American Lithium shares surge on report that boosts Falchani resource six-fold

An updated resource for American Lithium‘s (TSXV: LI, NASDAQ: AMLI) Falchani project in Peru grows the measured and indicated totals of lithium carbonate equivalent (LCE) by 476%, according to the report released on Tuesday. 

The new resource shows Falchani contains 5.53 million tonnes of LCE, which breaks down to 447 million tonnes at 2,327 parts per million (ppm) lithium. It also includes 3.9 million inferred tonnes of LCE (506 million tonnes at 1,481 ppm lithium). 

The new Falchani resource is based on 3,075 metres of additional drilling from 15 drill holes from 2022 to 2023. The updated resource now has data for 12,317 metres of drilling in 67 drill holes completed since 2017.

“We are extremely pleased with the results of our EIA drill program and the very large increase in resources at Falchani which includes, doubling the contained lithium,” said American Lithium CEO Simon Clarke. “Falchani is now one of the largest hard rock lithium projects globally with the ability to produce high-purity battery-grade lithium carbonate.”

Compared to the previous estimate from March 2019, the base case cut-off grade has been lowered to 600 ppm lithium from 1,000 ppm, based on strong project economics that specifically updated operating costs and a selling price of US$20,000 per tonne LCE.

Using the old cut-off, the updated measured and indicated resources still totals 5.32 million tonnes LCE versus the 960,000 tonnes LCE from the 2019 resource, for an increase of 455%.

Located in Puno, southwestern Peru, Falchani represents the sixth-largest hard-rock lithium deposit in the world, according to the company’s website.

A preliminary economic assessment (PEA) based on the 2019 resource outlined a potential 33-year operation producing 23,000 tonnes of battery-grade lithium carbonate annually over the first seven years, then ramping up to 44,000 tonnes a year.

The study gave the project an after-tax net present value of US$1.55 billion (at an 8% discount) with a 19.7% internal rate of return. Its initial capital expenditure is estimated at US$587 million.

With the updated resource as well as the inclusion of potassium, cesium and rubidium in the new resource block model, American Lithium has commenced mine plan modelling and updating capital and operating costs for the PEA, which is expected within the next several weeks.

Shares of American Lithium surged 15.8% to $1.68 by late afternoon on Tuesday in Toronto, valuing the company at $360.6 million. Its shares traded in a 52-week range of $1.39 and $4.90.