Avino Silver & Gold Mines Ltd. press release
PEA Highlights Shaakichiuwaanaan Project as a Potential North American Lithium Raw Materials Supply Base
TSX - Toronto Stock Exchange · Silver · Gold · Copper · Canada
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PEA outlines the potential for a competitive and globally significant high-grade lithium project targeting up to ~800 ktpa spodumene concentrate
| CAUTIONARY STATEMENTS REGARDING THE PEA | | The Preliminary Economic Assessment (PEA) referred to in this announcement is a preliminary technical, conceptual and economic study of the potential viability of developing the Shaakichiuwaanaan Project by constructing a concentrate processing facility on site. The PEA referred to in this announcement is conceptual, at scoping study level only, which is based on a lower level of technical assessment that is not sufficient to support the estimation of mineral reserves and is inherently uncertain. The PEA has an accuracy of ± 25-30% only to determine potential viability. It does not have the same level of detail, precision and confidence to determine technical and economic viability as a pre-feasibility study (PFS) or definitive feasibility study (FS). Further exploration and evaluation work and appropriate studies are required before the Company will be in a position to estimate any mineral reserves or to provide any assurance of an economic development case.
Approximately 75% of the Life of Mine production is in the Indicated Mineral Resource category and 25% is in the Inferred Mineral Resource Category. The use of Inferred Mineral Resources in the PEA is not the determining factor in the viability of the Shaakichiuwaanaan Project. The Inferred Mineral Resource is considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorised as mineral reserves and is not the determining factor in the viability of the Shaakichiuwaanaan Project. Inferred Mineral Resources are that part of the mineral resource for which quantity and grade, or quality are estimated on the basis of limited geologic evidence and sampling, which is sufficient to imply but not verify grade or quality continuity. Inferred Mineral Resources may therefore not be converted to mineral reserves. Whilst both the CIM Code and JORC Code provide that it is reasonably expected, though not guaranteed, that the majority of Inferred Mineral Resources could be upgraded to Indicated Mineral Resources with continued exploration, in accordance with ASX Listing Rule 5.16.4, there is a low level of geological confidence associated with Inferred Mineral Resources and there is no certainty that further exploration work will result in the determination of Indicated Mineral Resources or that the production target in the PEA will be realized. Accordingly, there is no certainty that the PEA or its conclusions will be realised.
The PEA is based on the material assumptions outlined elsewhere in this announcement. These include pricing assumptions and assumptions about the availability of funding including the availability of tax credits under CTM-ITC and cash flow from Stage 1 operations which are not guaranteed. While the Company considers all the material assumptions to be based on reasonable grounds, there is no certainty that they will prove to be correct or that the range of outcomes indicated by the PEA will be achieved.
In accordance with ASX's guidance on scoping studies, the Company makes the following statements.
To achieve the range of outcomes indicated in the PEA, funding in the order of $869.7 million is required for Stage 1 and $503.8 million for Stage 2, representing a total of $1,373.5 million (including contingency, pre-operating expenditure and assuming no CTM-ITC nor Stage 1 cashflow becomes available). Despite the Company having a track record of raising funds, investors should note that there is no certainty that the Company will be able to raise funding when needed. However, the Company has concluded it has a reasonable basis for providing the forward-looking statements included in this news release and believes that it has a "reasonable basis" to expect it will be able to fund the development of the Project based on the assumed long-term pricing and on a staged development approach (and therefore staged funding strategy), which involves a combination of potential strategic partnering, strategic debt, equity financing, potential operating cashflows, tax credits and funding from available government infrastructure funds. It is possible that such funding may only be available on terms that may be dilutive to or otherwise affect the value of the Company's existing shares. It is also possible that the Company could pursue other strategies to provide alternative funding options. Given the uncertainties involved, investors should not make any investment decisions based solely on the results of the PEA.
