REG - Atlantic Lithium Ltd - Mining Lease Granted for Ewoyaa Lithium Project
20/10/2023 07:00
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RNS Number : 7948Q Atlantic Lithium Limited 20 October 2023
20 October 2023
Mining Lease Granted for Ewoyaa Lithium Project
Ghana awards historic first Mining Lease for lithium,
paving the way for Ewoyaa to become one of the next major spodumene concentrate producers
Atlantic Lithium Limited (AIM: ALL, ASX: A11, OTCQX: ALLIF, "Atlantic Lithium"
or the "Company"), the African-focused lithium exploration and development
company targeting to deliver Ghana's first lithium mine, is pleased to
announce that Ghana's Ministry of Lands and Natural Resources has granted a
Mining Lease in respect of the Company's flagship Ewoyaa Lithium Project
("Ewoyaa" or the "Project"), comprising the proposed Ewoyaa Lithium Mine and
Processing Plant, enabling the advancement of the Project towards commercial
production.
Highlights
- Mining Lease terms, secured in the interests of all stakeholders
through close cooperation with the Government of Ghana, in line with
establishing its new Green Minerals Policy, maintain the Project's position as
one of the lowest capital and operating cost hard rock lithium projects
globally and indicate strong commercial viability and exceptional
profitability potential for a 2.7Mtpa steady state operation, producing a
total of 3.6Mt of spodumene concentrate (approximately 350,000tpa) over a
12-year mine life(1):
· Ewoyaa to become one of the top 10 largest spodumene concentrate
producers globally(1);
· Payback period of main processing plant of 9.5 months;
· C1 cash operating costs of US$377/t of concentrate Free-On-Board
("FOB") Ghana Port, after by-product credits, All in Sustaining Cost ("AISC")
of US$675/t;
· Development cost estimate of US$185m; to be substantially funded by
Piedmont Lithium and planned investment by Ghana's sovereign wealth fund, the
Minerals Income Investment Fund ("MIIF");
· Post-tax NPV(8) of US$1.3bn, with free cash flow of US$2.1bn from Life
of Mine ("LOM") revenues of US$6.6bn.
- Mining Lease represents a considerable de-risking milestone in the
development of the Project.
- First Mining Lease to be granted for lithium in Ghana,
demonstrating the Government's strong support in the Company as its 'partner
of choice' to deliver long-term lithium production and serving as a major
landmark in the country's efforts to reaffirm its status as a leading mining
destination and establish itself as a key player in the global decarbonisation
drive in Africa.
- Atlantic Lithium granted exclusive rights to carry out mining and
commercial production activities over the Mining Lease area for an initial
15-year period, renewable in accordance with Ghanaian legislation.
- Project to be funded by strategic partnerships with Piedmont
Lithium and MIIF, with competitive offtake partnering process underway to
secure Project funding for a portion of the remaining 50% available feedstock.
- Under the terms of the Mining Lease, the Company agrees to list on
Ghana Stock Exchange and is provided the opportunity, with incentives offered
by the Government of Ghana as support, to participate in further value
addition by undertaking studies to assess the viability of the production of
feldspar at Ewoyaa and for downstream conversion in Ghana, offering the
potential to significantly enhance shareholder value.
- The Company intends to outline the next steps regarding the
Project's development in the coming weeks.
Commenting, Neil Herbert, Executive Chairman of Atlantic Lithium, said:
"As the first to be granted for lithium in the country, the award of the
Mining Lease for the Ewoyaa Lithium Project is auspicious for both Ghana and
Atlantic Lithium. It serves as Ghana's statement of intent to establish itself
as a leading hub in Africa in the EV supply chain through the long-term
production of lithium, with Atlantic Lithium as its partner of choice in this
objective.
"The Mining Lease is a major endorsement of the viability of the Project and a
landmark de-risking milestone in its advancement towards production. The
Government of Ghana, which is eager to build upon its mining history that
spans back over a century and diversify away from its long-standing gold
production, has remained incredibly cooperative throughout our application
process. We wholeheartedly welcome their support, alongside the intent shown
by Ghana's sovereign wealth fund, MIIF, at this pivotal moment.
"We believe that Ewoyaa will showcase the Central Region and Ghana more
broadly as a highly attractive mining investment jurisdiction. As a first
mover in Ghana, we look forward to working closely with our in-country
partners to set an example for responsible, modern mining, delivering
long-lasting benefits to all stakeholders in the process.
"We consider the Project to be one of the industry's leading lithium assets.
Speaking on behalf of the entire Atlantic Lithium team, we are incredibly
excited and proud to be playing such an important role in the development of
Ghana's economy, including the opportunity to support Ghana's aspirations to
further develop its lithium value chain.
