Tech: Lithium Batteries Continue to Develop as Governments Focus on EVs

Lithium prices have skyrocketed during recent years due to the growing global demand for lithium-ion batteries. In 2018, lithium prices surged by 45%, or to USD 16,500 per ton year-over-year as the demand began to outpace the supply. Lithium-ion batteries are being used within various applications such as electric vehicles (EV), portable consumer electronics, and grid energy storage systems, to name a few. The batteries are commonly used in applications that require lightweight and high-energy density solutions as lithium-ion batteries are much more compact when compared to traditional batteries. They also boast a higher energy density per weight than traditional batteries. Additionally, the ongoing technological advancements are aimed towards reducing the weight of these batteries, while also maintaining the ability to provide sufficient power. While the battery market is the largest segment of the overall lithium market, energy storage systems are expected to witness the fastest growth rate because of the ongoing developments in the wind and solar PV across the world. Furthermore, the rising demand for efficient but clean energy is also accelerating the lithium market and causing prices to rise dramatically. According to data compiled by Grand View Research, the global lithium-ion battery market is expected to reach USD 93.1 Billion by 2025, while registering a robust CAGR of 17% as well. The EV market is expected to be a major driver for the overall marketplace, while the growing adoption in portable consumer electronics and grid storage systems is also expected to accelerate its growth. Neo Lithium Corp. (OTC: NTTHF) (TSX-V: NLC), Livent Corporation (NYSE: LTHM), Panasonic Corporation (OTC: PCRFY), Enphase Energy, Inc. (NASDAQ: ENPH), Lithium Americas Corp. (NYSE: LAC) (TSX: LAC)

The EV market is growing rapidly due to government initiatives aimed at adopting clean environment legislation, as various nations have already moved to limit or even ban gas-powered vehicles. For instance, countries within the European Union have implemented regulations to limit gas-powered vehicles on the road. Meanwhile, the U.S. offers EV owners federal credit for taking the initiative to reduce global environmental harm. Several automotive manufacturers have also pledged to reshape their vehicle production lines. Within the shortcoming years, a handful of manufacturers plan to solely produce only EVs and eliminate the production of gas-powered vehicles. “As automakers ramp up production for evermore EVs, demand on the power grid from EVs will grow exponentially. According to best estimates, growth in EV adoption could drive a 300-fold increase in electricity consumption by 2040, compared to 2016. The current grid will need to evolve significantly to accommodate that growth, driving a blitz of new innovation in wind and solar power, which will ultimately shift global reliance on coal toward clean energy alternatives,” it was stated in a Thomson Reuters research report.

Neo Lithium Corp. (OTCQX: NTTHF) (TSX-V: NLC) is also listed on the TSX Venture Exchange under the ticker (TSX-V: NLC). Earlier today, the Company announced, “positive results of a prefeasibility study (“PFS”) prepared in accordance with National Instrument 43-101 (“NI 43-101”) for its wholly-owned Tres Quebradas lithium brine project (“3Q Project”) in Catamarca Province, Argentina.

Sponsors

Sponsors

Sponsors

The technical report summarizing the PFS is being prepared by GHD Chile SA (“GHD”) and Groundwater Insight Inc., in accordance with NI 43-101 (the “Technical Report”). GHD is a leading independent engineering services firm with extensive experience in projects developments with some of the largest and lowest cost lithium brine processing facilities in Chile and Argentina. Groundwater Insight Inc. is a technical consultancy with lithium brine experience on more than 18 salars in exploration or production stages.The reserve estimation in the Technical Report was done by groundwater numerical model experts IHLLA Research Group under the supervision of Groundwater Insight Inc. (“Groundwater Insight”). Golder SA and G&T Ingenieria SA also collaborated in the study.

