Lithium Chile Announces Pre-Tax NPV of US$3,853,000,000 and Pre-Tax IRR of 42.1% from Pre-Feasibility Study ON Arizaro Project
LITHIUM CHILE ANNOUNCES PRE-TAX NPV OF US$3,853,000,000 AND
PRE-TAX IRR OF 42.1% FROM PRE-FEASIBILITY STUDY
ON ARIZARO PROJECT
TSX Venture Exchange: LITH For Immediate Release
OTC-QB: LTMCF
Results include 20 Year Life Production Rate of 25,000 Tonnes of Battery Grade Lithium Carbonate Per Year
and Upgraded Mineral Resource and Reserve Volumes.
CALGARY, ALBERTA, July 23, 2024 – Lithium Chile Inc . (“Lithium Chile” or the “ Company”) is
pleased to announce the successful completion of the Pre -Feasibility Study ( “PFS”) for its
flagship Arizaro Project, located in Salta, Argentina . The PFS, prepared in accordance with
National Instrument 43 -101 Standards of Disclosure for Mineral Projects (NI 43 -101), outlines
the project's strong economic viability, environmental sustainability, and long-term operational
potential.
HIGHLIGHTS:
• Project Location: Salar de Arizaro, Departamento de los Andes, província de Salta,
Argentina
• Production Capacity: 25,000 tonnes per annum of Battery Grade Lithium Carbonate
(“LCE”).
• A Life-of-Mine (LOM) duration of 20 years.
• Mineral Resource of 4,122,000 tonnes LCE:
o Measured Mineral Resource: 261,000 tonnes LCE
o Indicated Mineral Resource: 2,237,000 tonnes LCE
o Inferred Mineral Resource: 1,624,000 tonnes LCE
• Probable Mineral Reserve of 490,000 tonnes LCE
• Project Economics:
o Pre-tax Net Present Value (“NPV”)8% US$M 3,853
o Average Li2CO3 price of US$ 30,513
o After-tax NPV8% US$M 2,829
o Pre-tax Internal Rate of Return (“IRR”) of 42.1%
o After-tax IRR of 36.3%
o Pre-tax initial capital payback period 2.5 years; after-tax payback 2.7 years
o Initial Capital Cost (“CAPEX”) estimated at US$M 1,055
o Operating Cost (“OPEX”) estimated at $5,457/t LCE.
Building upon the success of the Company’s 2023 Preliminary Economic Assessment (“ PEA”),
the PFS further solidifies the Arizaro Project's position as a leading contender in the race for
sustainable lithium production. The study is the culmination of a year-long, in-depth engineering
and design process, incorporating valuable insights gained from successful 2023 Direct Lithium
Extraction (“DLE”) pilot plant trials and extensive in-house laboratory testing. The PFS confirms
the effectiveness of DLE technology in efficiently extracting lithium chloride from the Arizaro
brine, which is then purified and converted into high-quality lithium carbonate (LI2CO3).
Enhanced Economic Viability: Stronger Returns Driven by Market Conditions and Argentina's
Régimen de Incentivo para las Grandes Inversiones (“RIGI”) Incentives
The Pre -Feasibility Study for the Arizaro Project highlights its strong economic potential,
revealing significantly enhanced pre-tax net present value and internal rate of return. These key
metrics underscore that the Arizaro Project's is a highly profitable and attractive investment
opportunity, as detailed in Table 1.
Metrics or Target 2023 PEA PFS @ PEA Price PFS RIGI
Pre-Tax NPV (8%) (US$M) $1,846 $1,985 $3,853
Post-Tax NPV (8%) (US$M) $1,138 $1,431 $2,829
Pre-tax IRR (%) 29.3% 28.1% 42.1%
After-tax IRR (%) 24.1% 24.4% 36.3%
Post-Tax Payback period (years) 3.6 3.7 2.7
NPV/CAPEX 1.4 1.36 2.68
OPEX 5,197 5,457 5,457
Execution schedule duration (months) - 22 22
Table 1: Key Metrics & Targets
Key factors contributing to the robust economics of the Company’s PFS:
• Favorable Pricing Environment : The PFS benefits from a significantly more favorable
lithium carbonate price environment according to Benchmark Minerals LCE price
forecast compared to the 2023 PEA. The PEA utilized a n average price assumption of
USD $ 21,396 per tonne, while the PFS models a n average price of USD $ 30,513 per
tonne, resulting in a substantially improved economic outlook for the project.
