Volt Lithium (TSXV: VLT) shares rose more than 11% today after it released a positive preliminary economic assessment (PEA) for its Rainbow Lake lithium brine project in northwest Alberta.
The study gives the project a net present value (NPV) with an 8% discount of US$1.5 billion and an internal rate of return (IRR) of 45% before taxes.
Even after taxes, the project has an NPV of US$1.1 billion and an IRR of 35%.
Volt shares traded 2¢ higher on the PEA at 19.5¢ each. The company has a market capitalization of just $25.4 million.
The PEA outlines annual production beginning at 1,000 tonnes and rising to over 23,000 tonnes of battery-grade lithium hydroxide monohydrate (LHM) over a 19-year period.
The PEA assumed a price of US$25,000 per tonne LHM.
The three-phase project would start out at a modest capital cost of just US$60 million, with the subsequent expansion expected to cost US$242 million. The capex for the final phase is the biggest at US$946 million. Add in the processing facility, administration, infrastructure, and contingency, and the total capex is US$1.5 billion.
Production would start at 1,000 tonnes per year with a lithium grade of 92 mg per litre from the Muskeg formation. A phase two expansion would boost output to 5,000 tonnes per year, again from the Muskeg formation. And the final phase would see production expanded to 23,000 tonnes per year of LHM from both the Muskeg and Keg River formations.
Brines would be treated using Volt’s proprietary direct lithium extraction (DLE) method, referred to as IES-300. The technology was successfully tested during the company’s pilot program in the second quarter of 2023 and was used as the basis for the PEA.
“We are very pleased with the results of the PEA,” said Alex Wylie, president and CEO of Volt. “Volt’s focus on extracting lithium from oilfield brines allows for significant project returns and economics that will allow Volt to grow its lithium production in a measured and responsible way.”
Volt owns lithium rights across 1,750 sq. km of land.
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