Please refer to the "Disclaimer for Forward Looking Information" section at the end of this document for more information regarding assumptions and risks surrounding forward looking statements contained herein. |
VANCOUVER, BC , Aug. 21, 2024 /CNW/ - August 22, 2024 – Sydney, Australia
HIGHLIGHTS
Preliminary Economic Assessment (PEA) completed by independent consultants, BBA and Primero, outlining a preliminary base case scenario for a staged development of the cornerstone CV5 Spodumene Pegmatite, via both open pit and underground mining methods. High-grade Nova Zone 1 (including 21.8 million tonnes at 2.1% Li 2 O of which 93% is Indicated, 7% is Inferred Resource category respectively) to be targeted and prioritised via underground mining methods, allowing direct access to higher grade material and minimizing the environmental footprint. At the targeted Stage 2 production rate of ~800 ktpa 2 spodumene concentrate, this would potentially position Patriot as the 4 th largest spodumene concentrate producer globally 3 . Potential pre-tax net present value ("NPV") 8% of $4.7 billion ( US$3.6 billion ) and after-tax NPV 8% of $2.9 billion ( US$2.2 billion ) with a pre-tax internal rate of return ("IRR") of 38% (after-tax IRR of 34%) at US$1,375 per tonne (SC5.5, FOB Bécancour basis). Payback period of 3.6 years at an assumed average lithium price of US$1,375 per tonne (SC5.5, FOB Bécancour basis) or US$1,500 per tonne (SC6, FOB Bécancour basis), with life of mine ("LOM") of up to 24 years. Targeting to become a North American top-tier, lower cost producer with an estimated average LOM cash operating cost 4 at site of $510 per tonne (US$387) and total cash operating cost free-on-board ("FOB" Bécancour) 5 of $736 per tonne (US$560) 6 . An estimated break-even SC6 price (on a fully ramped 800 ktpa, EBITDA, FOB Bécancour basis) of US$587 /t highlights the potentially viable nature of the Shaakichiuwaanaan Project throughout the lithium price cycle. Estimated to indicatively generate approximately $8.3 billion in Project Cash Flow (unlevered) over LOM. Average annual EBITDA 7 anticipated to be in the order of $850M and annual FCF 8 of $515M at an assumed spodumene price of US$1,375 per tonne (SC5.5, FOB Bécancour basis). Phased development strategy with anticipated Stage 1 capital expenditure estimate of $761M ( US$579M ) for the first 400 ktpa capacity including contingency and Net Capex of $640M ( US$487M ) leveraging the proposed 30% Canadian Clean Technology Manufacturing – Investment Tax Credit ("CTM-ITC") 9 . Estimated Stage 2 expansion Capex of $504M ( US$383M ) including contingency and Net Capex of $408M ( US$310M ) leveraging the proposed CTM-ITC, to reach a production capacity of ~800 ktpa of spodumene concentrate per year. The combined net cost 10 to reach nameplate production for both Stage 1 and Stage 2 is estimated to be approximately $608M ( US$462M ) taking into account funding that could come from both cash flows from Stage 1 and proposed CMT-ITC tax credits. Process plant feed rate following Stage 2 expansion at an average of ~4.5 Mtpa 11 via simple DMS-only process; average LOM lithia recovery of 69.5%; spodumene concentrate grade at 5.5% Li 2 O. Access to existing, high quality transportation infrastructure with potential future improvements in the region combined with a low-carbon footprint, low cost and mainly renewable electricity source. Tier 1, stable mining jurisdiction of Eeyou Istchee James Bay region of Québec (under modern land claims agreement – James Bay Northern Quebec Agreement "JBNQA") combined with a strong relationship with the Cree Nation of Chisasibi , Cree Nation Government and all stakeholders. The Eeyou Istchee James Bay region's unique Examination Committee "COMEX" permitting process, with its well-defined guidelines, ensures a structured and clear path to project approval, fostering strong community and stakeholder engagement. Significant opportunities to enhance returns through further resource expansion, optimized mining to further prioritise access to the high-grade Nova Zone earlier and additional cost-saving measures indicate transformative potential. The Company will consider progressing a Feasibility Study, which among other options may include a trade-off study for a smaller high-grade focused development scenario, to optimise the project in the event of a lower price environment. The Project remains on track with FID targeted in CY27, indicatively paving the way for the construction to progress through CY28 and first production commencing in early CY29.
