The changing face of lithium availability

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Objective Capital's Global Resources Investment Conference 2011
Stationers' Hall, City of London
27-28 September 2011
Day 1- Session 3: Strategic metals – the resources everybody wants
Speaker: Gerry Clarke, International Lithium Institute

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The changing face of lithium availability

  1. 1. The changing face of lithium availability<br />Gerry Clarke – International Lithium Institute<br />
  2. 2. @Objectivelive<br />GLOBAL RESOURCESINVESTMENT CONFERENCE 2011<br />Lead sponsor:<br />Media partners:<br />Other sponsors & participating organisations:<br />
  3. 3. The changing face of lithium availability<br />Gerry Clarke<br />International Lithium Institute<br />
  4. 4. HEADLINES<br /><ul><li>USGS 2011 World Resources: 32.5m tonnes contained lithium</li></ul> World Reserves: 12.6m tonnes contained lithium <br /><ul><li>LAWM 2009 Broad Base World Reserve: 39.4m tonnes contained lithium
  5. 5. USGS 2010 World Production: 134,672 tonnes LCE (circa 77% chemical)
  6. 6. Average (5) Forecast World Demand 2015: 190,500 tpa LCE
  7. 7. Average (6) Forecast World Demand 2020: 254,300 tpa LCE
  8. 8. 3 majors adding 80,900 tpa LCE capacity plus SQM yet to announce
  9. 9. Four Major Producers 2015: 225,800 tpa LCE capacity
  10. 10. Pipeline Projects 2015 add: 219,700 tpa LCE capacity
  11. 11. Total supply capability 2015: 445,500 tpa LCE ex China!
  12. 12. Forecast excess capacity 2015: 255,000 tpa LCE
  13. 13. China’s lithium resources: Not satisfying domestic demand</li></li></ul><li>Lithium Availability Wall Map 2011<br />
  14. 14. Announced LCE Capacity Rises (‘000 tpa)*SQM will also increase capacity but not yet announced<br />
  15. 15. Near Projects in Development<br />Company Start Location Plan capacity* <br />Galaxy Resources 2011 Aus/China 17k<br />Orocobre 2012 Argentina 15k <br />Canada Lithium 2012 Quebec 19k<br />Western Lithium 2014 Nevada 27k<br />Lithium Americas 2014 Argentina 15k<br />Total 93k tpa LCE<br />*Company published LCE annual capacity <br />By 2012 Talison’sGreenbushes, WA capacity will equal 2010 world demand: 110k tpa LCE <br />Reserves: 9.6m. te 3.9% Li20 (920k LCE) M&I Resources: 22.0m te 3.7% Li20 (2m LCE)<br />Capacity: 315k tpa concentrates (47k LCE) going to 740k tpa(110k LCE) June 2012<br />Li2CO3 plant: Undertaking engineering & location studies for Li2CO3 plant & targeting first stage 20ktpa fiscal 2015 with a second 20ktpa stage to follow. Total: 40,000 tpa<br />Courtesy: Talison Lithium, Greenbushes, WA<br />
  16. 16. Chemetall LithiumSalar de Atacama: 30k tpa LCE<br />
  17. 17. SQM’s final LiCl evaporation pond <br />In 2010 the brine volume (2,700 ppm Li) pumped to produce 1.5m tonnes of potash contained such a large volume of lithium in excess of the 44k tpa LCE capacity that 400k tonnes LCE were reinjected into the aquifer.<br />
  18. 18. Emerging & Advanced Projects<br />Brines Mines<br />Rincon Lithium 2010 Galaxy Resources 2010<br />Orocobre2012 Reed Resources 2011<br />Albemarle 2012 Canada Lithium 2012<br />Lithium Americas 2014Nemaska Exploration 2013<br />Lithium One 2014 Western Lithium 2014<br />POSCO 2014 <br />Rodinia2015<br />International Li 2016Rio Tinto 2016 <br />Plus other projects further out------and------China? <br />
  19. 19. Rincon Lithium Ltd Privately-owned<br />Salar del Rincon, Salta, Argentina: ADY Resources<br /><ul><li>Initiated 1,200 tpa 99.5% Li2CO3 December 2010
  20. 20. Brine: 600 ppm Li, 2,500 ppm Mg
  21. 21. Phased expansions up to 50k tpa Li2CO3
  22. 22. Reserves: 1.4m tonnes lithium: NI43-101 awaited
  23. 23. Project initiated 2002 by Equity-1 Resources morphed into Admiralty Resources 2004 and developed project to envisaged 17,000 tpa Li2CO3 2007 starting mid-2008.
