Australia’s Winsome Resources (ASX: WR1) said a scoping study reinforces the US$260-million Adina lithium project’s potential as a capital-efficient mine with a 17-year life in Quebec.
Repurposing the dense media separation (DMS) and ore sorting facilities at the Renard diamond mine, that Winsome said in April it might acquire, would be substantially cheaper than developing Adina from scratch, shows the study released on Tuesday.
It would involve a relatively simple upgrade to use the DMS circuit to produce 282,000 tonnes per annum of 5.5% spodumene concentrate (38,000 tonnes per year lithium carbonate-equivalent) over the mine life, Winsome said.
“The ease of mining mineralized material at Adina via an initial low strip open-pit along with the simple DMS flowsheet results in a competitive operating cost estimate, which optimization may improve further,” managing director Chris Evans said in the statement.
Renard review
The lithium explorer and developer in August paid $2 million for an extra three months to decide whether it would buy the past-producing Renard for a total of $54 million. The new report suggests it’s moving in that direction.
The plant provides a significant commercial advantage compared to other proposed projects in Canada, particularly given current low lithium prices, Evans said. It would “continue to operate through market fluctuations and commodity cycles,” he said.
Adina lithium project location. (Map courtesy of Winsome Resources.)
43% return
The scoping study indicates a post-tax net present value of US$743 million, an internal rate of return of 43% and a payback period of 1.8 years. Post-tax free cash flow over the mine’s life is estimated at US$1.8 billion.
These figures are based on an average all-in sustaining cost of US$693 per tonne and a forecasted spodumene concentrate (SC5.5) price of US$1,375 per tonne. This is the same estimate base used by its regional neighbour, Patriot Battery Metals (TSX: PMET; ASX: PMT), at its flagship Shaakichiuwaanaan project, formerly known as Corvette.
That project comes with a $761 million cost for a 2.5-million-tonnes-per-year plant capable of producing 400,000 tonnes annually due to its high-grade ore.
Renard’s annual processing capacity sits at 2.2 million tonnes with a potential run rate of 1.7 million tonnes, at an average head grade of 1.24% lithium and targeted recoveries of 67%.
Adina resource
The Adina project has a resource of 77.9 million tonnes grading 1.15% lithium, of which 35.8 million tonnes is included in the production target.
Winsome is currently advancing the asset’s permitting and finalizing due diligence on Renard. Previous owner Stornoway Diamonds spent about $900 million on infrastructure from 2016 to 2023 before failing when the diamond market collapsed.
The company says the Adina lithium project would create 500 jobs during operation and could potentially generate more than US$7.5 billion in gross revenue.
It could also potentially generate $1.1 billion in corporate Quebec provincial and Canadian federal taxes, supporting the local communities, the Australian miner says.
Shares in Winsome Resources closed flat on Tuesday at A52¢ apiece, giving it a market capitalization of A$112. 5 million ($103.3 million).
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