Frontier Lithium Files Ni 43-101 Pre- Feasbility Study FOR Pak Project IN Northern Ontario
FRONTIER LITHIUM FILES NI 43-101 PRE-
FEASBILITY STUDY FOR PAK PROJECT IN
NORTHERN ONTARIO
SUDBURY, ON
,
July 14, 2023
/CNW/ - Frontier Lithium Inc. (TSXV: FL) (FRA: HL2) (OTCQX:
LITOF) ("Frontier" or "the Company"),
Ontario's
leading lithium developer, has filed the "Pre-
Feasibility Study for the PAK Project " technical report (the "
Technical Report
"). As communicated
in a news release dated May 31, 2023, this Technical Report outlines the preliminary feasibility
assessment of the 100% owned PAK Project, located north of
Red Lake
in
Ontario
, and a proposed
hydrometallurgical plant that would convert spodumene concentrate feedstock into lithium chemicals.
The Technical Report confirms the vertically integrated project could be
North America's
largest and
lowest-cost producer of lithium hydroxide, supplying the rapidly growing electric vehicle industry on
the continent.
The Technical Report is effective as of the 31
st
day of
May 2023
, the summary press release is
located at
https://us13.campaign-archive.com/?u=4007c765f4181d2d87e755530&id=cf13300efd
.
The full Technical Report is available on SEDAR (
www.sedar.com
) and can be located at
https://www.sedar.com/DisplayCompanyDocuments.do?lang=EN&issuerNo=00008434
.
Pre-Feasibility Study Highlights: A 24-year total project life, with after-tax pay back of capital
expenditures in less than 5 years following commercial production
Life of Project Cash Flow (unlevered) of US$8.07 billion over 24-year total project life;
Total initial capital expenditure estimate of US$468 million for the technical grade concentrator
and expansion capital of
US$576
million for the chemical grade concentrator and chemical plant
with a contingency of 20% included.
Sustaining Capital of US$90 million ;
Post-tax Net Present Value at an 8% base case discount rate ("NPV
8
") of US$1,739
million and IRR of 24.1%
[see Tables and Figures below]
;
Post-tax net "undiscounted" Cash Flow (before initial capital expenditures) of US$5.98 billion ;
Annual Average EBITDA of US$251.3 million ;
Chemical plant producing 12,520 tonnes of battery-quality Lithium Hydroxide Monohydrate
(LiOH-H
2
O) per year with an average selling price of US$22,000 per tonne and a 7,360 tonnes
of battery-quality Lithium Carbonate per year with an average selling price of US$20,500 per
tonne;
PAK and Spark deposits are open along strike and to depth;
All-in cash costs of US$7,433 per tonne of Lithium Carbonate Equivalent; and
After-Tax Pay Back of Capital Expenditures is 4.9 years after the start of commercial
operations.
In addition, with regard to this particular release, the Company hereby presents the following
sensitivity analysis tables and figures that were hitherto undisclosed. The sensitivity analysis reveals
that the USD:CAD exchange rate and battery grade ("BG") lithium hydroxide price have the most
significant influence on both the Net Present Value ("NPV") and Internal Rate of Return ("IRR")
compared to the other parameters, based on the ranges evaluated. Overall, the NPV and IRR of the
Project is positive over the range of values used for the sensitivity analysis when the sensitivities are
analyzed individually.
Table
1
: Summary of NPV Sensitivity Results
Item
Results
Discount Rate:
8 %
After-Tax Net Present Value (NPV)
@ 8% (CAD M)
-30 %
-20 %
-10 %
0 %
10 %
20 %
30 %
Chemical Grade
1,151
1,521
1,891
2,261
2,631
3,001
3,371
Technical Grade
1,939
2,046
2,154
2,261
2,369
3,662
3,811
Metal Price (USD) Chemical Grade (CG) 6%
2,261
2,261
2,261
2,261
2,261
2,261
2,261
Metal Price (USD) Technical Grade (TG) 7.2%
1,939
2,046
2,154
2,261
2,369
2,476
2,583
Metal Price (USD) BG LiOH
1,544
1,783
2,022
2,261
2,500
2,739
2,979
Metal Price (USD) BG Li
2
CO
3
1,869
2,000
2,130
2,261
2,392
2,523
2,653
Exchange Rate (USD: CAD)
829
1,306
1,784
2,261
2,738
3,216
3,693
Capital Costs
2,580
2,473
2,367
2,261
2,155
2,049
1,943
Sustaining Capital
2,272
2,269
2,265
2,261
2,257
2,254
2,250
Operating Cost
2,640
2,514
2,387
2,261
2,135
2,008
1,882
Figure 1: Sensitivity Analysis of Net Present Value (After-Tax) to Financial Variables (CNW
Group/Frontier Lithium Inc.)
