Pure Energy Minerals Announces Positive Preliminary Economic Assessment and Plans for Pilot Plant at Its Clayton Valley Project
Pure Energy Minerals Announces Positive Preliminary
Economic Assessment and Plans for Pilot Plant at Its Clayton
Valley Project
DENVER, June 26, 2017 (GLOBE NEWSWIRE) -- Pure Energy Minerals Limited (TSX-V:PE)
(FRANKFURT:A111EG) (OTCQB:PEMIF) (the “Company” or “Pure Energy”) is pleased to announce the
results of a Preliminary Economic Assessment (“PEA”) for the production of lithium hydroxide monohydrate
(“lithium hydroxide” or “LiOH∙H2O”) from its Clayton Valley Project (the “Project”) located in Esmeralda
County, Nevada. The PEA was prepared jointly by an expert consulting group comprised of Tenova
(“Tenova”), Montgomery & Associates (“Montgomery”), SRK Consulting (“SRK”), and Andeburg Consulting
Services Inc. (“ACSI”).
A graph accompanying this announcement is available
at http://www.globenewswire.com/NewsRoom/AttachmentNg/baf904f0-26d7-4b17-bd5f-229c344d204d
Preliminary Economic Assessment Highlights (All Currency in US $)
The PEA forecasts average annual production of approximately 10,300 tonnes ( “t”) of lithium hydroxide or
9,100 t lithium carbonate equivalent (“LCE”), using more efficient and sustainable new technologies that do
not require evaporation ponds. Over its expected 20 -year life, the proposed project has an estimated Net
Present Value (“NPV”) of $264 million (after tax at 8% discount rate) and an estimated Internal Rate of
Return (“IRR”) of 21% (after tax). The study projects an estimated average “steady-state” operating cost of
$3,217 per tonne of lithium hydroxide monohydrate and product sale pricing ranging between $9,000 and
$16,500 per tonne. Having these attractive margins and an estimated initial capital cost of $297 million, the
project achieves pay -back in just over 4 years, even allowing for a ramp -up of more than one year. Some
of the key economic parameters are summarized in the first table and chart below.
The PEA incorporates Tenova Advanced Technologies ’ (“TAT”), formerly Tenova Bateman Technologies,
proprietary lithium recovery flow sheet (the “Process”) that is anticipated to provide improved operating
benefits and flexibility while maintaining a balance between production and expense. Based on the mini -
pilot plant and subsequent engineering studies, the Process achieves estimated lithium recoveries of
greater than 91%. Traditional lithium brine processing using evaporation ponds typically struggles to
achieve 50% lithium recovery.
The PEA also includes an updated drainable mineral resource estimate, which estimate includes
approximately 247,000 tonnes of LiOH ∙H2O (218,000 tonnes of LCE) in the inferred category.
Patrick Highsmith, Chief Executive Officer of Pure Energy, commented, “We are very pleased that this PEA
demonstrates the attractive potential for a new low -cost lithium producer in Nevada. The potential reduction
in operating costs for lithium hydroxide through the innovative application of cleaner, more efficient
technology is exciting. As outlined in the PEA, the Clayton Valley Project is expected to nearly double
lithium recoveries when compared to conventional operations while at the same time returning in an
environmentally responsible manner more than 90% of the brine to the basin after lithium recovery. The
development and completion of the PEA and its flowsheet is the result of excellent collaboration among
TAT, its partner GE Water and Process Technologies, and our team of independent engineers. The
engineers recommend moving forward as soon as possible with pilot plant testing, so planning and design
work is already underway toward that objective. ”
Walter Weinig, Pure Energy ’s Vice President of Projects and Permitting, added , “The results of the PEA
indicate an achievable path and timeline to move the Clayton Valley Project through a feasibility study,
including construction and operation of a robust pilot plant. The new resource model also demonstrates an
improved 3D understanding of the aquifer system and opportunities for growth at depth and on the newly
acquired Lithium X properties to the west and north. ”
* - EBITDA is a non-IFRS earnings measure which does not have any standardized meaning prescribed by
IFRS and therefore may not be comparable to EBITDA presented by other companies. EBITDA represents
earnings before interest expense, income taxes, depreciation and amortization. Investors are cautioned
that this non-IFRS financial measure should not be construed as an alternative to other measures of
financial performance calculated in accordance with IFRS.
