VANCOUVER, BC, Nov. 29, 2021 /CNW/ - Rock Tech Lithium Inc.
(TSXV: RCK) (OTCQX: RCKTF) (FWB: RJIB) (WKN: A1XF0V) (the "Company"
or "Rock Tech") is pleased to announce the results of an
engineering study (the "Converter Engineering Study") for the
construction and operation of the Company's proposed high grade
merchant lithium hydroxide converter and refinery facility (the
"Converter") in Guben, Germany.
Highlights
- Estimated initial capital costs of approximately
€462 million
- Estimated nameplate annual LMH production capacity of
approximately 24,000 tonnes
- Estimated revenue of approximately €6,273
million over 20-year life of project
- Estimated After-Tax NPV (8% discount rate) of approximately
€234 million
- Estimated After-Tax IRR of 14.5%
Converter Engineering Study Details
The Converter Engineering Study was conducted by Wave
International Pty ("Wave") and provides an economic evaluation,
including capital and operating cost estimates, of the construction
and operation of the Converter. The results of the Converter
Engineering Study are based on a single plant merchant converter
designed to produce up to 24,000 tonnes of high purity battery
grade lithium hydroxide monohydrate ("LHM") annually.
As announced on October 18, 2021,
the Company has recently completed a pilot test program that
resulted in the successful production of high purity battery grade
LHM, supporting the proposed process plant design of the Converter.
As a merchant converter, a robust flowsheet has been developed to
handle a range of spodumene feed sources and, as such, relevant
unit processes are included in the capital and operating cost
estimates.
Wave prepared the Converter Engineering Study in accordance with
the requirements of a Class 4 estimate, as defined by the American
Association of Cost Engineers' Cost Estimation and Classification
System.
The results of the Converter Engineering Study support the
Company's ongoing Front End Engineering Design ("FEED") study of
the Converter on a Class 2 estimate basis. The FEED study is
expected to include the following activities:
- continuation of metallurgical testwork;
- finalization of process flowsheet;
- progression of discipline engineering to support improved
accuracy of cost estimates;
- major procurement activities including basic engineering design
for major supply packages;
- selection of major contractors and negotiation of material
contract terms; and
- progression of approvals.
Key Metrics
Key metrics from the Converter Engineering Study at the assumed
base case are presented below:
Key
Metrics(1)(2)
|
Pre-Tax Net Present
Value ("NPV")(3)
|
€354.3 million /
U.S.$429.6 million
|
After-Tax
NPV(3)
|
€233.9 million /
U.S.$284.6 million
|
Pre-Tax Internal Rate
of Return ("IRR")
|
17.0%
|
After-Tax
IRR
|
14.5%
|
Payback
Period
|
64 months
|
Initial Capital
Costs
|
€462.1 million /
U.S.$560.2 million
|
Life-of-Project
Capital Costs(4)
|
€544 million /
U.S.$659.6 million
|
Life-of-Project
Revenue
|
€6,273.4 million /
U.S.$7,606.1 million
|
Life-of-Project
Operating Costs
|
€3,261.7 million /
U.S.$3,954.6 million
|
Weighted average C1
Costs per tonne LMH(5)
|
€6,950.4 /
U.S.$8,427.0
|
Weighted average C2
Costs per tonne LMH(6)
|
€8,130.8 /
U.S.$9,858.1
|
Weighted average
spodumene concentrate price per tonne(7)
|
€473 /
U.S.$573(8)
|
Weighted average
lithium hydroxide ("LiOH") price per tonne
|
€10,950 /
U.S.$13,276(8)
|
Notes:
- See "Key Assumptions and Sensitivity Analysis" section below
for further details.
- Key metrics are calculated on nameplate annual production of
24,000 tonnes of LHM over 20-year life of project (as
applicable).
- Discount rate of 8%.
- Includes sustaining capital.
- Includes all cash costs.
- Incudes all cash costs and depreciation.
