The future demand for lithium is expected to accelerate as more and more car companies announce full or partial conversions to electric vehicles. Each of those vehicles will run on lithium ion batteries and so will everything from leaf blowers to laptops.
While the demand for lithium is rising the supply, and thus the price, are lumpier. New supply in the form of a number of Australian hard rock spodumene producers coming online in 2018 has kinked the rising prices of the past few years. So has the battery industry’s shift to nickel-cobalt-manganese cathode technology.
For Millennial Lithium (V.ML) President and CEO, Farhad Abasov, the shifting market conditions in the lithium market echo the conditions he faced in the rapidly changing potash market where Abasov ran an earlier company, Allana Potash. “There are quite a few similarities,” said Abasov when I asked him about Allana. “The climate is similar for evaporation. Good mining jurisdictions. Both projects were quite low cost. But there are differences. Argentina has better infrastructure than Ethiopia. The labour situation is better and there is a big difference in the size of the CAPEX.”
Overall market demand is one thing, the nuts and bolts of a lithium brine deposit are another and they are the focus of Millennial’s efforts.
The development process is about determining the concentration, composition and flow of the lithium bearing brine. Millennial passed a significant milestone in early February when it was able to report in a news release the results from an extended pumping test of a second production-scale well at its Pastos Grandes Project. In that news release, Abasov stated, “The pumping rate was 15 L/s from September 7 to 30th with a draw-down of 57m with full recovery to initial levels after 24 days. Lithium concentrations remained consistent throughout the pumping test ranging from 482 mg/L to 518 mg/L and averaging 495 mg/l. The transmissivity of the 40m²/day is encouraging and indicates the aquifer has good potential to sustain long term pumping at 15 L/s”.
“This is another piece of the puzzle,” said Abasov in a phone interview. “These results up to 20 L/s and at 15 litres per second sustained are very good.”
Millennial has also tested the brine. “We evaporated the brine and we tested the purity. Our results were between 99.5% and 99.92% purity. Pure, battery grade, material,” said Abasov.
“These results are very important to getting to the pilot plant development process we are currently involved in,” said Abasov. “We’re looking at three tons of lithium carbonate per month from a pilot plant which would be proof of concept.”
This pilot plant process would also give Millennial product to send to potential off-takers for testing and evaluation.
In the lithium world, offtake agreements are critical to the financing and development of a lithium project. “We are already in touch with potential off-takers,” said Abasov. “We’re talking about both battery and industrial grade and we are discussing terms.”
Millennial is able to conduct these discussions on the basis of its results but also on the basis of its February 2018 Preliminary Economic Assessment (PEA) report. “We’re working on the Feasibility study but we can use the numbers from the PEA for discussion”, said Abasov. “In the PEA the CAPEX is $410 million and the OPEX comes in at $3218 per tonne of lithium carbonate produced. Those operating costs are very low.”
“Potential off-takers are comfortable with those numbers,” said Abasov. “These are early stage discussions but they understand that we want to leverage off takes to raise capital.”
But, to return to the nuts and bolts, in a news release on March 4, 2019 Millennial announced “the inauguration of its on-site permanent Project Center, including a 60-100 person camp, an on-site laboratory, and a process pilot plant under construction which is to be commissioned in the second quarter.”
The camp will be “powered by a state-of-the-art hybrid solar power system that will reduce CO2 output and costs for fuel.”
In the release, Abasov noted, “We at Millennial are excited to be on the leading edge of the green revolution in commissioning our renewables-powered project development park at our Pastos Grandes Salar lithium brine project in Argentina. This follows through on our personal commitment to the environment while preserving shareholder value, and our goal of producing lithium products with a low CO2 footprint.”
While many lithium projects have been postponed or scaled back because of lithium prices or financing or both, Abasov is confident Millennial can push through. “We have a three to five year outlook,” said Abasov. “We look at the demand picture. In the automotive sector, all the major automakers are making or planning to make EVs in the next three years. So demand should be pretty robust.”
“Millennial has cash in the bank, a tight share structure and low operating costs,” said Abasov. “With a healthy lithium price…”
Work is continuing at the Pastos Grandes Project with a Feasibility Study being prepared for Q2 2019. With that study in hand and with a pilot plant operating, Millennial will be in a position to move beyond the preliminary stages with potential off-takers and other sources of financing which could bring the lithium resource online just in time to meet the rising world demand for lithium.