Rock Tech Lithium (TSXV: RCK) (OTCQX: RCKTF) reached a significant milestone building up to construction for its lithium hydroxide converter and refinery plant in Guben, Germany.
On Monday, the company announced the completion of its Front-End Loading (FEL3) stage 3 study, which details construction, commissioning, start-up and operations specifications.
Rock Tech Guben GmbH, the company’s German subsidiary, completed the study in collaboration with engineering partner AFRY AB, marking the crucial step towards commencing the project’s construction phase.
The projected profitability, after taxes and applying an 8 per cent discount rate, is estimated to be 1,194 million Euros (USD$1.2 billion), representing a 43 per cent increase compared to the previous bankable project study.
Furthermore, Rock Tech has selected Deutsche Bank AG to serve as the placement agent for securing financing related to the company’s converter project.
The FEL3 findings yield a significantly more precise cost estimate with a variance of just plus or minus 10 per cent. The estimate is based on firm offers from primarily European suppliers and service providers, ensuring reliable figures for major equipment costs. Despite this improved accuracy, it is evident that capital expenditure planning remains steady, experiencing only a 4 per cent increase primarily due to inflation.
Comprehensive execution planning and basic engineering have now encompassed all areas of the plant. These efforts have involved a notable increase in basic engineering deliverables and cost estimate preparations.
The metallurgical testwork, which was underway during the BPS publication, has been successfully completed and subsequently subjected to expert review and interpretation by industry specialists.
The completion of these tasks has facilitated the finalization of plant equipment selection and flowsheets.
The lithium recovery assumptions made in the BPS have proven to be accurate, requiring no adjustments to production expectations. Moving forward, a metallurgical testing work plan has been devised to conduct final optimizations, including bench and pilot scale testing, utilizing material from the chosen spodumene concentrate supplier.
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Refinery plant production capacity slated at 24,000 tonnes
To oversee project execution, a competitive tendering process, guided by an independent expert, has been initiated to select an Engineering, Procurement, and Construction Management (EPCM) partner.
Rock Tech’s lithium hydroxide facility is slated to have a production capacity of 24,000 tonnes of battery-grade lithium hydroxide monohydrate per year. The facility will be capable of processing spodumene concentrates from various sources, including the company’s own mineral project in Georgia Lake, Ontario, Canada, as well as from locations like Australia.
In March 2023, Rock Tech obtained the initial partial permit from the Brandenburg State Office for Environment. This permit allows the commencement of construction for all non-process buildings and site infrastructure, while also approving the general layout of the plant and its functions related to the conversion of spodumene to lithium hydroxide.
The company submitted the second partial permit in November 2022 and anticipates receiving approval by the fourth quarter of 2023. The targeted timeline for commissioning remains on schedule for the fourth quarter of 2025, with the production of the first battery-grade lithium hydroxide monohydrate expected in the first quarter of 2026.
The FEL3 stage has seen a 4 per cent increase in initial capital costs compared to the BPS, the previous published study phase3. This rise can be attributed to enhancements in engineering, advanced construction planning, and a more refined understanding of freight requirements. These improvements formed the foundation of the FEL3 estimate, which now carries a Class 2 level of certainty.
The subsequent engineering process, to be executed in close collaboration with an EPCM contractor, will offer opportunities to further mitigate risks associated with capital expenditures. By identifying key areas where negotiations with preferred suppliers can yield better outcomes, the aim is to enhance the accuracy of the capital expenditures estimate.
The procurement team will work alongside selected financing groups to ensure supplier pricing is thoroughly assessed, resulting in a higher level of confidence. The final investment decision is scheduled to be made in the second half of 2023.
Shares of Rock Tech Lithium remained flat on Monday at $2.34 on the TSX Venture Exchange.
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