One of the extraordinary aspects of Canada’s junior mining sector is just how international it actually is. Millennial Lithium (V.ML) is headquartered in Vancouver, is advancing two lithium projects in Salta province in Argentina but its CEO, Farhad Abasov is based much closer to the lithium markets in China. Abasov’s last project, Allana Potash Corp, was a deposit in Ethiopia which was eventually sold to Israel Chemicals (ICL) for $170M in 2015.
“After Allana I looked at many projects,” said Abasov. “I was interested in lithium and I wanted to find an interesting brine project. I like brine because it tends to have a low CAPEX and low operating expenses.”
“I joined Millennial in May 2017,” said Abasov. “We raised capital and, in the last twelve months, we finished a drill program at our Pastos Grandes project.”
That drill program lead to a 43-101 compliant technical report which contained 2.1 million tonnes of measured and indicated of lithium carbonate (“Li2CO3”) equivalent (LCE) and over 800,000 tonnes of inferred resource.
Armed with this technical report, Millennial went on to engage WorleyParsons Chile S.A. to prepare a preliminary economic assessment (PEA) of the project. That PEA was announced by the company on January 31, 2018.
The headline numbers in the PEA are 25,000 tonnes production per year with a 25 year mine life. CAPEX of 410 million dollars and a very low OPEX running $3,218/t.
The PEA is based on using traditional solar evaporation. The proposed site is at 3600 meters above sea level and it is sunny 360 days a year.
“We would evaporate the brine,” said Abasov. “Then we would remove the impurities using proven technology. The property itself has access to good infrastructure. The provincial capital is 230 kilometers away. There is power and gas within 60 kilometers.”
Important as access to infrastructure is, Abasov is also very positive about the jurisdiction. “Argentina is a good country to do business in. The province of Salta is one of the best mining jurisdictions in the world. The provincial officials have been very supportive.”
With the PEA in hand, Abasov is ready to take the next steps. “First, we want to launch exploration on new land we have to the south of the Pastos Grandes project. While we are doing that we want to move forward on a full, bankable, feasibility study of the project,” said Abasov. “Third, we want to secure off take agreements.”
“We are looking for off takes with financing attached,” said Abasov. “We’ve raised over 70 million dollars in the last twelve months. 11 million in commercial/private transactions. 31 million in bought deal financings. And we have a strategic partner in China. So we have a strong cash position.”
These next steps were outlined in a March 21, 2018, Update press release in which Abasov states, “Millennial is now well funded with approximately CDN $65,000,000 in its treasury allowing us to fast track our pilot studies and the exploration work on the Remsa ground. Millennial has a strong technical team in Argentina which is expected to expand in the coming months to undertake pond construction and pilot plant construction and commissioning. A Feasibility Study will commence in Q2 2018 and we look forward to continuing to develop and advance the Pastos Grandes Project.”
The bankable feasibility will de-risk the Pastos Grandes project further; but the key to actually building the project will be Abasov’s success in securing off take agreements. With the right off take agreements in hand and a successful pilot plant in operation, Millennial will be well on the way to full-scale production. The off takes will likely be with Chinese companies which may account for Abasov’s current location.
For investors, there is always the question of news flow and Abasov is well aware of this. “We’ll have news about our continuing exploration. We’ll be announcing progress and then completion of the feasibility study,” said Abasov. “And we’re looking forward to signing and announcing off take agreements.”
Add to that the expected permitting of Millennial’s other project, Cauchari East, in Q2 2018 and the news flow should keep the market engaged.
So should the increasing demand for lithium as more and more lithium-ion batteries are deployed. Lithium watchers are all predicting a steady increase in demand with a spotty increase in supply. 2017 saw lithium prices in China crest at over $25.00 USD/kg. Millennial’s PEA uses a lithium price of less than $14/kg.
For the moment, Millennial is cash rich with an attractive lithium deposit in an excellent jurisdiction. However, unlike many of the juniors in the lithium space, Frahad Abasov has taken a project from discovery to sale before. Experience is a huge advantage for Millennial and its shareholders.