Waldo Perez, President and CEO of Neo Lithium, commented, ‘With the discovery of a high-grade core, we optimised the 3Q Project development plan with respect to our Preliminary Economic Assessment. The new capex and opex, together with a long life of mine and high-grade brine, allow us to present a superior IRR of 50%. Furthermore, we currently continue drilling the high grade core and we are now able to validate that the 3Q Project still has further significant high-grade resource upside potential’,

The PFS represents a comprehensive study of the technical and economic viability of the 3Q Project and has advanced to a stage where a preferred processing method has been established and an effective method of mineral processing has been determined.

PFS Highlights

Unless otherwise indicated, all dollar amounts in this press release are stated in U.S. dollars (“$“). Currency exchange is based on current rates.

“We are delighted with the results of the PFS. We have improved the PEA results on all fronts, requiring a smaller capital investment for a similar NPV.  The 3Q Project is now easier to build, easier to finance, and its larger size allows us to think in terms of potential phased expansions. The final value of this project will be realized over time,” said Carlos Vicens CFO of Neo Lithium.

Mineral Resources, Mineral Reserves and Mine Plan

The Mineral Resources were defined in the Company’s “Updated Mineral Resource Estimate Technical Report on the 3Q Lithium Project, Catamarca Province, Argentina” prepared by Groundwater Insight Inc. with an effective date of August 14, 2018 and summarized in the following table:

The strategy to maximize value at the 3Q Project was by first extracting the high-grade core brine with 5 wells strategically located in the middle of the high-grade component of the measured and indicated resource, with screens between 70 and 100 m. Early extraction of high-grade brine allows minimal sizing of early stage ponds. Grade is predicted to decrease with time, as progressively lower grade brine is extracted. Consequently, total pond area increases over the years.

A numerical groundwater model was developed to support the reserve estimate and development of the 35-year mine plan. The model predicts a brine grade decrease over time and simulates additional brine recovery to maintain production at around 20,000 tonnes of lithium carbonate equivalent over the life of mine. The model simulates long term brine recovery, based on rigorous assembly of groundwater flow and solute transport parameters.

The tonnage, grade, and classification of the Mineral Reserves captured within the PFS mine plan are summarized below.

*Total M&I resources 4,005,000 tonnes LCE @ 400 mg/l cut-off / ** Rounded / *** These two include some incidental capture from the inferred resource, which is excluded from the reserve estimate.

In the initial 10 years of the PFS mine plan, 5 wells would each produce 51 l/s of high-grade brine. During the subsequent 10 years, the same wells would produce 64 l/s. From 20 years onward, a total of 11 wells would be in operation, with individual production rates between 23 l/s to 49 l/s. These variable brine recovery rates are designed to maintain a relatively constant production rate of approximately 20,000 tonnes of Lithium Carbonate Equivalent (“LCE”). The required yields are reasonable within the known parameters of the brine aquifer. However, ample space exists within the resource for additional production wells, if required. The Company has already installed one production well capable of sustained production of 84 l/s from the high-grade zone.

Proposed Mining Operation and Processing

The PFS identifies the preferred development option as being a conventional evaporation pond operation followed by purification and precipitation of lithium carbonate.

‘We have been working towards a mining plan and a process facility that maximizes the competitive advantages of the 3Q Project, which is high grade, with low impurities and a large size of resource’, said Gabriel Pindar, Director and COO of Neo Lithium. ‘The PFS has been tailor-made to the 3Q Project, while using proven technologies that have been utilized by major companies in the region to minimize operational and construction risks.’

The process begins with the extraction of brine from pumping wells into solar evaporation pre-concentration ponds. After a retention period of approximately 120 days, approximately 90% of the sodium chloride and other salts crystallizes out from the brine. The potash is harvested in a subsequent pond, with no requirement for reagents. Subsequently, the brine is transferred to calcium chloride precipitation ponds and thickeners are used to extract most of the calcium that precipitates as antarctite. Minor amounts of hydrochloric acid are required for pH control and to crystallize boric acid out of the brine. Residence time in the calcium chloride ponds is approximately 105 days. When the brine achieves a lithium concentration of 3.5%, it is transported to the brine processing plant. The total time to get to this stage is approximately 225 days and lithium recovery in the ponds is approximately 60%.

