Frontier Lithium posts PFS with US$2.59 billion pretax NPV, Ontario

Oct 10, 2023

Frontier Lithium Inc. [FL-TSXV; LITOF-OTCQX; HL2-FSE] reported strong results of a prefeasibility study (PFS) for a proposed mine-to-lithium-hydroxide chemical/hydrometallurgical plant facility (integrated project) in the Great Lakes region of North America.

The PFS assumes a hydrometallurgical plant that would convert spodumene concentrate feedstock sourced from a vertically integrated spodumene open-pit mining and milling facility at the company's Pak lithium project, located north of Red Lake, northwest, Ontario. The PFS demonstrates a pretax net present value (NPV) of US$2.59-billion discounted at 8%. The PFS confirms that the 100%-owned project could be the continent's largest and lowest-cost producer of lithium hydroxide able to supply the rapidly growing electric vehicle industry in North America.

PFS highlights: Life-of-project cash flow (unlevered) of US$8.07-billion over 24-year total project life. Total initial capital expenditure estimate of US$468-million for the technical-grade concentrator and expansion capital of US$576-million for the chemical-grade concentrator and chemical plant, with a contingency of 20% included.

Sustaining capital of US$90-million. Pretax NPV at an 8% base-case discount rate of US$2,588-million and pretax internal rate of return (IRR) of 28.6%. After-tax NPV8 of US$1,739-million and IRR of 24.1%. After-tax net undiscounted cash flow (before initial capital expenditures) of US$5.98-billion. Annual average EBITDA (earnings before interest, taxes, depreciation and amortization) of US$251.3-million.

Chemical plant producing 12,520 tonnes of battery-quality lithium hydroxide monohydrate (LiOH-H2O) per year with an average selling price of US$22,000 per tonne and 7,360 tonnes of battery-quality lithium carbonate per year with an average selling price of US$20,500 per tonne;.

Pak and Spark deposits are open along strike and to depth. All-in cash costs of US$7,433 per tonne of lithium carbonate equivalent. After-tax payback of capital expenditures is 4.9 years after the start of commercial operations.

"Surging global demand for unique premium low-iron spodumene concentrates and high-margin, low-cost lithium chemicals presents an opportunity for Frontier Lithium to establish itself as a leading producer. The outstanding PFS results further emphasize this, underscoring the project's ability to meet the market's needs. The project's phased approach, highlighted in the study, ensures efficient resource utilization and minimizes upfront capital expenditure, positioning us for long-term success in the North American electric vehicle market," commented Trevor Walker, president and CEO. "Building upon the PFS results, we are committed to further optimizing the project through definitive-feasibility-level work. This crucial step allows us to unlock additional value and fine-tune our operational plan to maximize efficiency and profitability. We are confident that this milestone paves the way for strategic resource development and facilitates deeper discussions with potential offtake partners. We are dedicated to establishing mutually beneficial collaborations and supporting infrastructure upgrades in close co-operation with our first nation community partners. This commitment to sustainable and inclusive development reflects our respect for the environment, local communities and our shared goal of creating a prosperous future together."

The PFS is based on an updated mineral resource estimate completed by Todd McCracken, P.Geo, outlined in the National Instrument 43-101 technical report update as reported in Table 6.

Commodity Price Assumptions from the PFS are, base-case premium technical grade lithium concentrate of 7.2% Li2O (TG_SC7.2) price of US$3,000/tonne, chemical grade lithium concentrate of 6.6% Li2O (CG_SC6.0) price of US$1,350/tonne; lithium hydroxide price of US$22,000/tonne; lithium carbonate US$20,500 per tonne and an exchange rate of $1.30 USD/CAD.

The PFS results demonstrate the potential for Frontier Lithium to become a major North American lithium chemicals producer on a fully integrated spodumene mine to lithium hydroxide and carbonate chemical plant basis. The company will now concentrate on the following initiatives to drive the Project forward: complete a Definitive Feasibility Study Phase 1; continue environmental baseline studies to enable and advance permitting; selection of a site for commercial chemical plant; complete and finalize community partnership agreements; complete formal submission of announced federal and provincial critical minerals grants and tax breaks; continue to evaluate opportunities to increase the company's resources for the scaling of future operations; and evaluate strategic partnership options and offtake agreements.

The PAK lithium project contains North America's highest-grade lithium resource and is the second largest in North America by size. The project encompasses close to 27,000 hectares and remains largely unexplored; however, since 2013, the company has delineated two premium spodumene-bearing lithium deposits (PAK and Spark), located 2.3 km apart. Exploration is continuing on the project through two other spodumene- bearing discoveries: the Bolt pegmatite (located between the PAK and Spark deposits), as well as the Pennock pegmatite (25 km northwest of PAK deposit within the project claims).

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