Table
2
: Summary of IRR Sensitivity Results
Item
Results
Discount Rate:
8 %
After-Tax Net Present NPV)
@ 8 % (CAD M)
-30 %
-20 %
-10 %
0 %
10 %
20 %
30 %
Chemical Grade
17.6 %
20.0 %
22.1 %
24.1 %
25.9 %
27.6 %
29.2 %
Technical Grade
21.6 %
22.4 %
23.2 %
24.1 %
24.9 %
25.7 %
26.6 %
Metal Price (USD) Chemical Grade (CG) 6%
24.1 %
24.1 %
24.1 %
24.1 %
24.1 %
24.1 %
24.1 %
Metal Price (USD) Technical Grade (TG) 7.2%
21.6 %
22.4 %
23.2 %
24.1 %
24.9 %
25.7 %
26.6 %
Metal Price (USD) BG LiOH
20.1 %
21.5 %
22.8 %
24.1 %
25.3 %
26.4 %
27.5 %
Metal Price (USD) BG Li
2
CO
3
22.0 %
22.7 %
23.4 %
24.1 %
24.7 %
25.4 %
26.0 %
Exchange Rate (USD:CAD)
14.8 %
18.2 %
21.3 %
24.1 %
26.7 %
29.2 %
31.5 %
Capital Costs
31.2 %
28.4 %
26.1 %
24.1 %
22.4 %
20.9 %
19.5 %
Sustaining Capital
24.2 %
24.1 %
24.1 %
24.1 %
24.1 %
24.0 %
24.0 %
Operating Cost
26.3 %
25.5 %
24.8 %
24.1 %
23.3 %
22.6 %
21.8 %
Figure 2: Sensitivity Analysis of Internal Rate of Return (After-Tax) to Financial Variables (CNW
Group/Frontier Lithium Inc.)
Pre-Feasibility Study Overview
1. LITHIUM CHEMICALS FOR THE NORTH AMERICAN ELECTRIC VEHICLE MARKET
The PAK Project has the ability to produce 7,360 metric tonnes of lithium carbonate and 12,
520
m.t.
of lithium hydroxide annually. This production tonnage meets the specific requirements of
original equipment manufacturers (OEMs), such as automotive companies operating in the North
American electric vehicle market. As the electric vehicle market continues to evolve and expand,
the ability to adapt and meet changing customer demands becomes crucial. The lithium
chemicals to be produced by Frontier Lithium will be tailored to the needs of the industry,
supporting the growth of electric vehicles manufacturing in the region and building in optionality
for the future demand profiles through adjustments in production capacity and product mix to
align with future market trends and customer preferences.
2. A PHASED APPROACH
The development of the PAK project and hydromet chemical plant will be completed in phases
to allow for efficient resource allocation, to minimize upfront capital expenditure, and de-risk
project execution. The first phase will focus on the production of spodumene concentrate to
generate revenue and support the concurrent development of necessary infrastructure to build
the proposed mine-to-lithium hydroxide chemical plant facility. Implementing a phased approach
also enables a more streamlined and controlled project development process, enabling a
thorough understanding of the resource base and an optimization of the refining process in
advance of chemical plant construction. This approach ensures that the subsequent refinery
build-up is well-informed, efficient, and aligned with market demand.
3. GROWING REGIONAL DEMAND
The North American electric vehicle market is experiencing significant growth, with strong
commitments of over CAD$25 billion to build Ontario battery capacity by 2030. This strong
regional growth provides a favorable market environment for the lithium project. The project can
capitalize on its strategic North American location, the growing demand for electric vehicles and
the need for lithium chemicals to support battery production.
The commitments to build Ontario battery manufacturing capacity indicate a long-term future in
sustainable transportation and the development of the electric vehicle ecosystem. By supplying
locally produced lithium chemicals, the project can contribute to the regional supply chain,
reduce dependence on imports, and strengthen the overall resilience and competitiveness of the
North American electric vehicle market.
4. OPPORTUNITIES FOR FURTHER UPSIDE
The project offers opportunities for further upside through the potential conversion of additional
mineral resource to mineral reserves. The PFS reserve calculation includes only one-third of the
identified resources. None of the 32.4 million tonne of inferred mineral resources were included
in the PFS mineral reserves. This indicates significant exploration potential and the possibility of
scaling the project.