Influent brine lithium grade is predicted to change over the mine life, from 1,177 mg/l in year 1 to 670 mg/l in year 35. Consequently, pre-concentration ponds must be expanded over time to keep production constant. In the initial phase, 406 hectares of pre-concentration ponds will be utilized. This will be followed by two expansions of 102 hectares, each in year 10 and year 20. The calcium chloride ponds and thickeners remain constant over the life of mine. Average production is 20,000 tonnes LCE per year, and the need for capital at the beginning of the project is minimized by mining the high grade first.

Processing of the concentrated brine is achieved in four stages at two locations Fiambalá y Recreo:

Fiambalá (100 Km. from Salar 3 Quebradas)

• Solvent Extraction to remove remaining boron;
• Sulfatation to remove remaining calcium adding a saturated solution of sodium sulfate; Recreo (465 Km. from Fiambalá)
• Mix with mother liquor and minor soda ash to remove traces of calcium and magnesium; and
• Addition of soda ash and heat to precipitate lithium carbonate, followed by drying and packaging.

Recovery in the sulfatation plant is 92% and recovery in the carbonation plant is 85%. The Company is now operating a 1:500 scale pilot plant in Fiambalá, to fine-tune this standard method. The general approach has been proven in industry by major producers, to achieve battery grade lithium carbonate.

Key parameters that provide the basis for the PFS and other qualifications and assumptions are provided below.

Capital Costs

Initial capital costs are estimated at approximately $319 million. Life-of-mine deferred and sustaining capital costs are estimated at approximately $207 million, and closure costs are estimated at approximately $26 million. Details for capital costs could be found in the table below:

Operating Costs

Average operating costs per tonne processed are as follows:

Lithium Markets and Price

Neo Lithium commissioned a market study by Benchmark Minerals Ltd. in December 2018, which shows the following results:

The average lithium carbonate pricing estimate over the life of mine is approximately $11,882 per tonne.

Base Case Sensitivity Analysis

Future Work

Neolithium intend to now complete a full feasibility study to further validate and detail the elements outlined in the Pre-Feasibility Study.

At reserve level, it is recommended to extend drilling at depth of the high-grade zone below the already drilled 100 metres.  Definition of additional high-grade resources could have a significant impact on pond requirements, with the possibility to increase production with fewer ponds. This program is already in process, and the first drilling results are expected soon.

Additional long-term pumping tests in the high-grade zone are also recommended to test the aquifer in production scale pumping scenarios. Currently, the Company is carrying out a 20 days long term pumping test that is almost completed.

The pilot plant operation, currently in the commissioning and testing phase, is critical to complete the feasibility study and to prove the concept of the plant facility to yield battery grade lithium carbonate.

The final feasibility study must consider the economics of by-products including potash, calcium chloride and boric acid, all readily available with minor additional investment.

The recommended feasibility study is expected to be completed in the first half of 2020.

Environmental and Permitting Considerations

Neo Lithium is fully permitted for the current work program, through feasibility and up to construction. The Company has completed the baseline studies and is now completing the final environmental impact assessment report for mine construction. The report is expected to be delivered to the mining authorities in Argentina imminently.

Technical Information

The Technical Report will be filed on SEDAR within 45 days of the date of this news release.

The PFS is being prepared in accordance with NI 43-101 by GHD and Groundwater Insight, in conjunction with a team of globally recognized consultants. The two independent qualified experts that lead the team of consultants are:

• Gino Zandonai, P.Eng., a Chilean Professional Mining Engineer and competent person under CRISCO#0155, is the independent qualified person signing the report for GHD Chile SA; and
• Mark King, Ph.D., P.Geo., a Canadian Professional Geoscientist registered with the Association of Professional Geoscientists of Nova Scotia, is the independent qualified person signing the report for Groundwater Insight.

