Lithium Universe study showcases Canadian lithium | Australian Markets

Lithium Universe has authorized a closing investment to progress its Bécancour lithium refinery in Canada, having introduced a definitive feasibility examine (DFS) that suggestions a internet current worth of US$718m (A$1.128b).

The company has authorized a closing investment within the refinery, primarily based on the examine outcomes, and can now intention to secure US$549m (A$862m) in funding to assemble the power.

Lithium Universe expects to generate an EBITDA of US$148m (A$232m) from an annual income of US$383m (A$601m) over a 3.9-year payback primarily based on the price assumptions used within the DFS. The DFS assumptions are larger than the present lithium spot costs.

The company says the refinery will generate a 21 per cent inside fee of return, primarily based on forecast costs of US$1170 (A$1838) per tonne of spodumene focus (SC6) consisting of 6pc lithium content material and US$20,970/t (A$32,952/t) of lithium carbonate.

Precise spot costs for the lithium supplies are US$775/t (A$1217/t) SC6 and US$10,680/t (A$16,782/t) for lithium carbonate.

The break-even price is estimated at US$740/t (A$1162/t) SC6 and US$14,000/t (A$22,000/t) for lithium carbonate, on the expectation it’ll produce 18,270 tonnes every year of battery-grade lithium carbonate.

With expectations that lithium pricing will improve within the coming 12-18 months because the supply-demand steadiness improves, management believes its financial modelling exhibits that the company has a compelling and economically viable project on its arms.

It expects lithium costs will appropriate even sooner than anticipated attributable to supply-side pressures, because the influence of lithium provide cuts from mines positioned on care and upkeep or reductions in deliberate manufacturing ranges start to kick in.

The company says the demand for lithium is being underestimated. Gross sales of electric autos in China are persevering with at tempo and exports of Chinese language EVs have skyrocketed from $3 billion in 2020 to $35b yearly.

Manufacturing ranges of electric buses and vans slip underneath the radar attributable to inadequate monitoring of manufacturing ranges. They require 5-10 occasions better battery capability than passenger EVs, the extra potential demand from this sector may contribute to future provide points.

Lithium Universe says the project will present a resolution to lithium conversion failures and start-up points which have occurred globally, given management’s deep lithium expertise and the use of confirmed new-age working technology used within the Jiangsu-manufactured refinery.

The company chosen a smaller, off-the-shelf Jiangsu-style refinery instead of bigger, more difficult-to-operate plants. Its initial focus can be on producing lithium carbonate, an important feed for the lithium-iron-phosphate batteries utilized in electric autos.

The company believes the plant can be ideally positioned as a trans-Atlantic lithium conversion facility, with important price advantages from sourcing low-cost energy utilizing Hydro Quebec’s inexperienced power and benefitting from United States-Canada tariffs.

It plans to acquire spodumene feedstock from Canadian sources, along with Brazil and African provides and goals to produce the massive North American EV battery market.

The sturdy NPV and returns for the project point out an economically viable project, the board has made the ultimate investment determination and the project is now continuing to the funding stage. An equity and debt advisor can be engaged to guide the funding outreach program, aimed toward securing strategic companions on the project stage to assist project financing.

The company’s determination to discover the best accessible funding choices for the project will see it interact in offtake discussions with unique gear producers to lock in provide offers and examine the potential for funding provides from vehicle producers.

Lithium Universe launched its preliminary feasibility examine in October 2024 and says the follow-up definitive examine confirms the viability of a sturdy lithium conversion facility. It says the refinery may contribute to the lithium provide chain and help close the lithium conversion hole, which the company estimates could possibly be about 700,000t of lithium carbonate by 2028.

The definitive examine places capital prices 11pc larger than they have been within the prefeasibility examine, primarily attributable to together with a zero liquid discharge system costing $30m so that each one the method water will be recycled and reused onsite.

The Lithium Universe staff driving the project ahead have bucketloads of lithium expertise throughout all sides of the industry. Ought to the company secure the mandatory funding for the Canadian project, the good money would possibly begin betting on a profitable consequence.

Is your ASX-listed company doing one thing fascinating? Contact: [email protected]