"With our sights set on first production, work is now well underway to prepare
Ewoyaa for shovel readiness. Meanwhile, we continue to de-risk and enhance the
value of the Project through further exploration. We look forward to sharing
our progress on these activities in due course."
Grant of Mining Lease
Following the release of the Company's Pre-Feasibility Study ("PFS") for the
Company's Ewoyaa Lithium Project (refer announcement of 22 September 2022),
the Company submitted its application for a Mining Lease in respect of the
Project (refer announcement of 13 October 2022).
On 19 October 2023, the Company was granted the Mining Lease in respect of the
application area ("Lease Area") within the Mankessim licence, held by Barari
DV Ghana Limited ("Barari"), which contains the Company's flagship Ewoyaa
Lithium Project.
The Lease Area contains the 35.3Mt @ 1.25% Li(2)O MRE(1), which includes a
total of 3.5Mt @ 1.37% Li(2)O in the Measured category, 24.5Mt @ 1.25% Li(2)O
in the Indicated category and 7.4Mt @ 1.16% Li(2)O in the Inferred category.
Summary of Key Terms
In line with the Government of Ghana's initiative to establish a new Green
Minerals Policy, the terms of the Mining Lease were agreed upon by the Company
and the Minerals Commission as being attractive to Ghana and to the Company's
shareholders.
The Mining Lease grants the Company exclusive rights to work, develop and
produce lithium (and other associated minerals) over the entirety of the 42.63
km(2) Lease Area for an initial period of 15 years, renewable under Ghana's
Minerals and Mining Act, 2006 (Act 703).
The Mining Lease is subject to parliamentary ratification and the Company
obtaining the necessary approvals and permits required by law in relation to
its proposed activities, including but not limited to, the Environmental
Protection Agency.
Under the terms of the Mining Lease, the Company must commence commercial
production within 24 months from the date of its ratification and comply with
Ghana's Local Content Regulations.
The Government of Ghana has publicly stated its ambitions for long-term
lithium production in Ghana and its objective to establish itself as a major
hub in Africa in the EV supply chain. Through the grant of the Mining Lease,
the Government of Ghana supports Atlantic Lithium as its partner of choice in
these ambitions, which include evaluating the establishment of feldspar
production and downstream conversion opportunities in Ghana.
Fiscal Regime
The following key financial terms, agreed under the grant of the Mining Lease,
have been updated from those considered as part of the Definitive Feasibility
Study ("DFS") for the Project (refer announcement of 29 June 2023).
Under the terms of the Mining Lease, the Government of Ghana will be entitled
to a 13% free carried interest in the Project, representing a 3% increase from
the 10% free carried interest incorporated in the DFS.
The Government of Ghana will also be entitled to a 10% royalty rate, increased
from the 5% royalty rate incorporated in the DFS.
Table 1 below is a summary of the key metrics table that has been prepared to
estimate and evaluate Project cash flows and economic viability for a 2.7Mtpa
steady state operation over a 12-year mine life, using the parameters as
defined in the DFS and incorporating the agreed terms of the Mining Lease.
The full Project metrics can be found in Table 3 in the Appendix.
Table 1 Summary of EWOYAA KEY METRICS - DFS VERSUS mINING lEASE TERMS
(100% PROJECT BASis(2))
Item Units DFS Result Mining Lease
Revenue (all products) US$M 6,566 6,566
LOM Concentrate Pricing, FOB Ghana US$/t 1,587 1,587
Post-tax IRR % 105 94
C1 Cash Cost, after secondary product credits US$/t 377 377
All In Sustaining Cost (AISC) US$/t 610 675
Surplus Cashflow, Post Tax US$M 2,438 2,091
NPV(8) Post Tax US$M 1,498 1,301
Payback - Combined Months 19 17
Payback - Main Plant Months - 9.5
Payback - Modular DMS Unit Months - 3
EBITDA US$M 3,798 3,365
EBIT US$M 3,527 3,022
NPAT, LOM US$M 2,284 2,004
(2) Whilst the asset is currently wholly owned by Atlantic Lithium Ltd,
Piedmont Lithium Inc. can earn up to half of the Company's ownership in the
Project through its funding agreement whereby Piedmont will sole fund the
first US$70m, and 50% of additional costs thereafter, of the total US$185m
development expenditure indicated in the DFS for the Project. The Government
of Ghana has the right to a 13% free carry once in production and the Minerals
Income Investment Fund has agreed Heads of Terms with the Company, which will
see it earn a 6% contributing interest in the Project.