These two qualified persons under NI 43-101 have reviewed that the technical information in respect to the PFS in this press release is accurate and approve the written disclosure of such information.

Other than as set forth above, all scientific and technical information contained in this press release has been reviewed, verified, and approved by Mr. Perez, Ph.D. and P.Geo., CEO and Director of Neo Lithium, and a qualified person for the purposes of NI 43-101, and also supervised the preparation of and approved the contents of this news release.

Project Financing

The PFS defines the major economic parameters of the 3Q Project. The Company now has a strong foundation to discuss various financial options to move the project forward, following strategic discussions with multiple partners during 2018.

“The robust project economics generated from the PFS further validates our view that the 3Q Project is an exceptional project, particularly when our industry faces unprecedented growth and it needs predictable, long term, low cost producers,” noted Constantine Karayannopoulos, Chairman of Neo Lithium Corp.  “We are not short of options, and the next step is a careful analysis of how to maximize value for our shareholders.”

About Neo Lithium Corp: Neo Lithium Corp. has quickly become a prominent new name in lithium brine exploration by virtue of its high quality 3Q Project and experienced team. Already well capitalized, Neo Lithium is rapidly advancing its recently discovered 3Q Project – a unique high-grade lithium brine lake and salar complex in Latin America’s “Lithium Triangle”.

The 3Q Project is located in the Province of Catamarca, the largest lithium producing area in Argentina. The project covers approximately 35,000 ha and the salar complex within this area is approximately 16,000 ha..

The technical team that has discovered the 3Q Project characterized this unique salar complex as one of the most experienced in lithium salars. For example, this team discovered and led the technical work, including resource definition and full feasibility study, that established the Cauchari lithium salar as one of the largest lithium brine resources in the world.

Additional information regarding Neo Lithium Corp. is available on SEDAR at www.sedar.com under the Company’s profile and at its website at www.neolithium.ca, including various pictures of ongoing work at the project.

Livent Corporation (NYSE: LTHM), for more than six decades, has partnered with its customers to safely and sustainably use lithium to power the world. Livent Corporation recently reported fourth quarter and full-year 2018 results.  For the year, Livent reported revenue of USD 443 Million, an increase of 27% compared to 2017.  On a GAAP basis, the company reported full-year net income of USD 126 Million, compared to USD 42 Million in 2017.  Full-year Adjusted EBITDA was USD 183 Million, an increase of 45% compared to 2017. Consistent with its strategy, Livent is focused on strengthening its partnerships with the largest and fastest growing lithium hydroxide customers globally. The Company expects higher costs in 2019 driven by raw materials and VAT on exports out of China, partially offset by favorable foreign exchange.  In addition, overall profit margins will be reduced by the impact of purchased lithium carbonate. Paul Graves, President and Chief Executive Officer of Livent Corporation, said, “We expect these costs to be largely temporary in nature. The requirement to purchase third party carbonate will end when the first phase of our lithium carbonate expansion comes online in Argentina, which we currently expect by mid-2020. As we add lithium hydroxide capacity outside China in future years, the VAT expense will also decrease as lower volumes are exported out of China. The fundamental drivers of demand in our industry continue to be positive. In particular, electric vehicle sales that are consistently exceeding even the most bullish forecasts, as well as battery technology developments that are increasingly favoring lithium hydroxide. We remain confident that Livent will continue to be a leader in the performance lithium compounds industry in the coming years.”

