Sayona Mining (ASX: SYA; US-OTC: SYAXF) has released a positive feasibility study for its Moblan lithium project in Quebec, just one month after announcing cost cuts at its 75%-owned North American Lithium (NAL) mine in the province on declining lithium prices.
The new study gives Moblan a post-tax net present value of $2.2 billion and a post-tax internal rate of return of 34.4%. Sayona says it will cost $962.5 million to build the project and a further $96.1 million in sustaining costs. The all-in sustaining cost to produce a tonne of concentrate is forecast at $748.04, compared to a projected market price of $2,653 per tonne (US$1,990 per tonne).
Moblan is a joint venture with Investissement Québec’s SOQUEM (40%) and located 130 km north of Chibougamau, in Quebec’s James Bay region.
An open pit mine and 4,800-tonne-per-day processing plant is planned to produce a spodumene concentrate containing 6% lithium oxide (Li2O). Annual production is forecast at 300,000 tonnes of concentrate per year at a grade of 6% Li2O over 21 years.
In a note to clients, Canaccord Genuity mining analyst Reg Spencer said that the study outlined a longer mine life, higher grades and higher recoveries than Canaccord’s models. However, Spencer has assumed a larger operation of 2.5 million tonnes per year producing 360,000 tonnes concentrate annually.
At US$722 million, the capex is also 70% higher than the US$425 million the analyst had modelled.
“This equates to capital intensity of US$412/t capacity, which is much higher than where industry averages have tracked (peer average over 2021-23 of ~US$250/t),” Spencer wrote in the Feb. 20 note. “Processing is planned to be via DMS (dense media separation) and flotation, which combined with the requirement to winterize the project, contributes to higher cap intensity than other peer development projects.”
The project is expected to generate total net revenue of $14.4 billion, with an EBITDA of $11.2 billion. In a release, the company noted the positive financial returns are driven by an estimated head grade of 1.36% Li2O, a life of mine recovery rate of 74.7%.
Moblan has probable reserves of 34.5 million tonnes grading 1.36% Li2O, included in measured and indicated resources of 49.9 million tonnes at 1.2% Li2O. The inferred resource is 21.1 million tonnes at 1.0% Li2O.
Sayona’s NAL operation began last year producing spodumene concentrate to meet growing battery demand. The company said last month it’s conducting a cost review of NAL as the spot price for concentrate is expected to dip to roughly US$2,200 per tonne in 2025 from an average of US$42,840 per tonne last year. The operation, located between Val d’Or and Amos, in the Abitibi-Temiscamingue hub, is a joint venture with Piedmont Lithium (ASX: PLL), which holds 25%.
“We are confident that the current lithium market will recover over the medium term,” said Sayona interim CEO James Brown in the release. ”Sayona will now look to review the timelines given the current market conditions, and continue to advance the necessary regulatory approvals, seek community support, and secure the necessary financing and project partners capable of advancing this project through to successful production, with the ultimate ambition to integrate Moblan into a regional supply chain for battery materials in Quebec.”
Sayona shares trade at A5.9¢ per share in a 52-week range of A3.7¢-A26¢. The company has a A$648-million market cap.
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