Weekly Lithium Lowdown with Chris Williams – Week 46, 2023

Nov. 18, 2023

ExxonMobil drills first oil field brine well in Arkansas

ExxonMobil has spudded its first well targeting lithium bearing brines in south-west Arkansas. The news follows the company’s acquisition of exploitation rights to ~48,500 ha of Smackover formation in early 2023.

The oil giant proposes to use an undisclosed DLE processing technology together with reinjection, and battery-grade refining on site. First production is targeted for 2027. By 2030 the company expects to produce enough lithium to “supply the manufacturing needs of a million EVs per year”, which is about 56,000 tpa LCE for a typical American battery pack today.

Adamas take: Drilling a 10,000ft exploration well marks one of the first tangible moves from “Big Oil”. The proposed scale of lithium output here is basically another Thacker Pass. The aggressive production timeline suggests Exxon will license (or simply acquire) a 3rd party DLE technology. If so, this would be a typical second-mover advantage playing out considering how long Standard Lithium have been at this play.

Eramet approves Centenario Phase 2, grabs 120,000 ha of Chilean salars

France’s Eramet has approved FID for Phase 2 of its Centenario-Ratones project in the Salta province, Argentina. Phase 2 now adds 30 ktpa Li2CO3 capacity (down from 50 ktpa). Subject to construction permits, construction is targeting for Q2 2024 and first production Q2 2026.

Phase 1 remains on track for first production Q2 2024 for 24 ktpa Li2CO3 capacity. Capital costs were updated to US$800M including sunk R&D costs for in-house DLE technology (from US$735M). The company expects to produce at US$4,500 – 5,000 /t LCE.

Eramet has also signed a binding offer for the acquisition of 120,000 ha of prospective Chilean salars. The deal involves an upfront payment of US$95M with a US$10M contingent payment.

Adamas take: After more than a decade of R&D, Eramet is on track to make history as South America’s first DLE projects void of evaporation ponds. If production is achieved at expected cost positions, the result is encouraging to Absorption-DLE developers. The Chilean land acquisition also breaths new life into the space following unnerving policy shifts earlier this year. It also speaks to the level of confidence Eramet has with its DLE technology. 

Atlantic Lithium unveils rejected takeover offers from Assore

Atlantic revealed this week that Assore, African mining company and major shareholder in Atlantic, had presented two identically priced non-binding takeover offers which were subsequently rejected by the board. 

The cash consideration was £0.33 per share (~A$0.63) at an implied company valuation of £213M (~A$411M). Atlantic Lithium is developing its Ewoyaa spodumene concentrate project in Ghana where it recently received mining rights. Impurity rejection averaged over 99% and boron rejection averaged over 95%.

Adamas take: Takeover bids below all-time highs are rarely popular, so the rejection is unsurprising. Of consideration too is the existing relationship with partners Piedmont Lithium which hold their own interests in the project’s development and offtake. 

Vulcan Energy releases optimized DFS

Vulcan Energy released its “Bridging Study” for Phase 1 of the Zero Carbon Lithium project this week. The study incorporates greater reserves confidence and consolidates infrastructure from two well fields, two geothermal plants and two DLE plants, into one single development. CAPEX has been reduced by €97M to €1,399M (including 12% contingency), now at class 2 reliability.

Operating cost remain at ~US$4,800/t LCE without considering the geothermal plant, reducing to ~US$2,960/t LCE when energy costs & credits are factored in (Adamas est.). More aggressive flow rate assumptions are used (86L/s per well, up from 69L/s) however these flows are supported by a greater spread of injector wells.

Using a 10-yr average price of US$28,475/t LCE price (US$25,058/t LiOH.H2O) the post-tax NPV8% comes in at US$2.7Bn.

Adamas take: Demonstrable progress has been made on process optimization and project execution de-risking, not just a model price update. There has been cost creep in some cost centers, common in late-stage engineering, but in aggregate these are outweighed by the design tweaks, retaining the ZCL project as a formidable source of European lithium hydroxide and green energy. 

Galan Lithium signs offtake and conditional pre-payment facility with Glencore

Galan Lithium has signed an initial 5-year offtake agreement with Glencore, covering the lithium chloride concentrate output from Phase 1 of its Hombre Muerto West project, in Catamarca province, Argentina.

Glencore has also offered to provide a prepayment facility to the tune of US$70M to US$100M, subject to conditions such as Glencore’s due diligence. Glencore will also have the first right to negotiate on the project’s Phase 2 offtake and financing.

Galan is in an early construction phase of Phase 1 evaporative brine processing facility with a 5,370 tpa LCE-in-LiCl concentrate capacity. 

Adamas take: The financing would theoretically facilitate Phase 1 construction without further capital raises which is quite the achievement. The news also puts to rest concerns that Galan’s 6% Li intermediate product could be stranded or unmarketable.  

 



Chris Williams, Analyst at Adamas Intelligence

Chris is an Analyst at Adamas Intelligence focused on the global lithium industry. He researches and analyzes the lithium value chain to uncover actionable opportunities for clients.

Chris has 11-years experience in mining and oil & gas operations optimization, delivering value from data intensive insight generation. He completed his Bachelor and Masters of Engineering at the University of Queensland, majoring in Mechanical Engineering, and is currently completing a Masters of Business Administration at the University of British Columbia.

 


 

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