Panasonic Corporation (OTC: PCRFY) is a worldwide leader in the development of diverse electronics technologies and solutions for customers in the consumer electronics, housing, automotive, and B2B businesses. Last year, Panasonic Corporation began mass production of prismatic-type automotive lithium-ion batteries at its factory in Dalian, China. The market for eco-conscious vehicles, including hybrids, plug-in hybrids, and electric vehicles, is growing every year thanks to the increase in environmental awareness in recent years. To respond to the market demand, Panasonic has been gearing up to start production at this factory, which is its first production site for prismatic-type automotive lithium-ion batteries in China. Amidst expectations of expanding demand for automotive lithium-ion batteries, Panasonic manufactures the high-capacity and high-safety prismatic-type batteries at this factory and ships them to the North American and Chinese markets. Shipments will be expanded in the future to reach more destinations, helping to drive the spread of eco-conscious vehicles. With the beginning of mass production shipments of automotive lithium-ion batteries from this factory, Panasonic now has a production system covering Japan, the United States, and China, the three key global locations. By strengthening the global competitiveness of its automotive batteries with these sites, Panasonic will further expand its automotive battery business in the future.

Enphase Energy, Inc. (NASDAQ: ENPH), a global energy technology company, delivers smart, easy-to-use solutions that connect solar generation, storage and management on one intelligent platform. Enphase Energy, Inc. recently announced that it had shipped over 27 MWh of energy storage systems since the introduction of the Enphase AC Battery™. Over 12,500 homes have been commissioned with Enphase energy storage systems worldwide, and nearly 40% of these homes have non-Enphase solar systems, reflecting the power of the AC coupled architecture. The Enphase system is fully integrated and includes a battery cell pack, battery management system, charge controller, inverter, and control software. The Enphase Energy Storage System™ provides a modular and scalable approach to storing solar energy for night-time or future use, giving homeowners greater energy independence. These systems are safety tested and certified by TÜV Rheinland, and their AC coupled architecture ensures that no high-voltage DC is exposed to installers or homeowners. Further, Enphase storage systems use Lithium Iron Phosphate (LFP) battery chemistry which provides a high current rating, long cycle life, excellent thermal stability, and enhanced safety and tolerance. “Solar installation contractors around the world are leveraging the AC Battery product to build truly innovative solar + storage systems,” said Badri Kothandaraman, President and Chief Executive Officer of Enphase. “I am impressed with how customers have embraced the scalable nature of the AC Battery product. I am excited to see what our customers and installation partners do with the many new choices for energy storage that our next-generation Encharge storage products will deliver.”

Lithium Americas Corp. (NYSE: LAC) (TSX: LAC), together with Ganfeng Lithium, is developing the Caucharí-Olaroz lithium project, under construction in Jujuy, Argentina through its 62.5% interest in Minera Exar. Lithium Americas Corp. recently provided a construction update on the Cauchari-Olaroz lithium project in the Province of Jujuy, Argentina. Cauchari-Olaroz is 100%-owned by Minera Exar S.A., a joint venture company owned 62.5% by Lithium Americas and 37.5% by Jiangxi Ganfeng Lithium Co., Ltd. Although January and February are characterized as the rainy season at Cauchari-Olaroz, the site has received unusually heavy rainfall during recent weeks. Minera Exar is pleased to report minimum disruptions to the current construction activities and Caucharí-Olaroz remains on track to reach production in 2020. The Company is also pleased to provide an update on the development of its 100% owned Thacker Pass lithium project located in Nevada. Following the release of the Preliminary Feasibility Study in August 2018, through the development of a pilot plant in Reno, Nevada, the Company is considering the production of lithium hydroxide directly from lithium sulphate to provide added flexibility. Commissioning of the pilot plant is underway, with testing and optimization expected to commence in the near term. Jon Evans, Lithium Americas President and Chief Operating Officer commented, “Heavy rainfall in January and February has not had a material impact to our construction activities and schedule.  We note the temporary disruptions to the international paved highway in Jujuy were quickly corrected and the dilution impact to the ponds was minor at this stage of development.” Mr. Evans continued, “We are very pleased with the progress at site and continue to work closely with our partner, Ganfeng Lithium, to explore ways to further optimize the project.”