Rodinia Lithium Inc. ("Rodinia" or the "Company") (TSX VENTURE:RM)(OTCQX:RDNAF)
is pleased to announce the results of the Preliminary Economic Assessment
("PEA") completed on its 100% owned Salar de Diablillos lithium brine project
("Diablillos" or "Salar") located in Salta Province, Argentina. The PEA outlines
an operation producing 15,000 tonnes lithium carbonate ("LC") per year and
approximately 51,000 tonnes of KCl ("potash") per year, projecting a 34%
internal rate of return ("IRR") pre-tax and a US$561 million pre-tax net present
value ("NPV") at an 8% discount rate. The PEA also outlines Rodinia's available
option to increase production to 25,000 tonnes LC and 85,000 tonnes potash per
year. This increased production scenario generates a much higher pre-tax NPV
estimate of US$964 million, along with a pre-tax IRR of 36%. Rodinia continues
to advance the technical and processing aspects of the Salar and will commence a
feasibility study once the PEA report is finalized.
The PEA was completed by SRK Consulting (U.S.) Inc ("SRK") located in Lakewood,
Colorado and is effective as of November 1, 2011. The brine resource model and
resource estimate were provided to SRK by Paula Larrondo, Principal Geologist,
P.Geo., of AMEC Internacional Ingenieria y Construccion Limitada, Santiago,
Chile, Qualified Person ("QP") for the Company's NI 43-101 compliant recoverable
lithium brine resource estimate. The complete PEA report will be filed on SEDAR
and Rodinia's website within 45 days of this news release.
The table below outlines the key findings of the PEA:
Preliminary Economic Assessment Highlights (All currency is US$, pre-tax)
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15,000 tpa LC 25,000 tpa LC
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NPV at 8% discount rate (pre-tax) $ 561 million $ 964 million
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IRR (pre-tax) 34% 36%
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Total Initial Capital Costs $ 144 million $ 220 million
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Operating Costs per tonne LC(i) $ 1,519 $ 1,486
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Operating Costs per tonne LC with
potash and boric acid credits $ (703) $ (762)
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Operating Costs per tonne KCl(i) $ 170 $ 160
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Average annual free cash flow(i) $ 89 million $ 150 million
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Mine life 20+ 20+
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Annual production rate of potash(i) 51,000 85,000
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Annual production rate of boric
acid(i) 18,000 31,000
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Projected commencement of production 2015 2015
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Years to payback 1.6 years 1.5 years
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(i) Averaged using years of full production, discounting ramp up period.
The PEA is preliminary in nature, includes inferred brine resources that are
considered too speculative geologically to have the economic considerations
applied to them that would enable them to be categorized as mineral reserves,
and there is no certainty that the estimates of the PEA will be realized.
William Randall, President & CEO of Rodinia, commented "This PEA is the product
of quality work completed on schedule by Rodinia's expert staff and consultants.
The PEA demonstrates that Diablillos has the potential to be a low cost producer
of high purity, battery-grade, lithium carbonate, potash and boric acid using
conventional, environmentally friendly methods to harvest the salts. Due to the
favourable geochemistry of the brines, our potash and boric acid production is
such that revenue from the sale of these products will result in credits in
excess of US$3,500/tonne of LC, more than covering our total anticipated
production costs. As long as prices for potash and boric acid remain at today's
levels or higher, Diablillos has the potential to remain price competitive down
to historic lows for lithium carbonate pricing."
Financial Sensitivity at Various Discount Rates (US$ millions over 20
years)(i)
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10,000 tpa 15,000 tpa 20,000 tpa 25,000 tpa
Discount rateOutput LC LC LC LC
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6% 462 716 971 1,225
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8% 361 561 764 964
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10% 283 442 604 765
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12% 223 350 481 610
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(i) At an average LC price of US$5,500 per tonne. All figures are pre-tax.