- 5.8% Li20.
- Based on market forecasts projected over 20-year life of
project.
Based on the results of the Converter Engineering Study, the
Company estimates that the Converter will generate an average
annual EBITDA1 of approximately U.S.$112 million between 2024 and 2043.
__________
|
1 See
"Non-GAAP Measures" section below.
|
Capital Cost Estimates
The Converter Engineering Study estimates total initial capital
costs of approximately €462 million for the implementation of the
Converter (determined to a nominal accuracy of +/- 25%), including
approximately €223 million in direct capital costs, €77 million in
indirect capital costs, €80 million in owner's costs and a weighted
contingency of 17.9%. The initial capital cost estimate includes
the capital requirements to engineer, procure, construct and
commission the Converter and covers project implementation costs
for the period from a final investment decision to commissioning
the Converter. It also includes early procurement of long lead
items and FEED costs. Initial capital cost estimates were generated
from preliminary design, vendor quotations and market data as of a
base date of May 14, 2021.
A breakdown of the capital cost estimates from the Converter
Engineering Study is presented in the following table:
Estimated Initial
Capital Costs(1)(2)
|
Earthworks
|
€1,044,383
|
Civil/Concrete
|
€7,918,393
|
Structural
|
€23,784,204
|
Architectural
|
€10,789,683
|
Rail/Rail
Off-loading
|
€14,090,000
|
Mechanical/Platework
|
€95,600,468
|
Piping &
Valves
|
€28,076,043
|
Electrical
|
€32,371,011
|
Controls &
Instrumentation
|
€3,013,293
|
Equipment
Acquisitions
|
€5,030,000
|
Land
Acquisition
|
€1,130,877
|
Subtotal Direct
Capital Costs(3)
|
€222,848,355
|
Earthworks
|
€292,427
|
Civil/Concrete
|
€234,047
|
Structural
|
€6,659,577
|
Rail/Rail
Off-loading
|
€1,549,900
|
Mechanical/Platework
|
€26,768,131
|
Piping &
Valves
|
€4,649,114
|
Electrical
|
€15,538,085
|
Controls &
Instrumentation
|
€843,722
|
Vendor
Support
|
€750,000
|
Delivery
|
€11,848,501
|
Commissioning
Spares
|
€1,664,381
|
Strategic/Maintenance
Spares
|
€3,883,555
|
First Fills
|
€2,219,174
|
Subtotal Indirect
Capital Costs(4)
|
€76,900,614
|
Owner's
Costs(4)
|
€80,928,145
|
Contingency
|
€81,383,553
|
Total Estimated
Initial Capital Costs
|
€462,060,667
|
Notes:
- See "Key Assumptions and Sensitivity Analysis" section below
for further details.
- Assumes that the Converter is developed using an Engineering,
Procurement and Construction Management (EPCM) execution
strategy.
- Most direct cost estimates were derived from quotes, tender
submissions or statutory requirements.
- Indirect and owner's cost estimates were derived from factors
and experience deemed to be reflective of current estimate
accuracy.
Operating Cost Estimates
The average annual operating costs of the Converter are
estimated at approximately €164 million per year (determined to a
nominal accuracy of +/- 25%).
