Pilbara Minerals Limited (ASX:PLS) announced that the PreFeasibility Study on its 100%-owned Pilgangoora Lithium-Tantalite Project in WA has delivered outstanding results, confirming that the project is on track to become a globally significant new mining centre for lithium concentrates for many decades to come.
As quoted in the press release:
The PFS – which has been completed to a high standard with the assistance of a group of highly experienced independent consultants and contractors – has outlined an extremely robust development with low operating costs, capable of generating exceptional returns for Pilbara shareholders.
The PFS includes an initial maiden Ore Reserve for Pilgangoora of 29.5Mt @ 1.31% Li2O, 134ppm Ta2O5 and 1.18% Fe2O3, underpinning a 2Mtpa standalone mining and processing operation over an initial 15-year mine life. There is considerable potential to extend the mine life and/or increase the production rate in the future, by including additional pit inventory not currently included in the PFS Ore Reserve. Drilling currently underway is expected to further increase the resource and reserve inventory across the project, most importantly within the existing defined reserve pit limits.
These outcomes are based on a conservative life-of-mine average spodumene price of US$456/tonne CFR (well below the current spot price of approximately US$600/tonne). An AUD/USD exchange rate of 0.75c has been applied over the LOM.
The highly successful PFS adds significant momentum to the ongoing Definitive Feasibility Study (DFS) for Pilgangoora, which commenced in January and is on track for delivery in Q3 2016.
Pilbara Minerals CEO, Ken Brinsden, stated:
This is an outstanding result for the Company, with the PFS clearly showing that Pilgangoora is a robust, long-life project based on a world-class resource. The strong technical fundamentals and excellent financial returns of the project are underpinned by a relatively modest capital cost estimate together with low forecast cash operating costs, which reflects the inclusion of significant tantalite by-product credits.
This means that the project will be capable of generating very strong operating margins and cash flows, producing a high-quality product that we expect will be in high demand as evidenced by the very high level of interest already displayed by our customer base. Based on these results, Pilgangoora is now firmly established as the world’s leading lithium development project – a premier mid-tier mining asset which is already attracting strong interest from prospective project financiers and cornerstone investors based on its potential to transform Pilbara into a leading player in the rapidly growing lithium industry.
While the PFS – which is an interim document designed to assist us with ongoing financing and offtake discussions while we complete the DFS – is based on an initial mine life of 15 years, we are confident that the mine life will be further extended with additional drilling of the current Inferred Resource base as well as exploration drilling outside of the known Resource envelope. Drilling has already commenced and any additions to the resource inventory will be incorporated into the ongoing Definitive Feasibility Study, further enhancing the key financial outcomes of the project.
The Pilbara Minerals team, together with our key consultants and contractors, have worked extremely hard in delivering this result for shareholders, and I would like to sincerely thank them for the outstanding financial and technical outcomes they have achieved. We will now focus on the completion of the Definitive Feasibility Study by Q3 of this year, with the overall aim of commencing commissioning at the Pilgangoora Project during Q4 2017.
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