  24. 24. Sold to Cayman-based The Sentient Group December 2008 for $22.17m. </li></li></ul><li>OrocobreASX:ORE TSX:ORL<br />Salar de Olaroz, Jujuy, Argentina: Flagship project 2008 init.<br /><ul><li>Strategic partner: Toyota Tsusho backed JOGMEC
  25. 25. Brine: 690 Li, 5,730 K, 1,656 Mg, plus B
  26. 26. NI43-101 M+I Reserve: 1.2m tonnes contained lithium
  27. 27. FS 2011: 16,400 tpa Li2CO3: 2012 start
  28. 28. Capital cost: $206.7m.
  29. 29. Op Cost: $1,512/t Li2CO3 or $1,230/t net including K2O
  30. 30. Sinclair Knight Merz project engineers
  31. 31. Final stages approvals, financing, engineering progressing
  32. 32. Also advancing Salar de Salinas Grandes, Salta; Salar de Cauchari, Jujuy; Salar de Guayatoyac</li></li></ul><li>Albemarle NYSE: ALB<br />Major corporation: Market Cap: $3,754,082,640<br /><ul><li>Magnolia, Arkansas: 148,000 tpa bromine
  33. 33. Smackover Formation oilfield brine: 750kt Li
  34. 34. 100-200 ppm lithium in bromine tailings
  35. 35. April 2011: new proprietary tech for Li extraction
  36. 36. Pilot plant now optimising process
  37. 37. Commercial production as early as 2013
  38. 38. Capacity not announced: maybe 10-15kt Li2CO3
  39. 39. Other oilfield brines projects: Alberta, Canada nowhere close. </li></li></ul><li>Lithium AmericasTSX:LAC OTCQX:LHMAF <br />Salar de Cauchari-Olaroz, Jujuy, Argentina<br /><ul><li>Strategic partners: Magna (13.3%), Mitsubishi (4.1%)
  40. 40. Brine: 627 Li; 5,417 K; 1,470 Mg
  41. 41. NI43-101 M+I Reserve: 997kt contained lithium
  42. 42. Full FS expected Q1 2012
  43. 43. April 2011 PEA Op cost: $1,434/tonne Li2CO3
  44. 44. Engineers: ARA Worley Parsons
  45. 45. Two phases: 20k tpa 2014; 20ktpa 2018
  46. 46. Capital cost: $217m phase 1; $399m phases 1 & 2
  47. 47. Expect 75% phase 1 production 2015: 16,000 tpa Li2CO3
  48. 48. Also in Incahuasi, Pocitas, Arizario: 82,200 ha total </li></li></ul><li>Lithium OneTSX-V:LI<br />Sal de Vida, Salar de Hombre Muerto, Salta, Argentina :39,200 ha<br /><ul><li>Strategic partner: Kores/GS Caltex/LG Int’l consortium
  49. 49. Brine: 695 Li, 7,590K, 1,520 Mg, plus B
  50. 50. NI43-101 Inf Reserve: 1.0m tonnes contained lithium
  51. 51. Expect PEA Q3/2011 and FS Q2/2012
  52. 52. Pilot plant operating since October 2010
  53. 53. ARA Worley Parsons project engineers
  54. 54. Plan 20,000 tpa Li2CO3 2014</li></ul>Cyr Property, James Bay, Quebec, Canada: 11,991 ha<br /><ul><li>Galaxy Resources acquire 20% for C$3m in 2011
  55. 55. Earn-in up to 70%: Galaxy Resources/started DFS exp Q4/2012
  56. 56. Hard rock (Spodumene): average grade 1.25% Li2O; c/o 0.75%
