Rock Tech Lithium Inc. (TSX-V: RCK) (OTCQX: RCKTF) (FWB: RJIB) (WKN: A1XF0V) (the “Company” or “Rock Tech”) announce the completion of a bankable project study (“BPS”) for the construction and operation of the Company’s proposed battery grade merchant lithium hydroxide monohydrate converter and refinery facility (the “Converter” or “Project”) in Guben, Germany.
The results of the BPS which was conducted in collaboration with Wave International Pty and the Company’s Finnish engineering partner show a significant improvement in the Converter’s economics compared to the previous engineering study (“Converter Engineering Study”), released on November 29th 2021, and are expected to form the basis for the project financing discussions with potential lenders.
GENERAL REMARKS
Rock Tech’s planned merchant LHM Converter in Guben, Germany is anticipated to be the first European lithium converter, with capacity to produce 24,000 tonnes of battery grade lithium hydroxide per year, a raw material urgently needed by the battery and automotive industries.
The importance of lithium hydroxide is supported by the European Union’s recent agreement to effectively ban the sale of new combustion engine vehicles from 2035. Such ban will reshape the European mobility sector and further accelerate EV production, leading to an increased demand for lithium hydroxide.
Rock Tech’s plant will be located in Guben, Brandenburg (DE). As announced in October 2021 the Company purchased a site within the existing Guben South industrial park. The site which covers a total of 12 hectares offers excellent accessibility by road and rail.
Additionally, key suppliers and customers reside in the region which is expected to become one of the leading battery and EV clusters in Europe. Transparent federal legislation and comprehensive state subsidy schemes further add to the region’s attractiveness.
The Converter is designed to process spodumene concentrates into battery grade LHM via the sulphation-causticisation (S-C) route. The basic process flowsheet was selected in the previous phase of the Project and was subsequently optimised using data supplied by equipment vendors and metallurgical test work completed during the study.
Dirk Harbecke, Rock Tech’s CEO stated:
Our Guben Converter is an exceptional project as it will help address the increasing need for battery-grade lithium hydroxide.
“Additionally, it will strengthen regional supply chains by offering a processing route for spodumene concentrates in Europe.”
The Company is very pleased that the technical and economic results of the BPS support the Company’s strategy of building a converter in Germany. Although the BPS uses more conservative costing assumptions than the Converter Engineering Study, it estimates an increase in NPV and of project IRR.
The BPS estimates a pre-tax NPV (8%) of USD 1,219 million an increase of USD 789 million (or 183 per cent) compared to the Converter Engineering Study.
Recent inflationary pressures and global supply chain tightening have had a substantial impact on both the estimated capital expenditures and operating costs. Cost impacts are partially offset by more favourable lithium pricing assumptions based on current market price forecasts.
“We remain conservative with our price forecasting,” Mr. Harbecke explained, “However, if we were to assume the current spot market prices for spodumene and lithium hydroxide remain stable, the pre-tax NPV of our Converter would increase substantially to USD 4,300 million and an IRR of 37.5 per cent”
The results of the BPS demonstrate the potential of Rock Tech’s zero waste and ESG strategy, with approximately 96 per cent of the estimated 290,000 tonnes of by-product identified for potential utilization in other industries.
Significant efforts have been undertaken to develop use cases for alumino‑silicates, sodium sulphate and gypsum. In line with its conservative costing assumptions, Rock Tech has not yet reflected such opportunities in its revenue estimates.
The city of Guben has commenced preparatory site activities such as grubbing and clearing. Rock Tech is expecting approval of its first partial permit (TG1) in Q4’2022 and the second and last partial permit (TG2) in Q3’2023.
As a result of increased lead times for delivery of major equipment from suppliers, early construction works to the extent permitted under TG1 are anticipated to begin in Q1’2023, with start of commissioning planned to commence in Q2’2025.
SUMMARY OF BPS RESULTS
The BPS was a collaborative study with key contributions from Wave International Pty (“Wave”) and the Company’s Finnish engineering partner. The BPS demonstrates a high-level engineering definition and cost certainty with AACE Class 3 estimates for capital and operating costs.
The BPS incorporates recent metallurgical test work, including vendor test work conducted for key process packages using spodumene feedstocks from a range of prospective suppliers, resulting in a more robust process design.
Additionally, the BPS describes a path forward to realize value-add opportunities for the Converter residues, which are envisioned as in-demand feedstocks for the domestic building and construction industries.
Rock Tech also recognizes the risks associated with supply chain disruptions due to the impacts of the ongoing war in Ukraine, the COVID-19 pandemic, fluctuating currency exchange rates and energy prices, and an inflationary global marketplace. In an effort to manage such risks and provide a robust financial outlook for the Converter; such risks were taken into account when preparing the BPS.
This resulted in an increase in capital expenditure and operating cost estimates for the Converter compared to the Converter Engineering Study. In addition, the start of commissioning of the Project has been moved to Q2’2025 to account for such evolving social, economic, and geopolitical risks.
Rock Tech is currently embarking on a Front-End Loading Stage 3 (FEL3) study to finalize basic engineering to support a final investment decision.
HIGHLIGHTS
- Estimated Pre-Tax NPV (8% discount rate) of USD 1,219m
- Estimated Pre-Tax IRR of 24%
- Estimated initial capital costs of approximately USD 683m
- Estimated nameplate annual lithium hydroxide monohydrate (LHM) production capacity of 24,000 tonnes
- Estimated C1 Plant Operating Cost of USD 4,752/t of LHM produced
- Estimated revenue of approximately USD 14,872m over 25-year life of project
- Early construction works are anticipated to begin in Q1’2023
- with start of commissioning planned from Q2’2025
Rock Tech Lithium completes Bankable Project Study for its Guben Converter Project USA – English, VANCOUVER, BC, November 4, 2022
