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Australia’s Winsome Resources (ASX: WR1) said a scoping study for its $259 million Adina lithium project in Quebec, Canada, has reinforced the asset’s potential as a capital-efficient mine with a 17-year productive life.
The company inked a deal in April to acquire the Renard diamond mine and plant in northern Quebec with the goal of repurposing the existing infrastructure for processing ore from Adina.
The lithium explorer and developer bought itself in August an extra three months to decide whether it would buy the past-producing mine, and today’s announcement suggests it would move in that direction.
Repurposing the existing dense media separation (DMS) and ore sorting facilities at Renard would be substantially cheaper than developing Adina from scratch, the scoping study shows. It would involve a relatively simple upgrade to use the DMS circuit to produce 282,000 tonnes per annum of 5.5% spodumene concentrate (38,000tpa lithium carbonate equivalent) over the mine life.
“The ease of mining mineralized material at Adina via an initial low strip open pit along with the simple DMS flowsheet results in a competitive operating cost estimate, which optimization may improve further,” managing director Chris Evans said in the statement.
The executive noted the plant provides a significant commercial advantage compared to other proposed projects in Canada, highlighting that it would “continue to operate through market fluctuations and commodity cycles,” particularly given the current pricing challenges in the lithium market.
The scoping study indicates a post-tax net present value of $743 million, an internal rate of return of 43%, and a payback period of 1.8 years. Post-tax free cash flow over the mine’s life is estimated at $1.8 billion.
These figures are based on an average all-in sustaining cost of $693 per tonne and a forecasted spodumene concentrate (SC5.5) price of $1,375 per tonne. This is same estimate base used by its regional neighbour, Patriot Battery Metals (ASX: PMT)(TSX: PMET) at its flagship Shaakichiuwaanaan project, formerly known as Corvette.
That project comes with a C$761 million ($560m) cost for a 2.5 million tonnes per annum (Mtpa) plant capable of producing 400,000 tonnes per annum (tpa) due to its high-grade ore.
Renard’s processing capacity sits at 2.2Mtpa with a potential run rate of 1.7Mtpa, at an average head grade of 1.24% and targeted recoveries of 67%.
The Adina project has a resource of 77.9Mt grading 1.15%, of which 35.8Mt is included in the production target.
Winsome is currently advancing the permitting for the asset and finalizing due diligence on Renard, where approximately C$900 million was invested in infrastructure between 2016 and 2023 before the diamond market collapsed and its previous owner, Stornoway Diamonds, went bankrupt.
The company says the Adina lithium project would create 500 jobs during operation and could potentially generate more than $7.5 billion in gross revenue.
It could also potentially generate $1.1 billion in corporate Quebec provincial and Canadian federal taxes, supporting the local communities, the Australian miner says.
Shares in Winsome Resources jumped on the news closing on Tuesday at A$0.52, which leave it with a market capitalization of A$112. 5 million ($76m).