  57. 57. NI43-101 Ind Res: 70,900 tonnes Li & Inf Res: 58,300 tonnes Li</li></li></ul><li>Rodinia Lithium TSXV: RM OTCQX: RDNAF<br />Salar de Diablillos, Salta, Argentina: 5,786 ha<br /><ul><li>Strategic partner: Shanshan Enterprise (equity)
  58. 58. Brine: 556 Li, 6,206 K, 2,057 Mg, plus B
  59. 59. NI43-101 Inf Reserve: 932kt contained lithium
  60. 60. PEA Q1 2012 for 10-15ktpa LCE start 2015</li></ul>Esmeralda Co, Clayton Valley, Nevada, USA: 29,275 ha<br />Ratones & Centenario, Salta, Argentina: 1,282 ha<br />Salinas Grandes, Jujuy, Argentina: 4,500 ha<br />
  61. 61. InternationalLithium TSX-V: ILC TNR Gold spin-off May 2011 (TNR retains 29%)<br />Salar de Mariana, Salta, Argentina 12,000 ha<br /><ul><li>TNR Gold spin-off May 2011 (TNR retains 29%)
  62. 62. Strategic Investor: Jiangxi Ganfeng Lithium 9.99%
  63. 63. NI43-101 resource estimate Q4 2011: 2016 start </li></ul>Runway, Fish Lake, Sarcobatus Flats, Nevada, USA: 4,800 ha<br /><ul><li>Moose, NWT, Canada: Li, Ta project mined 40s/50s
  64. 64. Forgan Lake, Ontario, Canada: Li, Ta project
  65. 65. Niemi, ON, Canada: Li, Ta project
  66. 66. Mavis, ON, Canada: Li, TA, Cs, Rb project
  67. 67. Blackfriars, Leinster, Ireland: Li (Ta-Nb) project </li></li></ul><li>Galaxy Resources ASX: GXY<br />Mount Cattlin, WA: Dec 2010 start; 18 years mine life <br /><ul><li> Strategic: Mitsubishi (30%)/13 Chinese Cathode Makers
  68. 68. JORC M+I Reserve 2011: 70kt Li: Total 91kt Li; 1.08% Li2O
  69. 69. Capacity: 137,000 tpa concentrates @ 6.1% Li2O (+Ta)</li></ul>Zhangjiagang, Jiangsu, China: 17ktpa Li2CO3; 99.5% Li2CO3<br /><ul><li>Cap cost: US$100m, continuous process, starting 2011</li></ul>Cyr Property, James Bay, QC, Canada: <br /><ul><li>Initial 20% stake & up to 70% by earn-in Feasibility Study
  70. 70. Also Lithium battery manufacturing plant
  71. 71. Earn-in: any Li project General Mining, UVS Nuur, China </li></li></ul><li> Galaxy ResourcesLithium Carbonate plant nearing completion<br />Zhangjiagang, Jiangsu: 17k tpa starting Q4 2011<br /> NB: Continuous process production line<br />
  72. 72. Reed Resources ASX: RDRMineral Resources Ltd 30%<br />Mt Marion, near Kalgoorlie, WA: 10 year mine life (plus)<br /><ul><li>JORC M+I Res July 2011: 44kt Li: Total 93 kt Li @ 1.3% Li2O and 0.3% cut-off grade
  73. 73. Capacity: 204,000 tpa concentrates @ 6.5% Li2O
  74. 74. Start: Plant commissioning expected December 2011</li></li></ul><li>Canada Lithium TSX: CLQ<br />LaCorne, Val d’Or, QC, Canada: Updated reserves<br /><ul><li>Marketing rights option agreement: Mitsui & Co
  75. 75. Proven & Probable Reserve: 17,064kt @ 0.94% Li2O
  76. 76. Plus low grade P&P Reserve: 3,271kt @ 0.38% Li2O
  77. 77. Total P&P Reserve: 20,335kt @ 0.85% Li2O: 80.2kt Li
  78. 78. For a 20,000 tpa Li2CO3 plant 2013
  79. 79. Capital construction cost: US$202m.