Prices used to develop operating cost estimates were based on
preliminary market enquiries and analyst reports. Wave identified
all activities relating to the procurement of materials,
transportation and processing to produce an ex-works LHM product. A
breakdown of the estimated average annual operating cost over the
life of the Converter is presented in the following table:
Estimated Annual
Operating Costs(1)(2)
|
Major Cost
Items
|
€/t
LHM
|
€/year
|
U.S.$/t
LHM
|
U.S.$/year
|
Raw
Materials
|
3,444.90
|
82,677,556
|
4,176.70
|
100,240,800
|
Labour
|
452.30
|
10,854,960
|
548.40
|
13,161,600
|
Power(3)
|
633.20
|
15,196,533
|
767.70
|
18,424,742
|
Diesel
|
55.90
|
1,342,514
|
67.80
|
1,627,705
|
Gas
|
157.20
|
3,773,760
|
190.60
|
4,574,400
|
Maintenance
|
217.10
|
5,211,243
|
263.30
|
6,319,200
|
Reagents(4)
|
683.70
|
16,409,254
|
829.00
|
19,896,000
|
Transport
|
635.90
|
15,260,403
|
770.90
|
18,501,600
|
Contract/General
Expenses
|
564.00
|
13,535,438
|
683.80
|
16,410,779
|
Total Estimated
Annual Operating Costs
|
6,844.20
|
164,261,661
|
8,298.20
|
199,155,867
|
Notes:
- See "Key Assumptions & Sensitivity Analysis" section below
for further details.
- Operating costs are calculated on nameplate annual production
of 24,000 tonnes of LHM over 20-year life of project.
- Includes a contingency of 5%.
- Includes a contingency of 10%.
Key Assumptions and Sensitivity Analysis
Certain assumptions were relied upon in the Converter
Engineering Study, including:
- 20-year life of Converter;
- nameplate annual production of approximately 24,000 tonnes of
LMH from approximately 178,000 tonnes of spodumene concentrate
sourced from multiple third parties through feedstock
contracts;
- weighted average price of spodumene concentrate of
U.S.$573 per tonne, reducing from a
peak price of U.S.$697 per tonne in
2023 (current spodumene price: U.S.$2,600) 2;
- weighted average price of LiOH of U.S.$13,276 per tonne, reducing from a peak price of
U.S.$17,695 in 2023 (current LiOH
price: U.S.$29,000) 3;
and
- exchange rates as follows: U.S.$/€ = 0.8248; C$/U.S.$ = 0.8042
(current exchange rates: U.S.$/€ = 0.8834; U.S.$/C$ =
0.7817)4.
As part of the Converter Engineering Study, a sensitivity
analysis was conducted on the Converter's pre-tax NPV and IRR to
key variables, including spodumene concentrate price and LiOH
price. Using the base case as a reference, the key variables were
changed between +/-30% at 10% intervals while holding other
variables constant. Spodumene concentrate price and LiOH price
sensitivities are presented below:
Spodumene
Concentrate Price – Sensitivity Analysis
|
|
70.00%
|
80.00%
|
90.00%
|
100.00%
|
110.00%
|
120.00%
|
130.00%
|
Pre-Tax
NPV
|
€566,714,106
|
€495,896,959
|
€425,079,811
|
€354,262,663
|
€283,445,515
|
€212,628,367
|
€141,811,220
|
Pre- Tax
IRR
|
21.49%
|
20.03%
|
18.53%
|
16.98%
|
15.37%
|
13.68%
|
11.91%
|
After-Tax
NPV
|
€388,375,756
|
€336,907,459
|
€285,431,195
|
€233,935,657
|
€182,377,676
|
€130,770,643
|
€79,126,263
|
After-Tax
IRR
|
18.14%
|
16.97%
|
15.76%
|
14.50%
|
13.19%
|
11.82%
|
10.38%
|
LiOH Price –
Sensitivity Analysis
|
|
70.00%
|
80.00%
|
90.00%
|
100.00%
|
110.00%
|
120.00%
|
130.00%
|
Pre-Tax
NPV
|
€(313,145,900)
|
€(90,676,379)
|
€131,793,142
|
€354,262,663
|
€576,732,184
|
€799,201,705
|
€1,021,671,226
|
Pre- Tax
IRR
|
0.00%
|
5.15%
|
11.64%
|
16.98%
|
21.73%
|
26.09%
|
30.18%
|
After-Tax
NPV
|
€(313,145,900)
|
€(100,357,003)
|
€71,993,336
|
€233,935,657
|
€395,607,485
|
€557,217,735
|
€718,822,762
|
After-Tax
IRR
|
0.00%
|
4.71%
|
10.17%
|
14.50%
|
18.32%
|
21.82%
|
25.09%
|
__________
|
2 Source: S&P Global Platts, CIF
North Asia (as of November 26, 2021).
