake estimated at 7.3 million tonnes grading 0.82% lithium oxide.
That compared with a previous combined measured and indicated resource of 6.6 million tonnes grading 1.16% lithium oxide and an inferred resource of 6.7 million tonnes grading 1.16% lithium oxide in a preliminary economic assessment (PEA) released last year.
Georgia Lake, planned as an open-pit and underground mining project, is located 160 km northeast of Thunder Bay.
The Vancouver-based explorer’s new study projected an after-tax net present value of $146 million with a discount rate of 8% compared with $230 million at the same discount rate estimated in the PEA. However, the new study forecast an after-tax internal rate of return of 36% (based on a spodumene concentrate price of $1,500 per tonne) versus 20% in the PEA.
The new study supported the construction and operation of a 1-million-tonne-per-year concentrator at Georgia Lake. The project would cost $192.2 million to build, with sustaining capital costs of $98.5 million including closure after a nine-year mine life. The prefeasibility forecast average annual spodumene concentrate production of 100,000 tonnes at a cost of $719 per tonne.
But the study didn’t consider a 15,000-tonne-per-year converter for refining some of the output as had been envisioned in the PEA. Instead, the company said the output might be refined at its proposed converter in Guben, Germany, at a company owned and operated converter in North America or by selling the output to third-party refiners.
“These results support the integration of Georgia Lake with the downstream conversion industry, where we have been building strong partnerships and extensive know-how,” Rock Tech chief executive officer Dirk Harbecke said in the release. “The encouraging results also demonstrate that we are well positioned to explore potential fields of collaboration in the North American and European electric vehicle supply chain.”
The company intends to proceed with a feasibility study and make a production decision next year, it said. Last month it agreed to a five-year, C$2-billion deal with Mercedes-Benz to supply 10,000 tonnes per year of battery-grade lithium hydroxide from the German plant to the automaker.
The explorer envisions open pit mining for the first four years and underground mining for the final five years at a rate of 2,800 tonnes per day. The process plant is to include crushing, grinding, density media separation and flotation to produce a combined 6% lithium oxide.
Estimates between the new study and the PEA differ mainly because the converter was omitted from calculations, and there was more confidence in engineering details, lower mineral resources and higher cost projections, the company said.
Rock Tech is among companies in the rapidly growing field of battery metals as global demand for lithium needed for a transition to clean energy is expected to balloon six times by 2050 from current amounts, according to US government forecasts.
Georgia Lake is on a list of some 70 Canadian projects that might be eligible for funding not just from Ottawa’s own C$3.8 billion critical minerals strategy announced in April, but also from the US Department of Defense in an allied partnership to thwart Chinese domination of the market. China controls some 80% of critical minerals output, according to BMO Capital.
Shares in Rock Tech fell 0.7% to trade at C$3 mid-morning in Toronto, valuing the company at C$254.1 million ($190.5m).