Frontier Lithium Inc. Announces Positive Preliminary Feasibility Study for the Pak Lithium Project, Northwestern Ontario
Sudbury, Ontario, March 2, 2018 – Frontier Lithium Inc. (TSXV: FL) (“Frontier” or “the Company”) is pleased to release the results of a Preliminary Feasibility Study (“PFS”) for the PAK Lithium Project located approximately 175 kilometers north of Red Lake, Ontario. Included with this PFS is the announcement on the updated Mineral Resource Estimate for the PAK Lithium Project.
The results of the PFS (see tables 1-5 below) include a pre-tax net present value at a 8 percent discount rate of $448 million with a pre-tax internal rate of return of 46.5 percent and a post-tax NPV at a 8 percent discount rate of $301 million with a post-tax IRR of 38.3 percent.
The PFS is based on an updated mineral resource estimate completed by Todd McCracken, P.Geo, outlined in the National Instrument 43-101 technical report update as reported in Table 6.
Highlights from the PFS, with the base-case premium technical grade lithium concentrate of 7.2% Li2O (TG_SC7.2) price of $1,250 (U.S.) per tonne, chemical grade lithium concentrate of 6.6% Li2O (CG_SC6.6) price of $750 (U.S.) per tonne and an exchange rate of $1.25 USD/CAD, are as follows (all figures in Canadian dollars unless otherwise stated):
- Life of Mine Revenue is $1,859 million.
- Pre-production Capital is $147 million with a contingency of 10% included within the initial capital. Pre-production is for a 2 year period.
- Sustaining Capital $37 million for the Life of Mine (“LOM”).
- Pre-tax NPV (8% discount rate) of $448 million and internal rate of return of 46.5%.
- Post-tax NPV (8% discount rate) of $301 million and internal rate of return of 38.3%.
- Pre-tax Cash Flow of $1,013 million over 16 year LOM.
- Post-tax Cash Flow of $700 million over 16 year LOM.
- Positive Cash-flow is realized in year 2 of production.
- 5.8 million tonnes of mill feed averaging a combined 2.00% Li2O.
- 11.5 year open pit operation, 4.5 year underground operation.
- Mill operates at average tonnage of 1,090 tonnes per day.
- Total production of 1.14 million tonnes of technical grade concentrate of 7.2% Li2O.
- Total production of 115,500 tonnes of chemical grade concentrate of 6.6% Li2O.
“The compelling PFS results display the PAK Lithium Project’s ability to firstly become a high margin, low cost producer of a unique premium low-iron spodumene concentrate which is in very high demand by the global lithium market. In addition, an additional by-product output of chemical grade concentrate is produced which could also be further upgraded as required by the lithium battery market” comments Trevor Walker, President and CEO of Frontier Lithium. “Despite the strong PFS results, I see room to further optimize the resource and engineering designs and have already transitioned to feasibility level work. This significant milestone also sets the path forward to strategically expand the resource, support ongoing lithium compound testwork, progress our discussions with potential offtake, as well as furthering collaboration agreements with our neighboring First Nation communities.”
Table 6 – Updated 2018 Mineral Resource Calculation
For the sole purpose of this resource estimation, Li2O equivalent was determined based on lithium and tantalum grades, prices ($400 per tonne of 6% spodumene concentrate and $150 per kg of 30% tantalite concentrate) and their respective recovery ratio (78.5% recovery for lithium and a 50% recovery for tantalum from bulk pegmatite). No credit was included for rubidium, cesium or any of the other elements contained for the purpose of this estimate.
Li2O content in the CIZ is predominantly associated with lithian micas and without metallurgical testing not deemed recoverable, therefore, not included in the Li2O contained and subsequently the Li2O equivalent calculation for the purpose of this report.
The UIZ and LIZ are technical/ceramic-grade lithium zones (high-grade lithium with low inherent iron (0.1% Fe2O3 from whole rock analysis). The iron content of spodumene contained within the LIZ increases as the contact with iron-rich metasedimentary country rocks are approached, but it has been noted that a concentration below 0.1% wt.% Fe2O3 is maintained to within about 1 meter of the pegmatite-metasediment contact.
Calculation is based on 6,307m of drilling in 32 holes with an average depth of 160m to a maximum depth of 360m vertical in the deposit, 294m of production drilling for 68 blast holes for the 300 tonne UIZ bulk sample in 2015, and 32 channels covering at surface.
Mineral Resources are not Mineral Reserves having no demonstrated economic viability. Results are presented undiluted and in situ.
Measured, Indicated and Inferred Resources were evaluated from drill hole and channel sample results using a block model approach (krig interpolation) with Surpac software.
(Calculations used metric units (meters, tonnes and ppm). Results were rounded to reflect their estimated nature. Tonnes are rounded to reflect the accuracy of the estimation. Grades reported in percent were rounded to two decimals while grades reported in part per million (ppm) were rounded to the closest integer.
Table 7 – Reserve Table
The Mineral Resources for PAK Lithium Project disclosed in this news release have been estimated by Mr. Todd McCracken, P.Geo., an employee of WSP Canada Inc and independent of Frontier. By virtue of his education and relevant experience, Mr. McCracken is “Qualified Person” for the purpose of National Instrument 43-101. The Mineral Resource has been classified in accordance with CIM Definition Standards for Mineral Resources and Mineral Reserves, (November 2014). Mr. McCracken, P.Geo., has read and approved the contents of this press release as it pertains to the disclosed Mineral Resource estimate.
Qualified Persons and 43-101 Disclosure
Garth Drever, P.Geo, Vice President Exploration for Frontier Lithium Inc. is a Qualified Person as defined by NI 43-101 and has reviewed and approved the contents of this news release. Mr. Drever has been involved with all aspects of the PAK Lithium project since 2013.
Todd McCracken, P.Geo, Principal, Manager – Mining , at WSP Canada is an independent Qualified Person as per National Instrument 43-101, and is responsible for the estimation of the PAK Lithium Project mineral resource. Mr. McCracken has reviewed and verified that the technical information contained herein is accurate and approves of the written disclosure of same.
Johnny Canosa P.Eng., Sr. Mining Engineer for Nordmin Engineering Ltd., is an independent Qualified Person as defined by NI 43-101 and has reviewed and approved the contents of this news release. Mr. Canosa is responsible for Financial Analysis, Open Pit Mine Planning, Operating and Capital Costs.
Roy Levesque P.Eng., Sr. Mining Engineer for Nordmin Engineering Ltd., is an independent Qualified Person as defined by NI 43-101 and has reviewed and approved the contents of this news release. Mr. Levesque is responsible for Underground Mine Design, Mine Planning and Scheduling.
Kurt Boyko, P.Eng., Consulting Specialist – Mechanical for Nordmin Engineering Ltd., is an independent Qualified Person as defined by NI 43-101 and has reviewed and approved the contents of this news release. Mr. Boyko is responsible for process plan design.