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Argosy Minerals fast-tracks lithium project development for emerging US battery market

Proactive Investors Thursday, 13 February 2020 ()
Argosy Minerals Limited (ASX:AGY) is accelerating development at its Rincon Lithium Project in Argentina with permits granted for a 2,000 tonne per annum processing plant and funding discussions underway. The shipping of a trial cargo of 5 tonnes of high-quality lithium carbonate from the projects pilot plant is scheduled for the first quarter and delivers into the sales agreement executed with Mitsubishi RtM to sell up to 100 tonnes lithium carbonate equivalent product. Rincon lies close to infrastructure in Salta Province, a prolific mining jurisdiction Argosy has also executed a heads of agreement (HOA) with Mitsubishi for the supply of 2,000 tonnes per annum for a term of three years with an option to extend for a further two years and is seeking to secure a binding off-take arrangement. Construction of the processing plant is expected to take around 12-15 months with CAPEX estimated at around US$15 million and Argosy is working to implement a funding structure during the first half of 2020. Long term production plans Permitting is underway for an eventual 10,000 tonne per annum plant capacity, with the scope to increase to 15,000 tonnes per annum. The preliminary economic assessment resulted in a pre-tax net present value (10% discount rate) of US$399 million and an internal rate of return of 53% with a forecast CAPEX of US$141 million including a contingency of US$18.34 million and a 2.1-year payback. The extended capacity would result in a 16.5-year mine life with the ability to extend further with deeper drilling to more than 100 metres depth. The JORC resource is 245,120 tonnes of lithium carbonate equivalent to 100 metres depth. Argosy’s total estimated operating cost for the project is US$4,645/tonne with an average annual pre-tax free cash flow over life-of-mine of around US$74 million with an EBITDA margin of 61%. Tonopah lithium brine project Argosy acquired the project in August 2019, which comprises 425 claims covering an area of about 34.25 square kilometres. SRK mining consultants completed a technical review of the project and provided positive validation of the lithium brine resource potential. The project also has regional and site infrastructure with the regional mining centre of Tonopah within a 40-minute drive. Strategic foothold in the US Tonopah sits around 4 kilometres from Albemarle’s Silver Peak lithium brine operation and around 300 kilometres from the Tesla gigafactory. The project gives the company a strategic foothold in a world class mining jurisdiction with lithium included in the country's list of critical minerals - which represents a significant opportunity to leverage Argosy’s lithium brine processing expertise over an expanded asset base. Tonopah is strategically located in a world class mining jurisdiction US battery market aspirations Argosy is confident its Tonopah project will be able to take advantage of the favourable lithium mining outlook in the USA. Last year Benchmark Mineral Intelligence has briefed the White House on developing a domestic EV industry and supply chain, Volkswagen broke ground on its Tennessee electric vehicle plant, Ford Motor Co unveiled its mustang-inspired electric SUV as part of its plan to invest US$11.5 billion electrifying its vehicles by 2022, and 12 states (plus Washington DC) have adopted California’s Clean Car standards. Its forecast that up to five gigafactory’s could be built in the US by 2028.
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