Patriot Battery targets 400,000 tonnes per year at Quebec lithium project, PEA shows

Patriot Battery Metals (ASX: PMT; TSX: PMET) is targeting initial lithium production capacity of 400,000 tonnes of spodumene concentrate at its flagship Shaakichiuwaanaan project, formerly known as Corvette, in Quebec.

Unveiling the results of an awaited preliminary economic assessment (PEA) for the lithium project, Patriot said on Wednesday it had chosen a staged development of the CV5 spodumene pegmatite, via open pit and underground mining methods. This approach would maximize earlier access to the high-grade Nova Zone, minimizing the environmental footprint, Patriot said.

The scenario, it noted, also offers options and flexibility to unlock the potential of Shaakichiuwaanaan to become a lithium raw materials supplier in North America. The asset, the largest known lithium pegmatite mineral resource in the Americas, hosts vast spodumene crystals, which enhances processing efficiency and recovery rates, Patriot said.

“The flexibility and scalability [of the staged development pathway for Shaakichiuwaanaan] could allow us to adapt nimbly to evolving market conditions, while continuing to grow the resource base,” CEO Ken Brinsden said in the news release, adding the PEA results show Patriot’s potential to become a global lithium leader and key supplier of lithium raw materials, despite its early stage.

The PEA comes as lithium, while an essential component in electric vehicle batteries, faces headwinds in the form of low prices, down from 80% of their level last summer. 

Staged development

The strategy’s first stage requires an estimated initial net capital expenditure of $640-million (around US$470 million).

This first phase lays the groundwork for production, followed by a Stage 2 expansion aimed at doubling output to 800,000 tonnes of spodumene concentrate per year. The estimated net capex for that expansion is $408 million (US$300 million). 

The combined net cost to reach nameplate production for both stages is estimated at around $608 million (US$447 million), considering cash flows from Stage 1 and proposed tax credits Patriot said.

Upon completion of the second phase, the Shaakichiuwaanaan project could become one of the world’s largest spodumene producers, providing spodumene concentrate with a 5.5% lithium oxide content, or SC5.5, in a stable jurisdiction.

Overall, the project is expected to have a pre-tax net present value of $3.6 billion, with a pre-tax internal rate of return of 38% at $1,375 per tonne. 

The payback period has been pegged at 3.6 years at an assumed average lithium price of 1,375 per tonne or $1,500 per tonne, with a 24 year mine life. 

2027 investment decision 

The executive said Patriot will only commit to development after considering the economic conditions that prevail or are foreseeable at the time that an initial production decision is made. 

The company aims to make a final investment decision by 2027, potentially enabling construction to proceed through 2028 and initial production to commence in early 2029. 

Patriot is simultaneously considering advancing to the Feasibility Study stage, as it believes that Shaakichiuwaanaan’s anticipated low operating costs and expected IRA-compliant high-quality lithium output would make the company an attractive partner for downstream players.