(3) Mr S. Searle of Ashmore Advisory Pty Ltd is the Competent Persons for
Mineral Resources and Mr H. Warries of Mining Focus Consultants Pty Ltd for
Ore Reserves. For full Competent Persons statements, refer to the Competent
Persons section later in this announcement.
NOTE: Mineral Resources are inclusive of the Ore Reserves.
Feldspar
The Company has agreed to undertake a Feasibility Study ("Feldspar Study") to
assess the viability of producing and processing feldspar feedstock as
by-product of spodumene concentrate production at the Project.
As announced on 15 August 2023, the Company has signed a Memorandum of
Understanding ("MOU") with The University of Mines and Technology ("UMaT"),
Tarkwa in the Western Region of Ghana to undertake the Feldspar Study. The DFS
for the Project does not currently consider any activity in relation to the
production of feldspar. The Company believes that the commercialisation of
feldspar at Ewoyaa offers the potential to reduce the Project's waste
footprint and generate significant value to the Company and to Ghana, in
addition to the Project's lithium production.
Downstream Processing
Under the terms of the Mining Lease, the Company will also conduct a scoping
study ("Downstream Conversion Study") to evaluate the economic benefits and
viability of downstream lithium conversion in Ghana. Subject to the results of
the Downstream Conversion Study and relevant economic and market conditions,
the Company has the right, with incentives offered by the Government of Ghana
in support, to establish a lithium processing plant in Ghana. This is believed
to generate considerable benefits to Ghana and presents the Company the
opportunity to significantly enhance shareholder value.
Ghana Stock Exchange Listing
In accordance with Ghana's Local Content Regulations, companies are required
to list on the Ghana Stock Exchange ("GSE") within five years of the
commencement of mining operations. The Company has committed to establish a
path for the Company to begin trading on the GSE, while also ensuring ongoing
compliance with the Company's Constitution and its ASX and AIM listings, as
soon as practicable.
Project Ownership and Financing
Piedmont Earn-In Agreement
On 1 July 2021, the Company announced a staged investment agreement (the
"Agreement") with Piedmont Lithium Inc (Nasdaq: PLL; ASX: PLL, "Piedmont"),
whereby, through the fast-tracked development of the Project, Piedmont will
earn up to a 50% interest in the Company's share of its lithium projects in
Ghana ("Ghana Portfolio") and 50% of the total spodumene concentrate (SC6)
offtake at market rates.
Through the satisfaction of the terms set out in Stage 2 of the "Agreement",
Piedmont has exercised its option to acquire an initial 22.5% interest in the
Ghana Portfolio (refer announcement of 17 August 2023).
To earn the full 50% interest, as set out in Stage 3 of the Agreement,
Piedmont has committed to sole fund the first US$70m, and 50% of any
additional development expenditure, towards the total US$185m development
expenditure for the Project indicated in the DFS.
Minerals Income Investment Fund Strategic Investment
The Minerals Income Investment Fund of Ghana ("MIIF") has agreed non-binding
Heads of Terms with the Company to invest a total of US$32.9m (A$51.4m
/ £26.3m) in the Company and its Ghanaian subsidiaries ("Strategic
Investment") to support the development of the Project (refer announcement of
8 September 2023).
Under the terms of the Strategic Investment, MIIF will acquire a 6%
contributing interest of the Ghana Portfolio, inclusive of the Project, for a
total consideration of US$27.9m (A$43.6m / £22.3m), payable on completion of
the Strategic Investment. The contributing interest will take the form of
funding of development, exploration and studies expenditure incurred via
monthly cash calls.
Government Free Carry
Under the terms of the Mining Lease, the Government of Ghana will be entitled
to a 13% free carried interest in the Project once in production.
Based on the assumption of the completion of the agreements the Company has in
place, Table 2 below sets out the Project's ownership structure once in
production:
Table 2 Ewoyaa lithium project ownership (once in production)
Company % Ownership
Atlantic Lithium 40.5
Piedmont Lithium 40.5
Minerals Income Investment Fund 6
Government of Ghana 13
Project Financing
Considering a total development expenditure of US$185m for the Project, as
indicated in the DFS, Figure 1 below indicates the expected allocation of
Project expenditure based on the assumption of the completion of the
agreements the Company has in place. This indicates the Company's allocation
of the remaining development expenditure equates to US$38m.
As at end 30 June 2023, the Company had cash resources of US$10m (A$15.3m /
£8m) and no debt (refer announcement of 31 July 2023).
As part of its non-binding Strategic Investment, MIIF has also agreed to
subscribe for Atlantic Lithium shares for a value of US$5m (A$7.8m / £4m)
(refer announcement of 8 September 2023).