Financial Sensitivity at Various LC Prices (US$ millions over 20 years)(i)
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PriceOutput 10,000 tpa LC 15,000 tpa LC 20,000 tpa LC 25,000 tpa LC
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US$5,000 322 503 686 868
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US$5,500 361 561 764 964
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US$6,000 399 619 841 1,060
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US$6,500 438 677 918 1,157
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(i) At an 8% discount. All figures are pre-tax.
The Salar has favourable economic potential across a range of discount rates,
annual production rates, and long-term LC prices. In all cases the Salar shows
robust economics consisting of large NPV values and significant positive cash
flows, which position it favourably relative to other PEA reports issued for
salars at a similar stage of development in the Puna region of South America.
Will Randall elaborated on the preliminary economics of the Salar, "We are
pleased with the results and initial conclusions of this PEA. While the
assessment estimates robust economics with first quartile capital and operating
costs, we gained considerable insight to further improve on these already
favourable numbers. We will look to validate these opportunities during the
Feasibility Study phase, which will commence once the PEA report is finalized."
Economic Parameters and Assumptions
The PEA presents a base case operation producing 15,000 tonnes of battery grade
lithium carbonate per annum and 25,000 tonnes of battery grade lithium carbonate
in the optional production scenario. First production levels of 9,000 tpa LC
(15,000 tpa LC for optional production) are expected to be reached after three
years of mine construction and pre-production, with full production levels
reached two years later. Allowing a further year for the completion of a
Feasibility Study, the PEA contemplates initial production by 2015. Management
will begin to evaluate methods in which feasibility level engineering and mine
construction can be combined to expedite this production timeline. In
particular, management will focus on construction of pilot ponds that will
subsequently be employed in the commercial production circuit.
Details and Assumptions
Total initial capital expenditures (including contingency) are estimated at
US$144 million to produce 15,000 tpa LC and US$220 million to produce 25,000 tpa
LC. The initial capital cost estimate excludes closure costs and sustaining
capital. Sustaining capital requirements for years 1 to 20 of operation (15,000
tpa LC) were estimated to be approximately US$80 million including wellfield
maintenance and replacement.
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15,000 tpa LC 25,000 tpa LC
Summary of Estimated Initial Capital Costs (US$ millions) (US$ millions)
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Wells & Ponds
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Wellfield 8 11
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Ponds 57 94
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Other (wellfield & pond) 11 16
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Contingency (20%) 15 24
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LC Crude Plant & Refinery
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Plants 17 25
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Other (carbonate plant) 9 12
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Contingency (20%) 5 7
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Potash Floatation Plant
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Plant 19 26
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Contingency (20%) 4 5
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TOTAL 144 220
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Mine construction for a 15,000 tpa LC production facility requires the
installation of 23 production wells, approximately 7 square kilometers of
evaporation ponds for the production of lithium carbonate, potash and boric
acid. At 25,000 tpa LC, the requirements increase to 53 production wells and
11.5 square kilometers. While the wells, evaporation ponds and potash plant are
designed to be constructed on the Diablillos property, the current design
contemplates constructing the boric acid and lithium carbonate plants off-site
at an industrial park in Pocitos. Cost analysis performed on the various
options, taking into account capital costs requirements and operating costs,
indicated constructing the lithium carbonate and boric acid facilities where
access, natural gas, and power are readily available presented considerable cost
savings across the board.
A conservative pumping rate of 11 litres per second was employed for this study
based on field test work. It is important to note that numerical groundwater
flow and solute transport modeling, constraining well drawdown and accounting
for dilution impacts on brine chemistry, has demonstrated that higher extraction
rates can be achieved from the sand and gravel aquifers predominant at
Diablillos. Once further tests are completed on production size wells management
expects the estimated capital expenditures required for well construction to be
significantly reduced. Pond construction considers an initial unlined pond,
where brine is brought to saturation, followed by a series of subsequent lined
ponds. There is natural clay occurring on or near Diablillos that will allow for
construction of the initial ponds, offering cost savings over lined ponds. Any
brine losses experienced in this unlined pond go straight back into the
underlying Salar sediments and can be potentially recovered at a later date.
