Ore reserve underpins Mt Holland Li project

Perth-based Covalent Lithium has announced a maiden ore reserve at its Earl Grey mine and confirmed the business case for its Mt Holland mine-refinery project in Western Australia (WA), which will include a concentrator and lithium hydroxide refinery.

Covalent — jointly owned by Australia's Kidman Resources and Chile's SQM, the world's largest lithium producer — has declared an ore reserve of 94.2mn t at Earl Grey at a grade of 1.5pc lithium oxide.

An integrated pre-feasibility study on the mine-refinery project indicates total capital expenditure of $737mn to produce 45,254 t/yr of lithium hydroxide at an average cash cost of $4,507/t and an average received price of $15,115/t over a mine life of 47 years.

Estimated capital costs for a lithium hydroxide refinery at Kwinana, south of Perth, have been reduced to $310mn from $335mn in an earlier standalone pre-feasibility on the refinery. Estimated costs for the mine and refinery have increased to $299mn from $266mn in an earlier standalone study because of non-process infrastructure considerations.

Covalent will now proceed to a definitive feasibility study due for completion in the first half of 2019, followed by a final investment decision. Discussions with potential funders are continuing and additional offtake talks are taking place. Kidman has already tied up some of its share of lithium hydroxide output in agreements with electric vehicle company Tesla and trading group Mitsui.

If all regulatory and funding requirements are met, it is expected that mine construction will begin in the second half of 2019, with first concentrate produced in the second half of 2020.

Covalent is progressing its integrated project at the same time that Albemarle, the world's second-largest producer, is advancing its joint venture with Mineral Resources to develop the Wodgina project in WA, including the production of 750,000 t/yr of lithium concentrate and the building of two 50,000 t/yr lithium hydroxide plants.