Surge Battery PEA posts $9.2B lithium project value

Surge Battery Metals (TSXV: NILI; US-OTC: NILIF) has issued a preliminary economic assessment (PEA) for its Nevada North lithium project that outlined what could be a low-cost, long-life producer of battery-grade materials for the U.S. market.

The study posted Monday gave the project an after-tax net present value at an 8% discount of $9.21 billion and an internal rate of return of 23% based on a lithium carbonate equivalent (LCE) price of $24,000 per tonne. Its operating cost is pegged at $5,097 per tonne of LCE, owing to near-surface, high-grade mineralization. The report projected a 4.7-year payback and a 42-year life of mine.

The project “could potentially be a major low-cost producer of battery-grade lithium carbonate for the United States battery industry,” Surge Battery Metals CEO Greg Reimer said in a news release. “We have taken a major step in achieving that with today’s results.” 

Stage one construction of the conventional open-pit operation is to cost around $2.97 billion, while stage two expenses are expected at $2.35 billion, according to the PEA. Together with a sustaining capital of $1.51 billion, the entire project would cost $6.86 billion.

Shares of Surge Battery Metals jumped 16% to close at 33¢ apiece in Toronto for a market capitalization of $59 million.

Throughput

Over the 42 years, the mine is projected to produce 86,300 tonnes of LCE annually at an average recovery rate of 83%. Peak production is expected in the sixth year at 109,100 tonnes.

During the mine life, about 205 million tonnes of mineralized material will be mined at an average lithium grade of 4,016 parts per million, the report showed. Mining will start with the shallow, high-grade portions of the resource, currently estimated at 8.65 million tonnes of LCE.

The lithium plant will initially process mined material at an annual rate of 2.58 million tonnes during stage one, then doubling to 5.15 million tonnes in its fourth year, when stage two comes online, taking the average annual throughput over the life of mine to 4.88 million tonnes.

“The combination of low operating expenses, great return on investment and the ability to produce large quantities of battery-grade lithium carbonate, including a peak of 109,100 tonnes in one year, showcases the tier one status,” CEO Reimer said.