The total average operating costs over 20 years are estimated to be negative at
(US$703) per tonne LC once the potash and boric acid credits are applied, based
on the following:
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Summary of Estimated Operating (US$/t
Costs (US$/t LC) (US$/t KCl) Boric Acid)
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Wells & Ponds (total) 408 46 85
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Brine transportation 104 12 22
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Reagents 242 27 51
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Energy 49 6 10
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Labour 10 1 2
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Other 4 0 1
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LC Crude Plant & Refinery (total) 972 - 203
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Reagents 791 - 165
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Energy 136 - 28
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Labour 37 - 8
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Other 9 - 2
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Potash Flotation Plant (total) - 73 -
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Reagent - 1 -
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Energy - 64 -
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Labour - 7 -
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Other - 1 -
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G&A 82 9 17
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Transport 56 42 42
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TOTAL 1,519 170 348
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TOTAL LC w/ credits & royalty
deductions (703)
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Well and pond costs as well as G&A costs were assigned to all three products
according to the percentage of revenue generated by each commodity. Potash plant
costs were assigned exclusively to potash and LC plant costs were distributed
between lithium carbonate and boric acid, as both of these are produced in the
same plant complex. By far the largest expense is the cost of reagents, and in
particular soda ash and lime, followed by transportation costs.
Consistent with practice in the industry, this PEA has been prepared with an
engineering accuracy of +/- 30%. As the project progresses through the
feasibility stage, advancement in the detail of engineering will improve the
accuracy to approximately +/-15%. The PEA used commodity pricing provided by
Rodinia that was assembled from various studies and sources, including industry
leading reports and forecasts provided to the Company through its relationship
with Forbes & Manhattan Inc., access to industry specialists (boric acid), and
generally accepted industry standard pricing based on recently completed studies
similar in nature to this PEA. The PEA assumed long-term commodity prices of
US$5,500 per tonne LC, US$620 per tonne potash, and US$1,150 per tonne boric
acid.
PEA Report
The PEA was prepared in accordance with the guidelines of National Instrument
43-101 by the independent engineering firm SRK Consulting Limited with
contributions from AMEC Internacional y Construccion Limitada ("AMEC") of
Santiago, Chile, and Mr. Robert Cinq-Mars of North Carolina, USA (whose work
experience includes 20 years with FMC Lithium Division as Manager, New Resources
and Process Development). SRK is a leading full-service engineering and
consulting firm. The final PEA technical report will be filed on SEDAR within 45
days.
Description of Proposed Operation
The proposed operation for Diablillos will largely make use of conventional
evaporation based processing, similar to those employed at Silver Peak (Nevada,
USA) and Atacama (Chile). The brine is to be pumped from subterranean aquifers
by a series of production wells to an initial unlined evaporation pond. The
proposed lithium recovery process is a combination of solar evaporation steps,
in-field brine treatment, by product potash ("KCl") and boric acid recovery and
chemical processing to produce lithium carbonate. The process results in a high
lithium recovery of approximately 65%. The process contemplates a series of six
ponds from largest to smallest, where the largest is used to bring brine to
saturation and is designed to be unlined reducing the capital cost of pond
construction. Sylvinite is to be harvested from the third pond, which is
proposed to be subsequently upgraded through a conventional floatation process
to muriate of potash. Brine extracted from the final pond will have a
concentration of approximately 12% lithium chloride and will be transported to
the treatment facility in Pocitos, where boric acid and lithium carbonate are
produced. For further details please refer to the press release dated October
11, 2011.
Groundwater and Solute Transport Modeling
SRK evaluated potential brine extraction for Diablillos to produce lithium
carbonate, potash and boric acid. This modeling was based on the resource
estimate conducted previously by AMEC (please refer to the press release dated
April 11, 2011), and on work completed more recently by Rodinia and SRK; in
particular the completion of pumping tests and additional drilling. The work was
completed based on the development of 3-D numerical groundwater and solute
transport models and included the assessment of:
-- The number of extraction wells needed to meet production targets, their
locations, total pumping rates and the subsequent drawdown in
surrounding areas
-- Expected changes in lithium, potassium and boron concentrations within
the extracted brine over time given possible surface water dilution and
dilution from surrounding areas containing lower concentrations of these
components
SRK completed the numerical modeling using MODFLOW-2005 (groundwater flow) and
MT3DMS (solute transport) finite-difference codes that are supported by Visual
MODFLOW software (SWS, 2010).