The economic analysis in the PEA is based upon following assumptions:
100% equity financing
Production ramp-up over approximately 15 months, reaching full production by the end of
Year 2
- 4,100 tonnes LiOH∙H2O in 2021
- 10,800 tonnes LiOH∙H2O in 2022
- 11,400 tonnes LiOH∙H2O in 2023
Construction on the Project commencing in 2019
Effective tax rate of approximately 20 percent
The economic analysis is based upon inferred drainable mineral resources only. Mineral
resources that are not mineral reserves do not have demonstrated economic viability . This PEA
is preliminary in nature and includes inferred mineral 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. There is no certainty that the Project envisioned by this PEA will be realized.
Capital Costs
The total direct capital costs of the Project are estimated to be $159 million, not including indirect costs,
Key Economic Indicators (Currency in US Dollars)
NPV (after tax, 8%) $264.1 million
IRR (after tax) 21%
Average Annual Production (lithium hydroxide) 10,300 tonnes
Average Annual Production (LCE) 9,100 tonnes
Mine Life 20 years
Production Royalties (% of gross revenues) 3.0%
Steady-state annual EBITDA* (nameplate production) $100 million
Payback Period (from commencement of production) 4.4 years
owner’s costs and contingency, in 2017 dollars. The total installed cost of the project is estimated to be
$297 million. All costs and revenues in the economic model are calculated on a constant US dollar basis.
Contingency costs are comprised of 30% of the direct and indirect costs. The capital cost estimate has an
estimated accuracy of +35%/-30%.
* - Indirect Costs are those costs that cannot be directly attributed to the construction of the physical
facilities but are required to support the construction effort. Items included in this category include, but are
not limited to: spare parts, freight, EPCM services and start -up services.
** Owner's Costs encompass all those costs specifically attributable to the Owner that are not included
elsewhere in the estimate. Typical items included in this category include, but are not limited to: land
ownership costs, feasibility study costs, legal fees, permitting costs and fees, Owner project support staff,
specialist consultants, and operations organization establishment (including training, etc). Other Costs
include initial purchase and charging of the plant with the proprietary solvent.
The capital cost estimate is based upon the direct production of lithium hydroxide monohydrate and
therefore eliminates the need for any intermediate production of lithium carbonate.
It should be noted that the lithium content of the Clayton Valley brines is significantly lower than that
produced in the operating lithium brine mines of South America. This lower feed concentration has an
understandable impact on capital costs. However, Clayton Valley brines also have very favorable chemistry
compared to other productive lithium brines. The content of divalent cations such as calcium (Ca),
magnesium (Mg), and strontium (Sr) is low relative to the lithium content. High concentrations of these
elements can negatively impact lithium recovery and processing costs. The Process flowsheet is designed
for these chemical parameters, and the process plant represents over 60% of the initial Direct Capital
Costs.
Operating Costs
The direct steady state operating costs of the Project are estimated to be $3,217 /t of LiOH ∙H2O in 2017
dollars. This corresponds to $3,652 /t on an LCE basis.
Lithium Markets and Price
Description of Capital Costs US $
Basin Activities $ 29 M
Plant Facilities & Equipment $ 100 M
Infrastructure & Utilities $ 30 M
Direct Costs $ 159 M
Indirect Costs* $ 34 M
Contingency $ 56 M
Owner’s and Other Costs** $ 48 M
Total Initial Capital Costs $ 297 M
Sustaining Capital Costs (LoM) $ 62 M
Description of Steady State Operating Costs
(Currency in US Dollars)
Unit Cost
LiOH∙H2O
Unit Cost
LCE
% of Total
Labor $ 427 /t $ 485 /t 14
Power $ 394 /t $ 447 /t 12
Operating Supplies & Services $ 2,227 /t$ 2,528 /t 69
Maintenance Supplies $ 169 /t $ 192 /t 5
Total $ 3,217 /t $ 3,652 /t 100%
The Company has conducted extensive research and analysis based on both public and private materials,
including industry studies, reports, forecasts and estimates, as well as a market assessment and
distribution strategy study commissioned by the Company and prepared by Benchmark Mineral Intelligence
Ltd. (“Benchmark”). This study, titled “Lithium Hydroxide Market Forecast Report ” (the “Market Study”)
included both primary and secondary research and focused on market analysis, supply and demand
capacity and pricing trends, economic forecasting and modeling, and developed a framework for domestic
and international distribution of lithium hydroxide and other lithium products.