Frontier has a strong track record in resource exploration and development, and the continued
exploration efforts within the PAK Lithium Project could uncover additional mineral resources.
The potential to tap into additional resources ensures the project will be responsive to future
market demands and supports long-term sustainability.
Due Diligence
All scientific and technical information in this release has been reviewed and approved by
Todd
McCracken
, P.Geo., Director – Mining & Geology –
Central Canada
, BBA E&C Inc., the qualified
person (QP) and
Garth Drever
, P.Geo., VP Exploration for Frontier Lithium Inc. the qualified person
(QP) under the definitions established by National Instrument 43-101. Under Frontier's QA/QC
procedures, all drilling was completed by Chenier Drilling Ltd. of
Val Caron, ON
using thin-walled
BTW drill rods (4.2 cm core diameter) and a Reflex ACT III oriented core system. Using the Reflex
system, the drill core was oriented and marked as it was retrieved at the drill. The core was boxed
and delivered to the Frontier core shack where it was examined, geologically logged and marked for
sampling. The core was photographed prior to sampling. Using a rock saw, the marked sample
intervals were halved with one halve bagged for analysis. Sample blanks along with lithium, rubidium
and cesium certified reference material was routinely inserted into the sample stream in accordance
with industry recommended practices. Field duplicate samples were also taken in accordance with
industry recommended practices. The samples were placed in poly sample bags and transported to
Red Lake
by Frontier employees and then shipped to AGAT Laboratories Ltd. (AGAT) in
Mississauga, ON
for quantitative multi-element analysis. AGAT is an ISO accredited laboratory. The
core is stored on site at the Pakeagama Lake exploration camp.
About Frontier Lithium
Frontier Lithium is a preproduction business with an objective to become a strategic domestic
supplier of spodumene concentrates for industrial users as well as battery-grade lithium hydroxide
and other chemicals to the growing electric vehicle and energy storage markets in
North America
.
The Company maintains the largest land position and resource in a premium lithium mineral district
located in
Ontario's
Great Lakes region.
About the PAK Lithium Project
The PAK lithium project contains
North America's
highest-grade lithium resource and is the second
largest in
North America
by size. The project encompasses close to 27,000 hectares and remains
largely unexplored; however, since 2013, the company has delineated two premium spodumene-
bearing lithium deposits (PAK and Spark), located 2.3 kilometres apart. Exploration is continuing on
the project through two other spodumene- bearing discoveries: the Bolt pegmatite (located between
the PAK and Spark deposits), as well as the Pennock pegmatite (25 kilometres northwest of PAK
deposit within the project claims). A 2023 Pre-Feasbility Study "National Instrument 43-101
Technical Report PFS PAK Lithium Project" by BBA E&C Inc., delivered post-tax NPV
(8)
of
US$1.74
billion
and IRR of 24.1% as per the press release disseminated on
May 31, 2023
, and was filed on
Sedar.com.
Forward-looking statements
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in
the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of
this news release. This news release includes certain statements that may be deemed "forward-
looking statements". All statements in this release, other than statements of historical fact constitute
forward-looking statements. Forward looking statements contained in this news release include, but
are not limited to, statements with respect to: estimated mineral resources, estimated capital costs
to construct mine facilities, estimated operating costs, the duration of payback periods, estimated
amounts of future production, estimated cash flows, net present value (NPV) , and statements that
address future production, reserve potential, exploration drilling, exploitation activities and events or
developments that the Company expects.
Although the Company believes the expectations expressed in such forward-looking statements are
based on reasonable assumptions, such statements are not guarantees of future performance and
actual results may differ materially from those expressed in the forward-looking statements.
Forward-looking statements involve inherent risks and uncertainties. Risk factors that could cause
actual results to differ materially from those in forward looking statements include: market prices for
commodities, increases in capital or operating costs, construction risks, availability of infrastructure
including roads, regulatory and permitting risks, exploitation and exploration successes, continued
availability of capital and financing, financing costs, and general economic, market or business
conditions. Investors are cautioned that any such statements are not guarantees of future
performance and those actual results or developments may differ materially from those projected in
the forward-looking statements. For more information on the Company, Investors should review the
Company's registered filings available at sedar.com.
SOURCE
Frontier Lithium Inc.
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%SEDAR: 00008434E
For further information:
Bora Ugurgel, Senior Manager, Investor Relations, 2736 Belisle Drive Val
Caron, ON. P3N 1B3 CANADA, T. +001 705.897.7622, F. +001 705.897.7618
CO: Frontier Lithium Inc.
CNW 11:05e 17-JUL-23