Lithium Americas advances Thacker Pass in Nevada

Lithium Americas (TSX: LAC; NYSE: LAC) is perhaps best known for its flagship 62.5%-owned Cauchari-Olaroz lithium brine project in northwestern Argentina’s Jujuy province, which is expected to start producing battery-grade lithium carbonate (Li2CO3) over a mine life of 40 years from 2020.

But the company also has a 100%-owned lithium project closer to home in Nevada, 100 km northwest of the mining town of Winnemucca. The Thacker Pass deposit is the largest lithium clay project in the world, the company says, and a prefeasibility study completed in June outlined a mine life of 46 years.

The study envisioned initial production capacity of 30,000 tonnes per year of battery-grade Li2CO3 starting in 2022 in phase one, increasing to 60,000 tonnes per year in phase two starting in 2026.

The company has just begun the permitting process and expects to start building the first phase of the project by the end of 2020, with lithium production beginning in 2022.

Construction of phase two will start in 2025, with added production entering the market by 2026.

Lithium Americas’ Thacker Pass project in Nevada. Credit: Lithium Americas.

The Thacker Pass project is the largest known lithium resource in the United States and contains lithium grades 2-3 times higher than other U.S. lithium clay deposits. The deposit is also very shallow, averaging only nine metres below ground (the maximum depth of the pit would be 120 metres), and, as a result, has a low strip ratio of waste-to-ore mined of 1.6:1.

“It is a world-class project and a great project for Nevada,” says Alexi Zawadzki, Lithium Americas’ president of North American operations. “From our financing modelling, it will generate about $6 billion in taxes to federal, state and county governments.”

The project involves building a leaching circuit using sulfuric acid to liberate the lithium from the claystone. After the leaching process, the lithium-bearing solution will be purified using crystallizers and reagents to produce battery-grade Li2CO3.

Because the plan relies on sulfuric acid, the company will build a 5,280-tonne-per-day conventional sulfuric acid plant. (In phase one it will be 2,640 tonnes per day.) The plant will convert molten sulfur into low-cost sulfuric acid, which will lower transportation costs and also provide a source of low-cost power. The company is also contemplating a co-generation facility that would provide enough carbon-free electricity to power the entire project and sell excess power to the grid.

Zawadzki notes that the company’s acid leaching process is more efficient, sustainable and cheaper than traditional processing.

“We are no longer using the historical approach, which includes a roasting and calcining process adapted from the lithium hard rock industry,” he explains. “Quite simply, our soft claystone ore responds well to a low-energy wet attrition and leach process because it was formed at the bottom of a lake under relatively benign geological conditions. Applying the hard rock process to our ore, which was effectively designed to liberate lithium in rock that was formed under intense heat and pressure, is like using a sledgehammer to crack a walnut.”

Zawadzki adds that although the process is new to lithium, vat acid leaching is commonly used across the U.S. in the phosphate industry and uses standard equipment and technology.

A pilot plant 354 km away in Reno is on schedule to be operational before the end of the year. The purpose of the pilot plant is to optimize the process to consume less sulphuric acid, which is a main driver on cost. The plant will also produce samples of lithium-enriched brine that will be shipped to crystallizer manufacturers who will use the brine samples to design their equipment and to provide performance guarantees for the production of battery-grade lithium chemicals.

“The pilot plant will also produce representative samples for environmental and rheology testing, which will be used for the permitting process and confirm key details of our design,” Zawadzki says. “Upon completion of the pilot plant studies, expected by mid-2019, we intend to go directly into basic engineering for our plant design.”

A drill rig at Lithium Americas’ Thacker Pass project in Nevada. Credit: Lithium Americas.

Capex for phase one of the Thacker Pass build is estimated to run to US$581 million, including a 19% contingency, and phase two will come at an additional cost of US$478 million. Phase two involves doubling the sulfuric acid capacity by building a second acid plant, as well as constructing a 93-km rail line that would connect the plant with a Union Pacific main line near Winnemucca. The UP line is connected to existing facilities producing soda ash in Wyoming, limestone in Nevada, and molten sulfur in various locations.

Lithium Americas began the permitting process in the first quarter of this year with baseline data collection, most of which is complete. The company expects to submit an Environmental Impact Statement to regulators by the third quarter of next year.

After acquiring Thacker Pass through its merger with Western Uranium in mid-2015, Lithium Americas spent about a year and a half reconfiguring the project (formerly known as Kings Valley). It conducted two drill campaigns and identified more lithium resources.

At a price of US$12,000 per tonne for battery-grade Li2CO3, the prefeasibility study estimated average annual earnings before interest, tax, depreciation and amortization (EBIDTA) of US$520 million (US$246 million in phase one); an after-tax net present value at a 8% discount rate of US$2.6 billion; and an after-tax internal rate of return of 29.3%.

Proven and probable reserves currently stand at 179.42 million tonnes grading 3,283 parts per million lithium for 589,000 tonnes of lithium metal or 3.14 million tonnes of lithium carbonate equivalent.

At full build-out, Thacker Pass’ 60,000 tonnes of Li2CO3 a year would represent about 25% of current global demand for lithium, Zawadzki says, adding that global demand is expected to grow by roughly 400% between now and 2025. As a result, Lithium Americas’ wholly-owned subsidiary, Lithium Nevada is currently evaluating the production of lithium hydroxide at Thacker Pass, as lithium hydroxide is priced higher than lithium carbonate and demand is rapidly growing for the production of cathode materials.

The U.S. is currently one of the largest lithium consumers, but produces only about 2% of the global supply.

“Economically available lithium is relatively scarce in the United States, ” Zawadzki says. “Most of it is located in South America — in Chile and Argentina — and in Australia. The U.S. is heavily reliant on imports of lithium that are vital to the nation’s security and economic prosperity, and that dependence on foreign sources creates a strategic vulnerability. This is precisely why President Donald Trump has defined lithium as a “critical mineral” under an Executive Order in 2017. Thacker Pass has the potential to satisfy the U.S. lithium demand or at least a good percentage of it. Therefore, not only is this a very unique deposit globally, it is very important to the U.S.”