  80. 80. Operating cost: US$3,164 per tonne Li2CO3
  81. 81. Now under construction for commission Q4 2012
  82. 82. Full production expected Q4 2013
  83. 83. 15 years life</li></li></ul><li>Nemaska Exploration TSX-V: NMX<br />Whabouchi, James Bay, QC, Canada: 15 years mine life<br /><ul><li>Strategic: Chengdu Tianqi Lithium Industry Gp (10%)
  84. 84. NI43-101 M+I Res: 25.1kt @ 1.54% Li2O: 179.2 kt Li
  85. 85. Open pit Q2 2013: 202,000 tpaspodumeneconcs
  86. 86. DFS for concentrate Q1 2012; Q2 2012 for Li2CO3
  87. 87. Plant for Li2CO3 & LiOH: construct 2013: 25ktpa LCE
  88. 88. Also Sirmac Property </li></li></ul><li>Nemaska Exploration: Whabouchi, James Bay, QCM+I Resources: 25.1m tonnes @ 1.54% Li2O & 0.4% Li2O cut-off<br />
  89. 89. Sichuan Tianqi Lithium Industry Co LtdSpodumene conversion plant, Shehong, Sichuan<br />
  90. 90. Western Lithium USA TSX: WLCConcordia Resources Corp (formerly Western Uranium) 28.5%<br />Kings Valley, Humboldt Co, Nevada, USA<br /><ul><li> Soft rock: hectorite; 5 stage lenses
  91. 91. Stage 1 NI43-101 M+I Res: 37.3m tonnes @ 0.404% Li = 150.7kt lithium. Represents 7.3% of historic total
  92. 92. Supports 25-year mine life
  93. 93. Jan 2010: 27.7ktpa Li2CO3 & operating cost $1,967/tonne
  94. 94. Nov 2010 upgraded Stage 1 feedstock resource allowed lower initial capacity at 13,500 tpa Li2CO3 and overall reduced costs
  95. 95. Prefeasibility study expected now
  96. 96. Detailed engineering/construction: mid-2012
  97. 97. Expect commission H2 2014</li></li></ul><li>Rio Tinto<br />Jadar Valley, Serbia<br /><ul><li>Jadarite: new Li & B mineral discovered by Rio 2007
  98. 98. Lower jadarite zone: 125.3m tonnes @ 1.8% Li2O
  99. 99. Decided to retain & develop project: $27m drill camp
  100. 100. Free milling soft rock
  101. 101. Off-the shelf conversion technology
  102. 102. Envisaged commissioning 2016 earliest
  103. 103. Now joined by Pan Global Resources/LithiumLi Holdings and Ultra Lithium Corp</li></li></ul><li>
  104. 104. Lithium Resources in China<br />Continental Brines: One in Tibet, two in Qinghai: Remote west<br />Hard Rock: Four in Sichuan, two in Jiangxi, one in Hunan<br />Mineral Conversion: Ten companies 2011 capacity: 52.5k LCE<br /> Sichuan Tianqi, Xinjiang Lithium Salt, Ganfeng Lithium, Sichuan Ni&CoGuorun are the majors now being joined by Galaxy Resources at Zhangjiagang, Shanghai (17k tpa LCE)<br />External reliance: Spodumene imports from Australia, partnering new resource development in Canada (Tianqi/Nemaska) & Argentina (Internat’l Lithium/Ganfeng)<br />High altitude, high magnesium, remoteness & robust growth in traditional lithium mineral uses especially glass/now battery <br />
  105. 105. Other projects further out<br />Simbol Materials, S California KGRA, Geo brines<br />Bollore-Eramet: Minera Santa Rita, Argentina<br />Salares Lithium Inc, Salares 7, Atacama RIII<br />East Coast Minerals: Austria<br />Li3 Energy, Salar de Maricunga, Chile<br />American Lithium Minerals, Borate Hills, NV, USA<br />Perilya Canada, Moblan, QC, Canada (Globestar)<br />Rock Tech Lithium, Georgia Lake, ON, Canada<br />And many more: see LAWM June 2011<br />
  106. 106. Considerations<br /><ul><li>Location: infrastructure, market proximity, reagent supply
  107. 107. Diversification: geopolitical, oligopoly
  108. 108. Commissioning to full capacity: ramping period
  109. 109. Strategic partnerships: financial support, off-takes
  110. 110. Resource quality: operating cost, scale, by-products, losses
  111. 111. End product markets: direct, CO3, OH, Cl, derivative
  112. 112. Government influences: CO2 reduction, supply security
  113. 113. Processing capability: conversion know-how
  114. 114. Financial strength: patience for ROI, failure risk
  115. 115. Project entry timing v market uptake: minimum capacity
  116. 116. Major companies’ actions: price, capacity expansion
  117. 117. Long term global resource capability: Ford Motor Co: 2100 need 40m tonnes Li up to 2100 for 50/50% losses/market compares with LAWM 2009 39.4m tonnes Li broad base identified global reserve.</li></li></ul><li>Prognosis <br /><ul><li>Galaxy only significant emerging entrant today!
  118. 118. Buyers support supply diversification allowing several only to enter at low occupacity levels restraining prices and slowing project development
  119. 119. Market volume growth to 2020 too slow causes project delays, shelving, abandonment.
  120. 120. Market volume growth to 2100 requires all projects (except seawater) to meet cumulative demand of 20m. tonnes Li -- 50% of broad based reserves of over 39m. tonnes (LAWM 2009) just covers need for double demand levels to cover extraction losses (Miller, Ford Motor Co. 2011).
  121. 121. Timing and project capability are key </li></li></ul><li>Survivors<br />Simple analysis: Is any new project essential?<br />Future market demand<br />What will be the truth? <br />Thank you<br />

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