Benchmark Minerals stated in their Q2 2024 report that "Our base case view is that the
emerging deficit will push lithium carbonate prices to a peak in 2030 before prices retreat
to the long -term incentive price of US$29,000/t. These prices will be sufficient to
incentivize new supply to catch up with demand”.
This price forecast reflects a more optimistic view of the future lithium market,
considering factors like growing lithium demand, the higher cost of new supply, and
growing awareness of a potential supply gap.
Figure 1: Lithium Carbonate Price, High, Base and Conservative Case US$/t, Real 2024 (PFS)
Figure 2: Lithium Carbonate Price, High, Base and Conservative case US$/t, Real 2023 (PEA)
• Optimized Project Parameters and RIGI Incentives: The Company’s PFS incorporates
optimizations in project design and operational efficiencies, leading to cost reductions.
Additionally, the potential benefits of Argentina's RIGI program have been factored into
the economic model. The RIGI program offers tax breaks and other incentives for large-
scale mining projects, further enhancing the project's profitability.
Upgraded Mineral Resources and Reserves
The Company’s PFS incorporates, for the first time, a mineral reserve estimate, in addition to
revised and expanded measured, indicated, and inferred mineral resource estimates, further
strengthening the project's foundation.
The PFS reported a maiden measured resource of 261,000 tonnes of LCE, increased the indicated
resource by 33% to 2,237,000 tonnes of LCE, and expanded the inferred resource by 13% to
1,624,000 tonnes of LCE, resulting in a total Mineral Resource of 4,122,000 tonnes of LCE.
Furthermore, the study establishes a Probable Mineral Reserve of 490,000 tonnes LCE at 273
mg/L Li. This significant estimate is underpinned by a comprehensive 3D groundwater flow and
solute transport model, rigorously calibrated using historical data and a long-term pumping test.
The model's accuracy in simulating the aquifer's response to pumping ensures reliable res erve
estimations and projects a 20-year mine life with an annual production of 25,000 tonnes of LCE.
The reserve estimate encompasses factor s such as wellfield design, potential dilution, and
lithium recovery during processing, further solidifying the project's substantial potential and
long-term viability.
Advanced Processing
Extensive pilot-scale testing conducted by various technology suppliers under the supervision of
Lithium Chile and by a qualified person (QP), from Ausenco has confirmed the project's process
flowsheet and the selection of key technologies for the PFS, including DLE. These long-duration
trials have not only confirmed a remarkable 23% reduction in water usage compared to the 2023
PEA but have also played a crucial role in informing the selection of preferred technology
providers for the PFS.
Further, post-DLE analysis has revealed naturally low boron levels in the brine, eliminating the
need for a separate lithium carbonate purification step. This streamlined process, validated by
both pilot testing and vendor selection, eliminates the need for the lithium carbonate
repurification step previously included in the PEA design.
Moving forward, Lithium Chile will continue to collaborate with technology providers to
optimize the process flowsheet and ensure that the final design achieves maximum efficiency
and performance.
Continued Commitment to Shared Value
In parallel with our technical advancements, Lithium Chile has demonstrated a steadfast
commitment to environmental and social stewardship. The Company submitted its
Environmental Impact Assessment (EIA) and baseline study in December 2023, displaying our
dedication to responsible project development.
Lithium Chile shares a core value of generating mutual benefits for both the Company, and the
local communities in which it operates. This commitment is evident in the ongoing engagement
with local stakeholders and the investment in community-focused initiatives. A recent highlight
of these efforts is the "Tolar Grande Sustentable" project, which has successfully introduced
solar cookers, water heaters, and lighting to the community. This project is just one example of
Lithium Chiles broader commitment to supporting sustainable development in the region, with
additional initiatives focused on education, health, and environmental protection. The Company
remains dedicated to fostering positive relationships and contributing to the well -being of the
region throughout the project's lifecycle.
Executive Comments
Steve Cochrane, CEO of Lithium Chile, commented on the positive PFS results: "The PFS confirms
our initial confidence in the exceptional potential of the Arizaro Project, outlining a clear
pathway to large -scale, cost-competitive lithium carbonate production. This achievement is a
testament to the unwavering dedication and expertise of our Argentinian team, who have been
instrumental in rapidly advancing the project."