Based on the Market Study and the Company ’s research and analysis, rapidly growing lithium demand is
forecasted. In 2016, global production of lithium hydroxide was only 39,000 tonnes, but Benchmark projects
lithium hydroxide demand to exceed 150,000 tonnes by 2025. Lubricants and grease were the primary
drivers of lithium hydroxide consumption in 2016, but future growth will be dominated by the rapid adoption
of electric vehicles powered by new generations of lithium batteries. New battery formulations for electric
vehicles, such as NCA (nickel-cobalt-aluminum) cathode chemistries, rely heavily on lithium hydroxide
rather than lithium carbonate. A significant portion of global lithium hydroxide production last year came
from the United States, including from the Silver Peak Mine, which adjoins the Project.
In expectation of domestic and international sales, the PEA utilizes a dynamic lithium hydroxide pricing
model as recommended by Benchmark. The “Base Case” in the Market Study forecasts a lithium hydroxide
price of $12,000/t in 2021 when the proposed Clayton Valley Project would be ramping up. The price is
expected to strengthen through 2025 to $16,500/t. Beyond 2027, Benchmark projects lithium hydroxide
prices to decline to as low as $9,000/t by 2038 as new supply and demand mature. The price forecast used
in the economic model represents FOB mine gate (ex -works) pricing.
Engineering Progress
The Process is specifically designed to exclude solar pond evaporation, enhance and accelerate lithium
recovery, and reduce the associated environmental footprint of lithium production. Proof -of-concept mini-
pilot plant testwork was completed in 2016 at TAT ’s Research & Development Center in Israel. The
Company’s news release of December 13 th, 2016 gives further details of the successful mini -pilot plant
testwork. The Process flowsheet consists of three distinct sections:
Pre-Treatment - LiP™: The pre -treatment stage efficiently removes the alkaline earth
elements (Ca, Mg, and Sr) without losing lithium. This was achieved in the mini-pilot plant
testwork using membranes supplied by TAT’s partner, GE Water & Process Technologies;
Solvent Extraction - LiSX™ process: The solvent extraction step incorporates Tenova
Pulsed Columns in each of the extraction, scrubbing and stripping stages. The LiSX™ step
is expected to increase the lithium concentration by a factor of approximately 38 with
negligible lithium losses;
Electrolysis - LiEL™ process: Through a process of electrolysis, the lithium sulphate
produced in the preceding solvent extraction step is transformed into lithium hydroxide. This
step allows for the direct production of lithium hydroxide monohydrate without having to first
produce lithium carbonate.
Based on the results of the mini -pilot plant, the overall lithium recovery of the plant is expected to exceed
91%, an exceptionally high recovery when compared with conventional solar evaporation based plants at
approximately 50% or less.
Central to the concept of the new Process is the environmentally responsible return of the brine to the
basin after recovery of the lithium. Subject to permitting and additional testwork and engineering during
pilot plant operation and a feasibility study, the Project is most likely to use rapid infiltration basins for that
purpose. The capital cost estimates include filtration steps to ensure the recovery of the solvent before the
brine is discharged.
To further develop the Process, the Company intends to carry out pilot plant testing of the TAT Process in
Clayton Valley. A continuously operated pilot plant in Nevada will generate important data to update the
current thermodynamic models and provide sample product for customer testing.