| _ | | | 1 | The Nova Zone is a subset of the CV5 Resource, proposed to be accessed via the same underground mining method targeting the overall PEA underground Resource of 39.8 Mt @ 1.54% Li 2 O (70% is Indicated, 30% is Inferred Resource category respectively). | | 2 | The annual production rate of ~800 ktpa is calculated considering the period of full production, i.e. Years 4 to 18 – see Figure 34. | | 3 | See Figure 2. | | 4 | Cash operating cost at site includes mining, processing and site administration expenses calculated on an SC5.5 basis. They are non-IFRS financial measures, and when expressed per tonne, non-IFRS ratios. Refer to " _Non-IFRS and other financial measures _" for further information on these measures. | | 5 | Total cash operating cost (FOB Bécancour) includes mining, processing, site administration, and product transportation to Bécancour calculated on an SC5.5 basis. They are non-IFRS financial measures, and when expressed per tonne, non-IFRS ratios. Refer to " _Non-IFRS and other financial measures _" for further information on these measures. | | 6 | Refer to Table 4 – Cash Operating Costs. | | 7 | EBITDA is a non-IFRS financial measure which is comprised of net income or loss from operations before income taxes, finance expense – net, depreciation and amortization. This annual EBITDA is calculated considering the period of full production (i.e., Years 4 to 18). Refer to " _Non-IFRS and other financial measures _" for further information on these measures. | | 8 | FCF is a non-IFRS financial measure defined as cash provided from operating activities, less cash outlays for sustaining capital, and less taxes. The annual FCF is calculated considering the period of full production (i.e., Years 4 to 18). Refer to " _Non-IFRS and other financial measures _" for further information on these measures. | | 9 | The CTM-ITC (enacted on June 20, 2024) provides for up to 30% of the cost of the investment in eligible property used for eligible activities through a refundable investment credit mechanism – see Table 3 for a full breakdown of the capital cost estimate. | | 10 | The combined net cost includes Capex, Opex during pre-production of $108.3M, estimated CMT-ITC tax credits of $216.7M, contingency of $242.8M and potential cash flow during expansion of $548.7M – see Table 3 for a full breakdown of the capital cost estimate. | | 11 | The average process plant feed rate of ~4.5 ktpa is calculated considering the period of full production, i.e. Years 4 to 18. |
MANAGEMENT COMMENT
Ken Brinsden , President, CEO, & Managing Director for the Company, said: "Although studies are still at an early stage the potential outcomes of the PEA for the Shaakichiuwaanaan Project highlights the opportunity for Patriot Battery Metals to become a global lithium leader and a key supplier of lithium raw materials to the emerging North American and European battery materials supply chain.
"The PEA outlines a staged development pathway for Shaakichiuwaanaan, commencing with an initial 400 ktpa production capacity which is intended to allow us to leverage the key competitive advantages of this world-class deposit to provide lithium raw materials in emerging western markets.
"Importantly, the resources to be mined include a high-grade component in the Nova Zone that creates an opportunity for a potentially resilient project, while also giving us considerable flexibility in terms of how we progress Shaakichiuwaanaan. This flexibility and scalability could allow us to adapt nimbly to evolving market conditions, while continuing to grow the resource base.
"As we consider moving to the Feasibility Study stage, the Project's anticipated low operating costs and expected IRA-compliant high-quality lithium product could make us an ideal partner for downstream players, making this a highly strategic asset in the future lithium landscape. There is also strong inbound interest from strategic partners to support Stage 1 funding, alongside potential access to Government funding mechanisms.
"The Shaakichiuwaanaan Project is potentially well positioned to anchor the North American lithium supply chain, meeting demand for decades to come, in the process targeting significant returns for all our stakeholders while maintaining a strong emphasis on sustainability and limited environmental impact," Mr. Brinsden added.
Patriot Battery Metals Inc. (" Patriot " or the " Company ") (TSX: PMET) (ASX: PMT) (OTCQX: PMETF) (FSE: R9GA), is pleased to announce the results of a Preliminary Economic Assessment (" PEA ") for the Shaakichiuwaanaan Project ( the "Project " or the " Property ") (formerly known as Corvette), located in the Eeyou Istchee James Bay region of Québec, Canada .
The PEA outlines a scenario for the staged development of the cornerstone CV5 Spodumene Pegmatite via both open pit and underground mining methods, thereby maximizing earlier access to the high-grade Nova Zone. This scenario provides optionality and flexibility to unlock the potential of the Shaakichiuwaanaan Project to become a leading lithium raw materials supplier in North America .
This study is based on the CV5 Pegmatite component of the recently announced updated Shaakichiuwaanaan Mineral Resource Estimate ("MRE"), which is the largest known lithium pegmatite Mineral Resource in the Americas and the 8 th largest globally (see news release dated August 5, 2024 ).
Although no final investment decision has been reached for the Shaakichiuwaanaan Project, the compelling economic potential presented in the PEA, coupled with the expected straightforward nature of the Project in terms of geology, pegmatite geometry, mining methodology and processing, supports the Company considering to progress a Feasibility Study ("FS"). If a FS is progressed, it would be targeted for completion during the September quarter 2025, in parallel with the submission of the Project Environmental and Social Impact Assessment "ESIA" documentation.
