Mining’s old guard needs strong medicine
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.
Noram Lithium (TSXV: NRM) announced on Wednesday the summary results of an independent Preliminary Economic Assessment (PEA) for the high-grade deposit at its wholly owned Zeus lithium project in Nevada.
The Zeus property is located in Clayton Valley, less than 1 mile to the east of Albemarle’s Silver Peak mine, which is currently the only lithium production facility in the US.
According to the NI 43-101 compliant PEA study, the Zeus lithium project has an estimated after-tax net present value (NPV) of $1.299 billion and internal rate of return (IRR) of 31% (using an 8% discount rate).
Initial capital cost of the project is $528 million, with an after-tax payback period of 3.23 years. Gross revenue for the mine is calculated at $303.4 million/year.
Once in full operation, the mine production rate is set at 17,000 tpd. The production schedule uses ore from the first 11 phases, resulting in a 40-year mine life. Production over life of mine (LOM) would reach 245.4 million tonnes, averaging 1,093 ppm Li.
Stripping ratios for the lithium mine are very low, averaging 0.07:1 for LOM. Mining consists of a truck and shovel method, with blasting being unnecessary due to the ore softness.
“This study represents the most significant milestone to date for Noram and establishes us among limited peers as the newest low cost, high-grade, near-term lithium producer in North America,” Sandy MacDougall, Noram’s CEO said in a news release.
“I am very pleased with what our team has achieved quickly, on schedule, and at the opportune time considering current and forecasted demand for lithium carbonate. This initial economic assessment is the most significant step to date towards our goal of lithium production and provides the market with a benchmark to evaluate our project’s viability and value compared with other lithium developers,” he added.
With the release of PEA results, Noram is now pushing towards the completion of a Pre-Feasibility Study (PFS) in 2022.
Shares of Noram surged nearly 11% on the back of the Zeus PEA results, giving the lithium miner a market capitalization of C$74.5 million.