Resource Estimate
The PEA is based upon an updated inferred mineral resource estimate which was completed by
Montgomery dated effective June 15, 2017. The updated mineral resource estimate incorporates data
collected during three phases of exploration performed in 2015 – 2017. Pure Energy field work consisted of
various types of geophysics in addition to drilling, brine sampling, and aquifer testing as reported in
Company news releases dated July 28, 2015; April 14, 2016; May 10, 2016; Sept 14, 2016, Oct 12, 2016;
March 6, 2017, March 27, 2017; and May 9, 2017. The updated resource estimate also includes data from
exploration by Rodinia Minerals, Inc. in 2009 – 2010. The maiden resource estimate was presented in a
technical report entitled “Inferred Resource Estimate for Lithium, Clayton Valley Project, Clayton Valley,
Esmeralda County, Nevada, USA” with a date of July 17th, 2015 by Mr. Raymond P. Spanjers, MS, PG of
Norwest (the “July 2015 Technical Report ”), which can be found on the SEDAR website (www.sedar.com).
Consultants, contractors, and Company staff acquired the following brine resource parameters from
surface geophysics, exploration well drilling and construction, downhole geophysics, brine sampling, and
pumping tests:
Depth-specific concentrations of lithium, magnesium, calcium, chloride, sulfate, and other
cations and anions of interest;
Multi-day pumping test samples measuring concentrations of lithium, magnesium, calcium,
chloride, sulfate, and other cations and anions of interest over time;
Depth to bedrock in the resource area;
Lithology;
Specific yield (sometimes referred to as drainable porosity and is less than or equivalent to
effective porosity) of the aquifer matrix measured from core samples by physical methods
and nuclear magnetic resonance (NMR) logging;
Electrical resistivity of brine; and
Downhole geophysical profiles including temperature, natural gamma, dual induction
resistivity, fluid electrical conductance, fluid specific gravity, and NMR.
Montgomery, in consultation with an independent geophysicist, determined the geometry of the brine
aquifer system from seismic and gravity surveys complemented by core -hole data. Montgomery estimated
the three-dimensional distribution of lithium concentrations in brine within the resource area from laboratory
analyses of depth -specific brine samples and the results of several surface geophysical surveys, including:
gravity, seismic, and hybrid source audio -magnetotellurics (HSAMT). NMR borehole logging results and
laboratory measurements made on core samples provided estimates of specific yield. Montgomery
incorporated the data into a three -dimensional geological model using Leapfrog™ software to calculate the
mineral resource volume and mass.
The estimated lithium resource and associated lithium -bearing brine volumes within the defined resource
area are summarized in the table below. The current inferred resource estimate totals approximately
247,000 tonnes of lithium contained as LiOH ∙H2O (218,000 tonnes on an LCE basis). This represents a
significant decline from the previously reported inferred resource (see Company news release dated July
28, 2015). The main components of the reduction are a smaller surface area projection of the resource
and a lower estimated specific yield. These factors are partially offset by a significant increase in the depth
and thickness of the brine resource and the addition of higher lithium grades at depth.
Comparisons of values in the table may differ due to rounding and averaging methods. Mineral Resources
are not Mineral Reserves and do not have demonstrated economic viability.
The updated resource model has a surface area projection of approximately 1,633 hectares (4,035 acres),
whereas the maiden resource covered a total area of approximately 3,240 hectares (8,004 acres). A
significant area in the southern portion of the Project was excluded based on negative drill results (see
Company news released dated May 10, 2016). Based on these negative indications, the Company and its
hydrogeological consultants established a new southern boundary to the resource area. It should be noted
that the Company believes there remains significant exploration potential at depth in the southern portions
of the basin, and it has plans to test this deeper target in the coming months.