It is contemplated that a trade-off study would also be undertaken at the early stage of a FS to explore the potential advantages of further prioritizing a potentially smaller scale underground development to access the high-grade Nova Zone within CV5, during the Stage 1 development 1 . This study will aim to further define and optimise the Project's potential economic returns and potentially create flexibility to increase the plant feed grade during periods of possible lower pricing outcomes. Higher plant feed grades could improve the yield-to-product, thereby directly correlating to lower unit production costs. This strategy has the potential to deliver a more financially resilient project in a low-price scenario, ensuring more sustainable returns and operations through the lithium price cycles.
A technical report prepared in accordance with National Instrument 43-101 _Standards of Disclosure for Mineral Projects _("NI 43-101") including the PEA and the MRE will be filed on SEDAR+ by September 19, 2024 .
Unless otherwise indicated, all references to "$" or "CA$" in this release are to Canadian dollars and references to "US$" in this release are to US dollars. A foreign exchange conversation rate of US$ of 0.76US$ /CA$ has been used over the LOM.
| _ | | | 1 | The PEA contemplates Stage 1 as being open pit mining only, with the Stage 2 expansion phase focusing on underground mining to access the Nova Zone in parallel to the open pit mining. The trade-off study included in the FS will explore the advantages of bringing forward the underground mining operation as part of the Stage 1 development. |
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PRELIMINARY ECONOMIC ASSESSMENT (PEA) SUMMARY
_Cautionary Statement: __The PEA is preliminary in nature and includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them. Inferred mineral resources are that part of the mineral resource for which quantity and grade or quality are estimated on the basis of limited geologic evidence and sampling, which is sufficient to imply but not verify grade or quality continuity. Inferred mineral resources may not be converted to mineral reserves. It is reasonably expected, though not guaranteed, that the majority of Inferred mineral resources could be upgraded to Indicated mineral resources with continued exploration. Accordingly, there is no certainty that the preliminary economic assessment will be realized. _
EXECUTIVE SUMMARY
The PEA for the Shaakichiuwaanaan Project highlights its economic potential and strategic advantages, potentially positioning it among the largest producers 1 and as a top-tier low-cost producer of lithium. The PEA outlines a promising staged development scenario for the cornerstone CV5 Pegmatite deposit, utilizing both open pit and underground mining methods, to ensure earlier access to the high-grade Nova Zone.
Using DMS only processing a 5.5% Li 2 O spodumene concentrate will be targeted in both the Stage 1 and Stage 2 expansion production scenarios. The concentrate will be transported by road and rail to Bécancour, where the base case assumes it to be converted to lithium chemicals by the customer(s) or otherwise loaded at the Bécancour port facilities for seaborne trade.
As announced on August 5, 2024 , Shaakichiuwaanaan hosts the largest known lithium pegmatite Mineral Resource in the Americas and the 8 th largest known globally. Based on the preliminary economic results of the PEA for the proposed development of the CV5 Spodumene Pegmatite, the Company will consider advancing the Project to the FS level, which if progressed is expected to be completed in the September Quarter 2025. The Company's strategy will emphasize resource growth and a phased development approach, ensuring flexibility and scalability to adapt to market conditions.
The PEA incorporates a staged development strategy, with Stage 1 targeting production capacity of ~400 kpta of spodumene concentrate with an estimated Initial Net Capex of $640M ( US$487M ) 2 , including contingency and proposed CTM-ITC tax credits.
This first stage lays a solid foundation for the Project to commence production, with a subsequent Stage 2 expansion aimed at doubling the production capacity to ~800 ktpa. The Stage 2 expansion has an estimated Net Capex of $408M ( US$310M ) including contingency and proposed CTM-ITC tax credits 3 . The combined net cost requirement to reach nameplate production for both Stage 1 and Stage 2 is estimated to be approximately $608M ( US$462M ) 4 taking into account cash flows from Stage 1 and proposed CMT-ITC tax credits.
The Company will only commit to development after considering the economic conditions that prevail or are foreseeable at the time that an initial production decision, or when a subsequent expansion decision is made. That said, through the publication of this preliminary economic assessment, the Company believes the Shaakichiuwaanaan Project has the potential to be a long-life lithium asset with unique competitive characteristics.