The Company has also commenced a competitive offtake partnering process with a
major investment bank, aiming to attract funding offers to expediate and
de-risk the Project. The Company's preference is for a pre-payment agreement
whereby the pre-payment covers the Company's allocation of the remaining
development expenditure for the Project.
Figure 1 project funding
Payback Period
In the DFS for the Project, the model for the payback period was calculated on
a yearly basis, whereby the calculation commences from the beginning of the
year of initial production from the Modular DMS unit.
When the model is calculated on a monthly basis, as used to determine the
metrics under the terms granted for the Mining Lease, the commencement of the
payback period calculation is more precise.
As such, on a combined basis (considering the payback for both the Modular DMS
Unit and the main plant), the payback period for the Project has been reduced
to 17 months.
On a standalone basis for each production stream, the payback period for the
Modular DMS unit is 3 months and the payback period for the main plant is 9.5
months.
End Notes
(1) Ore Reserves, Mineral Resources and Production Targets
The information in this announcement that relates to Ore Reserves, Mineral
Resources and Production Targets complies with the 2012 Edition of the
Australasian Code for Reporting of Exploration Results, Mineral Resources and
Ore Reserves (JORC Code). The information in this announcement relating to Ore
Reserves of 25.6Mt @ 1.22% Li(2)O and Production Targets is extracted from the
Ewoyaa Lithium Project Definitive Feasibility Study ("DFS"), announced by the
Company on 29 June 2023, and information in this announcement relating to the
Mineral Resource Estimate ("MRE") of 35.3 Mt @ 1.25% Li(2)O for Ewoyaa is
extracted from the Company's announcement dated 1 February 2023, both of which
are available at atlanticlithium.com.au (http://atlanticlithium.com.au) . The
MRE includes a total of 3.5 Mt @ 1.37% Li(2)O in the Measured category, 24.5
Mt @ 1.25% Li(2)O in the Indicated category and 7.4 Mt @ 1.16% Li(2)O in the
Inferred category. The Company confirms that all material assumptions and
technical parameters underpinning the MRE and the DFS continue to apply and
have not materially changed, and it is not aware of any new information or
data that materially affects the information included in this announcement or
the announcements dated 1 February 2023 or 29 June 2023.
Ewoyaa to become one of the top 10 largest spodumene concentrate producers
globally - Based on a comparison of targeted spodumene concentrate production
capacity (ktpa, 100% basis) of select hard rock spodumene projects globally
(refer Company presentation dated 8 September 2023).
Competent Persons
Information in this report relating to Mineral Resources was compiled by Shaun
Searle, a Member of the Australian Institute of Geoscientists. Mr Searle has
sufficient experience that is relevant to the style of mineralisation and type
of deposit under consideration and to the activity being undertaken to qualify
as a Competent Person as defined in the 2012 Edition of the 'Australasian Code
for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Mr
Searle is a director of Ashmore. Ashmore and the Competent Person are
independent of the Company and other than being paid fees for services in
compiling this report, neither has any financial interest (direct or
contingent) in the Company. Mr Searle consents to the inclusion in the report
of the maters based upon the information in the form and context in which it
appears.
The reported Ore Reserves have been compiled by Mr Harry Warries. Mr Warries
is a Fellow of the Australasian Institute of Mining and Metallurgy and an
employee of Mining Focus Consultants Pty Ltd. He has sufficient experience,
relevant to the style of mineralisation and type of deposit under
consideration and to the activity he is undertaking, to qualify as a Competent
Person as defined in the 'Australasian Code for Reporting of Mineral Resources
and Ore Reserves' of December 2012 ("JORC Code") as prepared by the Joint Ore
Reserves Committee of the Australasian Institute of Mining and Metallurgy, the
Australian Institute of Geoscientists and the Minerals Council of Australia.
Mr Warries gives Atlantic Lithium Limited consent to use this reserve
estimate in reports.