By conducting geophysical surveys, drilling deeper than previous programs, more extensive brine sampling
and pumping tests, and three -dimensional modeling, Pure Energy hydrogeologists have extended the
resource to depth. The new inferred mineral resource extends from approximately 128m (420 ft) below land
surface (bls) to approximately 942m (3,090 ft) bls. The full vertical extent of the resource in the deeper
portions of the basin is now at least 814m (2,671 ft) as opposed to only 366m (1,200 feet) in the maiden
resource. The brine encountered in the deeper portions of drillholes CV -3, CV-7, and particularly CV -8
tends to be higher grade and have more favorable chemistry (lower Mg and Ca) than shallower brines, so
the new discoveries at depth have improved the resource.
The new resource model also incorporates a more conservative specific yield of 0.06 (6%) than was used
in the maiden resource. This results from the completion of several core holes, which generated physical
samples for porosity testing, and the use of new logging technology (NMR) that provided a broader
analysis of fluid-filled porespaces. In addition, the Company conducted several pumping tests to gain
additional insight into specific yield. While there are intervals with more than 0.20 (20%) drainable porosity,
most of the sediments are relatively fine grained and a value of less than 0.10 (10%) has been used to
conservatively model the drainable brine. The maiden resource relied upon a much higher porosity value of
0.34 (34%) derived from early testwork (without core samples) and lithological averages from the literature.
The drilling and sampling indicate that the brine resource is layered with respect to lithium grade. Higher
grade brine (>221 mg/L lithium) occurs on the northeastern side of the resource area and in the deeper
extents of the basin. Lower grade brine (22 – 65 mg/L lithium), typically occurring in the shallower parts of
the system and lateral boundaries, may represent brine diluted by brackish or fresh water. A significant
portion of the brine volume falls between concentrations of 65 mg/L and 221 mg/L lithium.
Average Li
Concentration
in Brine Volume
(mg/L)
Leapfrog
Model
Brine Volume
(m3) x 103
Average
Specific
Yield
Drainable
Brine Volume
(m3) x 103
Lithium
(kTonnes)
LiOH∙H2O
(kTonnes)
LCE
(kTonnes)
Resource
Volumes by
Average Li
Concentration
22 550,600 0.06 33,040 0.7 4.39 3.87
65 2,424,000 0.06 145,400 9.5 57.16 50.32
132 579,200 0.06 34,750 4.6 27.73 24.41
221 1,971,000 0.06 118,200 26.1 158.00 139.09
Inferred
Resource
Estimate (Total)
123 5,524,000 0.06 331,500 40.9 247.3 217.7
The boundaries of the geologic model for the updated inferred resource estimate of lithium brine are
presently defined laterally north, east, and west by either property claim boundaries controlled by Pure
Energy and limited by bedrock boundaries. To the south, an east -west boundary is identified between SPD-
8 and CV-4 based on brine sampling results and results of surface geophysical surveys (HSAMT and
seismic). The footprint of the resource at land surface represents an area of 1,633 hectares (4035 acres).
Vertically, the inferred resource brine volume extends from saturated basin -fill deposits at the brine
interface to as deep as the bedrock contact at CV -8 of 942 meters (3,090 feet) bls or the bedrock surface
(determined by seismic and gravity surveys), whichever is shallower.
Using the average value of specific yield, the updated inferred resource estimate for lithium is based on the
total amount of lithium brine that is theoretically drainable from the aquifer system. The brine volumes
where lithium content is estimated as less than 22 mg/L are not included in the resource calculations.
Layers deeper and extending laterally that lack aquifer and brine chemistry parameters are included in the
estimate based on the substantial amount of geophysical information obtained to define depths to
basement rocks forming the vertical basin boundary, potential lateral boundaries, lithologic characteristics,
and deepest drilling achieved for the project, CV -8. The resource estimate does not include brine aquifer
volumes at depths greater than bedrock contact of CV -8 (below elevations of approximately 361 meters or
1,184 feet amsl). These deeper brine aquifer volumes remain open for further exploration and
characterization.
Environmental and Permitting Considerations
There are currently no known environmental conditions associated with the Clayton Valley Project. Cultural
resources are generally minimal on the playas, and the probability of the presence of threatened and
endangered faunal or floral species is considered low. Limited liabilities remain from the reclamation
obligations associated with the current exploration program(s).