José de Castro, Lithium Chile's President of South America, echoed this sentiment, stating, "We
are incredibly proud of the outstanding work of our team. Their efforts have not only
demonstrated the project's viability but also positioned us to seize the promising opportunities
that lie ahead. The Arizaro project's rapid progress, reflected in our increased asset value, is a
testament to their commitment and the strong partnerships we have forged with local
communities. We remain dedicated to building on th is success as we move towards the next
step, creating lasting value for all stakeholders.”
ARIZARO PROJECT PRELIMINARY FEASIBILITY TECHNICAL DETAILS
Project Overview and the Lithium Carbonate Production
The project considers the production of 25,000 tonnes per year (t/y) of battery grade lithium
carbonate (Li2CO3). To meet this objective, a raw brine flow of 64,080 m3/d is required, which
is extracted from wells located in the Salar de Arizaro. This brine is then transported t o the
process plant which, considering shutdowns, has an availability of 85%.
The general process diagram for the Project is divided into three primary areas: brine extraction,
chemical plant, and dry product handling.
1. Brine Extraction: Brine is extracted from multiple wells and collected at a central
operations center pond. This approach minimizes the need for extensive pipeline
infrastructure. After consolidation at the operations center, the brine is transferred to
ponds located near the processing plant, where it is then fed into the production
process.
2. Chemical Plant: An eight-stage chemical plant employs technology to efficiently extract
and purify lithium chloride from the brine. Subsequent processes include reverse
osmosis, ion exchange, precipitation, evaporation, and carbonation, culminating in the
production of high -quality lithium carbonate. The use of reverse osmosis and
mechanical evaporation enhances water recovery and contributes to the project's
overall water efficiency.
3. Product Handling: The final stage involves drying, milling or micronizing, and bagging
the lithium carbonate, producing either technical or battery-grade products depending
on the process.
This integrated approach maximizes resource utilization and minimizes environmental impact,
aligning with Lithium Chile's commitment to the development of sustainable and efficient
lithium production. To further enhance sustainability, the project has been designed to utilize
cogeneration for energy production.
Mineral Resources and Reserves
The updated resource estimate for the Arizaro project consists of Indicated, Inferred and
measured resources, and key parameters used for estimation correspond to brine concentration
and drainable porosity.
Resource Category Brine Volume
(m3)
Average Lithium
Concentration
(mg/L)
In-Situ Lithium Mass
(kt) LCE Mass (kt)
Measured 1.88E+08 261 49 261
Indicated 1.39E+09 302 420 2,237
Measured + Indicated 1.58E+09 297 469 2,498
Inferred 8.42E+08 362 305 1,624
Table 2: Summary of the Resource Estimate for the Arizaro Project (Effective April 3, 2024)
Notes:
1. Kt = ktonnes
2. The conversion factor used to calculate LCE from lithium is based on the molar weight of the elements added to
generate LCE. The equation is as follows: Li x 5.3228 = LCE.
3. The cut -off grade for lithium used to report mineral resources is 200 mg/L based on a conservative lithium
carbonate price of $8,000 USD per tonne of LCE.
4. The comparison of values may not be exact due to rounding.
5. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
The reserve estimate for lithium brine considers the modifying factors of converting Measured
and Indicated resources to mineral reserves, including the production wellfield design, future
dilution, and recovery of lithium during the processing phase. A ca librated groundwater flow
and solute transport model was created to estimate the reserve, as extraction of lithium -rich
brine is based on physical pumping from a wellfield. A 3D numerical model was constructed
using Groundwater Vistas interface Version 8 and simulated using MODFLOW USG-Transport.
Reserve
Category Time Period Brine Volume
Pumped (Mm3)
Average Extracted Lithium
Concentration (mg/L)
Extracted
Lithium
Mass (kt)
Extracted
LCE Mass
(kt)
Probable
Reserves
All
(Years 1 – 20) 407 273 92 490
Table 3: Summary of the Probable Reserve Estimate for the Arizaro Project, Considering Processing Losses
(Effective April 19, 2024)
Notes:
1. Mm3 = million cubic meters; kt = kilotonnes; LCE = lithium carbonate equivalent.
2. Mineral Reserves are reported at a point of reference of processed brine using a global recovery factor of 83%.
3. The cut -off grade for lithium used to report Mineral Reserves is 200 mg/L based on a conservative lithium
carbonate price of $8,000 USD per tonne of LCE.
