Core Lithium marches towards construction start at Finniss Lithium Project in 2021

Core Lithium Ltd’s (ASX:CXO) Finniss Lithium Project in the Northern Territory is almost construction ready, with government approvals and a funding offer already in place. The company expects to complete the definitive feasibility study (DFS) next quarter and anticipates a final investment decision (FID) soon which will allow it to target construction to start in the second half of the year. Finniss is set to become one Australia’s most capital-efficient and low-cost lithium projects, with capex of $85 million producing $160 million/per annum in revenue. The project also has access to key infrastructure and sits just 25 kilometres from Australia’s closest port to Asia and the city of Darwin, where the company has an agreement with the Darwin Port to ship 250,000 tonnes per annum of spodumene concentrate or 1 million tonnes per annum of spodumene Direct Shipping Ore (DSO). East Arm Wharf facilities at Darwin Port are also well suited to handle potential future production from Core’s lithium projects. Low-cost processing Notably, the project processing involves no flotation – this means simple Dense Media Separation (DMS) processing avoids problems of other new lithium Australian flotation projects burdened by high capex, large debt and high finance cost and high operating cost. Simple DMS (gravity) separation produces high quality lithium product with a 6.0% Li2O concentrate produced at a high 70% recovery rate and the project is projected to produce a minimum of 175,000 tonnes per annum. DMS also produces high-quality lithium concentrate low in iron at < 0.7% and other contaminants. This coarse product with low-moisture content has good handling properties, which is a key advantage for customers. The project has excellent location and infrastructure advantages as well as potential for downstream manufacturing. Offtakes in place The company has a binding offtake agreement in place with Yahua to potentially supply Yahua’s 5-year LiOH supply contract with Tesla The agreement is for 75,000 tonnes per annum (around 40% of Core’s current 175,000 tonnes per annum production). Core also secured its first European offtake agreement last year, signing a non-binding Memorandum of Understanding (MOU) for Offtake with Geneva-based Transamine for 50,000 tonnes per annum of spodumene concentrate over five years. This agreement also holds an additional option for a financing facility with Transamine. Resource growth potential Last year saw a 150% increase to the measured/indicated resource and ore reserves for the project to 7.62 million tonnes at 1.41% Li2O and a 52% increase to the mineral resource estimate to 15 million tonnes at 1.3% Li2O. The focus for 2021 is to accelerate life of mine (LOM) growth and production capacity increases, with resource drilling recommencing in quarter two. 2021 growth strategy Core has a pipeline of high-grade lithium targets that formed the basis of recent resource drilling. Resource/reserve extension opportunities include the Grants, BP33, Carlton, and Hang Gong deposits while brownfields exploration pathways include Far West, Shirleys, BP31, Ahoy, Talmina, Talmina W and Saffums. Greenfields exploration revolves around the hundreds of historic pegmatites untested by drilling which the company believes have potential for a large, step-change discovery. The company has a pipeline of high-grade lithium targets that formed the basis of recent resource drilling. Looking forward The company is confident the Finnis Project is positioned for early production in an increasing price and demand environment and is focused on optimising the DFS for quarter two, ahead of a final investment decision in the latter half of the year. Core is also exploring the potential for new adjacent acquisitions to contribute to future resource growth.