Appendix
Table 3 EWOYAA KEY METRICS - DFS VERSUS mINING lEASE TERMS (100%
PROJECT BASis(2))
Item Units DFS Result Mining Lease
Mineral Resource(3) Mt @ % 35.3Mt @ 1.25% Li(2)O 35.3Mt @ 1.25% Li(2)O
Measured Indicated Mineral Resource Mt @ % 3.5Mt @ 1.37% Li(2)O 3.5Mt @ 1.37% Li(2)O
Indicated Mineral Resource Mt @ % 24.5Mt @ 1.25% Li(2)O 24.5Mt @ 1.25% Li(2)O
Inferred Mineral Resource Mt @ % 7.4Mt @ 1.16% Li(2)O 7.4Mt @ 1.16% Li(2)O
Mine Life Years 12 12
Ore Reserves (Probable) Mt @ % 25.6Mt @ 1.22% Li(2)O 25.6Mt @ 1.22% Li(2)O
Total Material Movement LOM Mt 406 406
Mined Waste Mt 375.4 375.4
Mined Ore Mt 30.6 30.6
Strip Ratio W:O 12.3 12.3
Processed Ore LOM Mt 27.3 27.3
DMS Plant Feed Rate Mtpa 2.7 2.7
Li(2)O Head Grade (average) % 1.22 1.22
Average Whole of Ore Recovery SC6 % 62.1 62.1
Average Whole of Ore Recovery SC5.5 % 67.2 67.2
Secondary Product Mass Yield (% of ROM Feed) % 17.0 17.0
SC6 Produced LOM, t 1,792,222 1,792,222
SC5.5 Produced LOM, t 1,792,195 1,792,195
Secondary Product Produced LOM, t 4,733,264 4,733,264
Project Total Upfront Development Cost US$M 185 185
SC6 Sell Price, LOM Average, FOB Ghana US$/t 1,695 1,695
SC5.5 Sell Price, LOM Average, FOB Ghana US$/t 1,478 1,478
Secondary Product Sell Price, LOM Average, FOB Ghana US$/t 186 186
Revenue (all products) US$M 6,566 6,566
Spodumene Revenue US$M 5,687 5,687
Secondary Product Revenue US$M 878 878
Post-tax IRR % 105 94
C1 Cash Cost, after secondary product credits US$/t 377 377
All In Sustaining Cost (AISC) US$/t 610 675
Surplus Cashflow, Post Tax US$M 2,438 2,091
NPV(8) Post Tax US$M 1,498 1,301
Payback - Combined Months 19 17
EBITDA US$M 3,798 3,365
EBIT US$M 3,527 3,022
NPAT, LOM US$M 2,284 2,004
(
2) Whilst the asset is currently wholly owned by Atlantic Lithium Ltd,
Piedmont Lithium Inc. can earn up to half of the Company's ownership in the
Project through its funding agreement whereby Piedmont will sole fund the
first US$70m, and 50% of additional costs thereafter, of the total US$185m
development expenditure indicated in the DFS for the Project. The Government
of Ghana has the right to a 13% free carry once in production and the Minerals
Income Investment Fund has agreed Heads of Terms with the Company which will
see it earn a 6% contributing interest in the Project.
(3) Mr S. Searle of Ashmore Advisory Pty Ltd is the Competent Persons for
Mineral Resources and Mr H. Warries of Mining Focus Consultants Pty Ltd for
Ore Reserves. For full Competent Persons statements, refer to the Competent
Persons section earlier in this announcement.
NOTE: Mineral Resources are inclusive of the Ore Reserves.
This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law
by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is
disclosed in accordance with the Company's obligations under Article 17 of
MAR.
FOR ANY FURTHER INFORMATION, PLEASE CONTACT:
ATLANTIC LITHIUM LIMITED
Neil Herbert (Executive Chairman)
Amanda Harsas (Finance Director and Company Secretary)
www.atlanticlithium.com.au
IR@atlanticlithium.com.au
Tel: +61 2 8072 0640
SP Angel Corporate Finance LLP Yellow Jersey PR Limited Canaccord Genuity Limited
Nominated Adviser Charles Goodwin Company Broker
Jeff Keating Bessie Elliot Raj Khatri / James Asensio
atlantic@yellowjerseypr.com
Charlie Bouverat
Harry Rees
Tel: +44 (0)20 3004 9512
Tel: +44 (0)20 3470 0470
Tel: +44 (0) 20 7523 4500
NOTES TO EDITORS:
About Atlantic Lithium
www.atlanticlithium.com.au (http://www.atlanticlithium.com.au/)
Atlantic Lithium is an AIM and ASX-listed lithium company advancing a
portfolio of lithium projects in Ghana and Côte d'Ivoire through to
production.
The Company's flagship project, the Ewoyaa Project in Ghana, is a significant
lithium spodumene pegmatite discovery on track to become Ghana's first
lithium-producing mine. The Company signed a funding agreement with Piedmont
Lithium Inc. towards the development of the Project. At the Ewoyaa Project,
Atlantic Lithium intends to be producing spodumene concentrate via a simple
gravity only process flowsheet.
Atlantic Lithium holds 560km(2) and 774km(2) of tenure across Ghana and Côte
d'Ivoire respectively, comprising significantly under-explored, highly
prospective licences.
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