4. Lithium is expressed as a contained metal.
5. The conversion factor used to calculate LCE from lithium is based on the molar weight of the elements added to
generate LCE. The equation is as follows: Li x 5.3228 = LCE.
6. Minor discrepancies may exist when comparing values due to the use of averaging methods and rounding.
Capital Cost (CAPEX)
The base currency for capital cost estimates is the US dollar (USD). The second quarter of 2024
(Q2 2024) is defined as the base date for the estimate.
The estimate was developed with the objective of reaching class 4, based on the definition of
the AACE International Recommended Practice No. 47R -11 – “Cost Estimate Classification
System”.
A summarized breakdown of the project's capital cost (CAPEX) estimate is provided in table 4 ,
organized according to the Work Breakdown Structure ( “WBS”). The WBS is a hierarchical
decomposition of the total scope of work, dividing the project into smaller, more manageable
components. This structured approach facilitates detailed cost estimation, allocation of
resources, and effective project management.
WBS
Lv1 Description Initial Capital
Cost US$M
Sustaining
Capital Cost
US$M
Total
Capital Cost
Project
US$M
1000 Brine Extraction 73.6 68.3 141.9
2000 Chemical Plant 318.0 - 318.0
3000 Dry Product Handling 16.7 - 16.7
4000 General Utilities 163.0 8.78 171.78
5000 On-Site Infrastructure 79.0 - 79.0
Total Direct Cost 650.3 77.08 727.3
Project Indirect Cost (Including First Fills) 146.6 133.03 279.63
Owner Cost 39.0 - 39.0
Basis of Estimate 835.9 210.11 1046.0
Contingency CAPEX 218.8 35.97 254.77
Total Cost 1,054.7 246.08 1,300.8
Table 4: Summary by WBS of cost estimate (CAPEX)
Note: Numbers may not add up due to rounding
Operating Cost (OPEX)
The most relevant direct cost is reagents (52%) followed by energy (22%), both costs add up to
US$ 98.8 M/a meaning 74% of the total operating direct cost.
For the operating cost estimate of PFS level, reagents, resin, membrane, fuel and personnel
transportation were quoted by Ausenco or Lithium Chile representing 83% of the direct
operating cost.
Description US$ M/a US$/t Li2CO3
Direct Cost
Reagents 69.8 2,794
Resin make-up & Membrane replacement 6.8 270
Energy 29.0 1,159
Manpower 8.1 323
Catering and Camp services 6.2 249
Description US$ M/a US$/t Li2CO3
Maintenance 4.9 195
Site Vehicle Costs 0.3 11
Bus – In / Bus – Out transportation 2.7 110
Consumables 0.6 25
Li2CO3 transport to Antofagasta Port 5.2 208
Direct Cost Subtotal 133.6 5,344
Indirect Cost
General and Administration 2.8 114
Indirect Cost Subtotal 2.8 114
PRODUCTION Li2CO3 TOTAL COSTS 136.4 5,457
Table 5: Operating Cost Estimate Summary
Economic Analysis
An engineering economic model was developed to estimate annual pre -tax and post -tax cash
flows and sensitivities of the Project based on an 8% discount rate. It must be noted, however,
that tax estimates involve many complex variables that can only be accurately calculated during
operations and, as such, the after-tax results are only approximations. Sensitivity analyses were
performed to assess the impact of variations in battery -grade lithium carbonate prices,
operating costs, and capital costs.
The economic analysis was performed using the following assumptions:
• Construction starts January 01, 2026.
• Ramp-up production start -up in 202 8, with full process plant production achieved in
2030.
• Mine life of 20 years.
• Cost estimates remain constant in Q2 2024.
• No price inflation or escalation factors were considered.
• Results are based on 100% ownership.
• Capital costs funded with 100% equity (i.e., no financing costs assumed).
• All cash flows discounted to beginning of construction January 01, 2026.
• All lithium carbonate products are assumed sold in the same year they are produced.
• Project revenue is derived from the sale of battery -grade lithium carbonate FOB
Antofagasta; and
• No binding contractual arrangements currently in place.
The pre-tax net present value discounted at 8% (NPV8%) is US$M 3,853, the internal rate of
return (IRR) is 42.1%, and payback is 2.5 years. On an after-tax basis, the NPV8% is US$M 2,829,
the IRR is 36.3%, and the payback period is 2.7 years.