|
3 Source:
S&P Global Platts, FOB Australia (as of November 26,
2021).
|
4 Source: Bloomberg Market Data (as
of November 25, 2021).
|
By-Products
The following table provides a breakdown of the non-lithium
by-products expected to be generated from production activities at
the Converter:
Non-Lithium
By-Products
|
Estimated
Production (t/year)
|
Alumino-silicate
by-product
|
260,000
|
Gypsum
|
24,000
|
Sodium
sulphate
|
46,500
|
Zero Liquid Discharge
(ZLD) by-product
|
7,500
|
The results of the Converter Engineering Study are based on an
assumed disposal cost for all such non-lithium by-products of
approximately €18 per tonne, except with respect to sodium
sulphate, which is assumed to be cost neutral.
Nevertheless, preliminary testwork undertaken during the
Converter Engineering Study has identified that alumino-silicate
by-product, which is expected to be the largest volume non-lithium
by-product generated from production activities at the Converter,
is suitable for use in cement manufacturing. Other potential uses
for alumino-silicate by-product include construction and other
potential manufactured products such as Zeolites or Kaolinites.
The Company has established a research and development
collaboration with GP Papenburg, to work collaboratively to
identify applications and potential offtakes for alumino-silicate
by-product. As a risk mitigation, testwork has identified
alumino-silicate by-product as a class D0 waste, which is the
lowest classification of waste product in Germany and as such it can be disposed of in
waste management facilities, if required.
Converter Overview
The proposed Converter will be based in Guben, Germany, in a designated and historical
industrial area. As announced by the Company on October 10, 2021, Rock Tech has entered into an
agreement to acquire a twelve-hectare site in the Guben South
industrial park. Closing of the site acquisition is expected to
occur in April 2022, subject to the
satisfaction of customary closing conditions, including Rock Tech's
payment of the €1,130,877 purchase price.
The Guben site was selected after a rigorous site assessment.
With access to existing utility and transportation infrastructure
and proximity to potential customers, the Guben South industrial
park is well situated to allow the Company to satisfy growing
demand for LHM in the European electric vehicle manufacturing
market. At the proposed Converter site, approximately 500 metres of
rail spur will be required to connect the proposed facility with
the region's existing rail network. The Converter is expected to
benefit from the structural and logistical advantages associated
with long-term access to feedstock through the region's
well-developed transportation infrastructure and proximity to car
manufacturers seeking to localize their supply chain around
European production facilities.
It is expected that Converter will be designed to process
spodumene concentrate from multiple potential sources using the
sulphation-causticisation process route to mitigate technical risk
and increase speed to market. This base process chemistry was
developed in the 1950's, is currently employed almost exclusively
in China for the production of
lithium hydroxide from spodumene concentrates, and has also been
adopted for three projects under development in Australia.
The Company has commenced the process of soliciting targeted
lender groups, including international banks, in connection with
its evaluation of potential project financing arrangements in
respect of the Converter. Through its corporate advisor Blackbird
Partners, the Company has retained a leading global mineral
industry advisory firm to prepare an independent expert's report
(the "IER") on the proposed Converter. The results of the IER will
assist potential lenders in their due diligence process, assessing
the Converter Engineering Study and the Company's ongoing FEED
study. It is anticipated that the IER and the FEED study will be
complete in the first half of 2022, with a final investment
decision on the Converter expected to be made by the middle of
2022. Subject to receipt of necessary regulatory, environmental and
internal approvals, construction of the Converter is expected to
begin in mid-to-late 2022, with production commencing in 2024.