From a permitting perspective, the hydrographic basin was designated as one in need of additional
administration in early 2016 by the Nevada State Engineer. Whether this designation will have material
implications on Pure Energy’s ability to obtain water rights to develop the resource into a reserve, and
ultimately, produce lithium is unknown at this time. Because lithium, a locatable mineral under the US
General Mining Act of 1872, is dissolved in non -potable water beneath the ground surface, different and
competing legal opinions exist regarding whether state water law should limit Pure Energy ’s ability to
explore for lithium, obtain water rights, or develop its federal mining claims.
In addition, the Nevada State Engineer ’s administration of water rights and waivers for exploration has been
delayed by a nearby lithium producer ’s active obstruction of Pure Energy ’s mineral exploration activities.
This obstruction has delayed issuance of water rights permits and waivers to drill wells and divert water
therefrom. The recent passage of Nevada Assembly Bill 52 holds promise to streamline the process of
exploration for lithium brine, but the impacts of these various issues on permitting and construction of a
lithium mine cannot be foreseen.
Quality Assurance
Each of the qualified persons shown below has reviewed and approved the scientific and technical
disclosures contained in the PEA and in this press release and are independent of the company. Qualified
persons have verified the data including sampling, analytical, and test data underlying the information or
opinions contained herein. The qualified persons responsible are:
Mr. Michael D. S. Blois, Pr. Eng., QP, FIMMM, (Tenova) is the qualified person responsible
for the mineral processing and metallurgical testing, recovery methods, infrastructure, capital
cost and operating cost estimates, and the overall preparation of the report.
Mr. Ernie Burga, P. Eng., (ACSI) is the qualified person responsible for the mining methods.
Mr. Dan Weber, P.G., Senior Hydrogeologist, (Montgomery) is the qualified person
responsible for the resource estimate.
Ms. Valerie Sawyer, P.E., (SRK Consulting) is the qualified person responsible for the
environmental and permitting sections of the report.
In accordance with National Instrument 43-101, the Company intends to file the completed PEA technical
report (the “PEA Technical Report”) on the SEDAR website (www.sedar.com) and on the Company ’s
website (www.pureenergyminerals.com) within 45 days from the date of this news release.
About Pure Energy Minerals Limited
Pure Energy Minerals is a lithium resource developer that is driven to become a low -cost supplier for the
growing lithium battery industry. The Company ’s current focus is on the development of the Clayton Valley
(CV) Project and the adjoining Glory Lithium Clay Project in Clayton Valley, Nevada. Pure Energy also
recently acquired a purchase option on a major new lithium brine project in the Lithium Triangle of South
America, the Terra Cotta Project ( “TCP”). The TCP is located on Pocitos Salar in Salta, Argentina, where it
enjoys some of the best infrastructure and access of any lithium brine exploration project in Argentina.
Pure Energy has developed core strengths in innovative development and processing technologies for
lithium brines and lithium mineral deposits. Key attributes and activities include:
A large, strategic land position with excellent infrastructure in a first-class mining jurisdiction:
approximately 10,700 hectares (26,000 acres) in Clayton Valley, Esmeralda County,
Nevada, located a 3-hour drive from the Gigafactory;
An inferred mineral resource of approximately 247,000 tonnes of LiOH∙H2O (218,000 tonnes
of LCE) at an average grade of 123 mg/L lithium;
The only lithium brine resource in North America to yield a positive Preliminary Economic
Assessment including after-tax NPV (8% discount) of US $264 million and an IRR of 21%;
Advanced metallurgical testwork demonstrating the improved efficacy of a new
environmentally responsible lithium processing technology that produces low-cost battery
grade lithium hydroxide ;
A new early stage exploration program on the 13,000-hectare (32,000 acre) Terra Cotta
Project (TCP), located on Pocitos Salar in Salta Province; and
An active business development program, applying Company expertise to the evaluation of
new lithium targets around the world.
On behalf of the Board of Directors,
“Patrick Highsmith”
Chief Executive Officer
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies
of TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Forward -Looking Information
This press release contains "forward -looking information" within the meaning of applicable Canadian