Analyst and Shareholder Conference Call
Rodinia will host a conference call at 8:30 AM Eastern Standard Time on Tuesday,
November 8, 2011 to discuss the PEA results. To participate in the call please
dial the following:
International: +1 (416) 340-2217
Toll Free North America: 1-866-696-5910
Participant Code: 4326413
To register and listen to the webcast of the call, please go to Rodinia's
website at www.rodinialithium.com.
Qualified Person
The PEA was prepared under the supervision of Mr. Terry H. Braun, with SRK. Mr.
Braun relied on the independent QP contributions of Ms. Paula Larrondo (brine
resource), Mr. Bob Cinq-Mars (process design) and Dr. Vladimir Ugorets (brine
extraction modeling). Mr. Braun is an independent Qualified Person as defined by
NI 43-101 and Mr. Braun is independent of Rodinia. Mr. Braun has reviewed and is
responsible for the technical information contained in this news release.
About Rodinia Lithium Inc.:
Rodinia Lithium Inc. is a Canadian mineral exploration and development company
with a primary focus on Lithium exploration and development in North and South
America. The Company is also actively exploring the commercialization of a
significant Potash co-product that is expected to be recoverable through the
lithium harvesting process.
Rodinia's Salar de Diablillos lithium-brine project in Salta, Argentina,
contains a recoverable resource of 2.82 million tonnes lithium carbonate
equivalent and 11.27 million tonnes potassium chloride equivalent. The project
contains a recoverable inferred resource of 952,553,000 m3 grading 556 mg/L
lithium and 6,206 mg/L potassium. Throughout 2011, Rodinia will focus on
continuing to develop the Diablillos project by completing additional drilling
and advancing through scoping study.
The Company also holds 100% mineral rights to approximately 70,000 acres in
Nevada's lithium-rich Clayton Valley in Esmeralda County, and is currently in
the process of assessing the size, quality and processing alternatives of this
deposit. The Clayton Valley project is located in the only known lithium-brine
bearing salt lake in North America, and looks to represent the only new source
for domestic lithium carbonate supply.
The Projects are supervised by Ray Spanjers, Rodinia's Manager of Exploration.
Mr. Spanjers is considered a Qualified Person, as defined by National Instrument
43-101.
Please visit the Company's web site at www.rodinialithium.com or write us at
info@rodinialithium.com.
Cautionary Notes
Except for statements of historical fact contained herein, the information in
this press release constitutes "forward-looking information" within the meaning
of Canadian securities law. Such forward-looking information may be identified
by words such as "plans", "proposes", "estimates", "intends", "expects",
"believes", "may", "will" and include without limitation, statements regarding
the impact of the drill program at the Diablillos property and results of such
drill program; the potential of the Diablillos property; anticipated timing with
respect to the completion of a preliminary economic assessment, the potential
results and timetable for further exploration with respect to the Clayton Valley
project and the Diablillos property, the timetable with respect to future
acquisitions and exploration developments at Clayton Valley and Diablillos,
timetable for further exploration, analysis and development, title disputes or
claims; and governmental approvals and regulation. There can be no assurance
that such statements will prove to be accurate; actual results and future events
could differ materially from such statements. Factors that could cause actual
results to differ materially include, among others, metal prices, competition,
financing risks, acquisition risks, risks inherent in the mining industry, and
regulatory risks. Most of these factors are outside the control of the Company.
Investors are cautioned not to put undue reliance on forward-looking
information. Except as otherwise required by applicable securities statutes or
regulation, the Company expressly disclaims any intent or obligation to update
publicly forward-looking information, whether as a result of new information,
future events or otherwise.
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