Dirk Harbecke, Chief Executive
Officer of Rock Tech Lithium, explains, "We are pleased with
the results of the Converter Engineering Study, which support our
plans to build the first high-quality merchant battery-grade
lithium hydroxide converter in Europe. A FEED study, supporting project
financing, is underway and estimated for completion in the first
half of 2022. In addition to selecting the site in Guben, we have
commenced building our project execution team which is based in the
Company's offices in Ratingen, Germany. This team is responsible for
finalizing and implementing the contracting and construction
strategy to build and commission the converter commencing by the
end of next year."
About Rock Tech Lithium Inc.
Rock Tech Lithium is a cleantech company with operations in
Canada and Germany that aims to supply the automotive
industry with high quality lithium hydroxide "made in Germany". As early as 2024, the company plans
to commission Europe's first
lithium converter with a nameplate production capacity of 24,000
tonnes per year. This is equivalent to the volume needed to equip
around 500,000 electric cars with lithium-ion batteries.
The cleantech company has set itself the goal of creating the
world's first closed loop for lithium, thus closing the raw
material gap on the road to clean mobility. Rock Tech owns the
Georgia Lake lithium project in Ontario,
Canada and, as early as 2030, around 50 percent of the raw
materials used are expected to come from the recycling of
batteries.
Rock Tech Lithium - The fuel for the battery age
www.rocktechlithium.com
Cautionary Note Concerning Forward-Looking
Information
The following cautionary statements are in
addition to all other cautionary statements and disclaimers
contained elsewhere in, or referenced by, this press release.
Certain information set forth in this press release contains
"forward-looking information" and "forward-looking statements"
(collectively, "forward-looking information") within the meaning of
applicable securities laws, which are based on Rock Tech's current
expectations, estimates, and assumptions in light of its experience
and is perception of historical trends. All statements other than
statements of historical facts may constitute forward-looking
information. Often, forward-looking information can be identified
by the use of words or phrases such as "estimate", "project",
"anticipate", "expect", "intend", "believe", "hope", "may" and
similar expressions, as well as "will", "shall" and all other
indications of future tense. All forward-looking information set
forth in this press release is expressly qualified in its entirety
by the cautionary statements referred to in this section.
In particular, this new release contains forward-looking
information pertaining to: the features of the proposed Converter;
statements regarding the Company's future plans, estimates, and
schedules relating to the Converter project; Rock Tech's
expectations regarding the FEED study, IER, including the related
activities, findings and uses thereof; potential financing
arrangements; the expected economic performance of the Converter
and anticipated production of LHM and related processing methods;
the capital and operating costs of the Converter; the anticipated
timing of a final investment decision, construction activities and
potential in-service date of the Converter; expectations regarding
non-lithium by-products and the production thereof; the anticipated
features of the Guben site and expected benefits thereof; demand
for and pricing of LMH and the benefits therefrom; Rock Tech's
opinions, beliefs and expectations regarding the Company's business
strategy, development and exploration opportunities and projects,
and plans and objectives of management for the Company's operations
and properties.
The forward-looking information contained in this press release
also includes financial outlooks and other forward-looking metrics
relating the Company, including references to financial and
business prospects of the proposed Converter and future results of
operations and performance, including NPV, IRR and EBITDA. The
purpose of these forward-looking metrics is to assist readers in
understanding the expected financial and operating results of the
proposed Converter project. However, readers are cautioned that
this information may not be appropriate for other purposes and
should not be relied upon as necessarily indicative of future
results and that actual results may differ significantly from such
projections.
Forward-looking information is based on certain estimates,
expectations, analysis and opinions of the Company and in certain
cases, third party experts, that are believed by management of Rock
Tech to be reasonable at the time they were made. This
forward-looking information was derived utilizing numerous
assumptions regarding, among other things, the supply and demand
for, deliveries of, and the level and volatility of prices of,
intermediate and final lithium products, expected growth,
performance and business operation, future commodity prices and
exchange rates, prospects and opportunities, general business and
economic conditions, results of development and exploration, Rock
Tech's ability to procure supplies and other equipment necessary
for its business. The foregoing list is not exhaustive of all
assumptions which may have been used in developing the
forward-looking information. While Rock Tech considers these
assumptions to be reasonable based on information currently
available, they may prove to be incorrect. Forward-looking
information should not be read as a guarantee of future performance
or results.
