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A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Canadian junior E3 Lithium (TSX-V: ETL) has begun operations at its Direct Lithium Extraction (DLE) plant in Alberta, the province’s first facility focused on testing the alternative method for extracting lithium from brine projects.
Considered by analysts at Goldman Sachs a potential “game changing” technology, DLE could help companies nearly double lithium production from evaporation ponds, and has been compared to what shale did for the oil market.
E3 Lithium’s operations will focus on testing pre-determined parameters thought to offer the most efficient results for lithium extraction from brines.
Each system will then run over a longer period to confirm performance and produce larger volumes of lithium concentrate for refining into marketable products, such as lithium hydroxide, the Calgary-based company said.
“This is a foundational moment for E3 Lithium, as demonstrating DLE at pilot scale will enable us to move forward in developing this lithium asset in Alberta towards commercialization,” CEO Chris Doornbos said in the statement.
Instead of concentrating lithium by evaporating brine in large pools, DLE pulls the brine directly into a processing plant where it undergoes a series of chemical processes to separate lithium and then it injects it back underground.
The process produces a lithium carbonate in a matter of hours, instead of the 18-month average it currently takes evaporative ponds, and without the need to transport concentrates to a separate facility.
E3 Lithium’s plant is working with brine from the company’s own Clearwater project, which is expected to generate 20,000 tonnes of lithium hydroxide a year over a 20-year life, according to a 2020 preliminary economic assessment.
Its after-tax net present value (at 8% discount) is pegged at about $820 million, with an internal rate of return of 27%.
E3 currently holds one of the largest inferred lithium resources amongst its peers with 16 million tonnes of lithium carbonate equivalent (LCE) in the Measured and Indicated category, and 0.9 million tonnes LCE of Inferred mineral resources, hosted in the Leduc Aquifer.
Clearwater forms part of this resource area at an average lithium concentration of 74 mg/L.
Lithium production from DLE is forecast to grow from about 54,000 tonnes today to 647,500 tonnes by 2032, according to Benchmark Mineral Intelligence.
E3 Lithium’s shares jumped to a two-year high of C$3.78 after the announcement Tuesday. The highest the stock has ever traded at was on February 29, 2021, when it closed at C$4.68 each.
