Bald Hill has been estimated to have an internal rate of return of 185% and will pay back its A$42 million capital cost within about 12 months, while Tawana suggested the project’s net present value of $150 million will increase “significantly” as additional ore reserves are defined.
Bald Hill’s current reserves of 4.3 million tonnes grading 1.18% lithium oxide underpin a 3.6 year “starter pit” development, with inferred resources totalling another 8.2Mt.
Average earnings (EBITDA basis) are put at $83 million per annum, with cash costs of $508 per tonne of spodumene concentrate FOB (Esperance) resulting in 100% pre-tax margin.
The operation will produce 155,000tpa of spodumene concentrate, plus tantalum pentoxide.
Tawana has a binding offtake agreement for the supply of lithium concentrate from Bald Hill over an approximate initial five-year term, with a fixed price for all production for 2018 and 2019 of US$880/t.
Tawana is earning a 50% stake in Bald Hill, with Singapore listed Alliance Mineral Assets to have the other 50%.
Shares in Tawana were 7% to A23c in early trade, capitalising the company at $104 million.