In addition, forward-looking information involves known and
unknown risks and uncertainties and other factors, many of which
are beyond Rock Tech's control, that may cause Rock Tech's actual
events, results, performance and/or achievements to be materially
different from that which is expressed or implied by such
forward-looking information. Risks and uncertainties that may
cause actual events, results, performance and/or achievements to
vary materially include the results of the validation study, the
Company's ability to access funding required to invest in available
opportunities and projects (including the proposed Converter) and
on satisfactory terms, the current and potential adverse impacts of
the COVID-19 pandemic, including future outbreaks and any
associated policies or restrictions on business, the risk that Rock
Tech will not be able to meet its financial obligations as they
fall due, changes in commodity and other prices, Rock Tech's
ability to retain and attract skilled staff and to secure feedstock
from third party suppliers, unanticipated events and other
difficulties related to construction, development and operation of
the Converter, the cost of compliance with current and future
environmental and other laws and regulations, title defects,
competition from existing and new competitors, changes in currency
exchange rates and market prices of Rock Tech's securities, Rock
Tech's history of losses, impacts of climate change and other risks
and uncertainties described from time to time in Rock Tech's public
disclosure documents available on the Company's SEDAR profile at
www.sedar.com, including those discussed under the heading
"Financial Instruments and Other Risks" in Rock Tech's most
recently filed Management Discussion and Analysis. Such risks and
uncertainties do not represent an exhaustive list of all risk
factors that could cause actual events, results, performance and/or
achievements to vary materially from the forward-looking
information.
We cannot assure you that actual events, results, performance
and/or achievements will be consistent with the forward-looking
information and management's assumptions may prove to be incorrect.
Forward-looking information reflects Rock Tech management's views
as at the date the information is created. Except as may be
required by law, Rock Tech undertakes no obligation and expressly
disclaims any responsibility, obligation or undertaking to update
or to revise any forward-looking information, whether as a result
of new information, future events or otherwise, to reflect any
change in Rock Tech's expectations or any change in events,
conditions or circumstances on which any such information is
based.
Given these uncertainties, readers are cautioned not to rely on
the forward-looking information set forth in this press
release.
Non-GAAP Measures
This press release also refers to
non-GAAP financial measures, including EBITDA, which are not
defined by IFRS but are used by management to evaluate the
performance of Rock Tech and its business. Such non-GAAP measures
do not have a standardized meaning prescribed by IFRS and,
therefore, may not be comparable to similar measures presented by
other companies and should not be considered in isolation or used
in substitute for measures of performance prepared in accordance
with IFRS.
EBITDA is a non-GAAP measure calculated as net earnings before
finance costs, income taxes, depreciation and amortization and
excludes the following from net earnings (its most directly
comparable measure under IFRS): income tax expense, finance costs
and finance income. Management believes that EBITDA provides useful
information to investors as an indicator of a company's ability to
generate liquidity through capital invested. EBITDA is also used by
investors and analysts for assessing financial performance,
including calculating financial and leverage ratios.
Disclaimer
The Converter Engineering Study does not
constitute a preliminary economic assessment, preliminary
feasibility study or feasibility study within the definitions
adopted by the Canadian Institute of Mining, Metallurgy and
Petroleum, as it relates to a standalone lithium hydroxide
converter and does not concern a mineral project of Rock Tech. As a
result, disclosure standards prescribed by National Instrument
43-101 – Standards of Disclosure for Mineral Projects are
not applicable to the scientific and technical information included
in the Converter Engineering Study or this press release.
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SOURCE Rock Tech Lithium Inc.