Latin Resources (ASX: LRS) has unveiled a robust analysis of its Colina Project in Minas Gerais, Brazil, presenting a Preliminary Economic Assessment (PEA) that outlines a low-capital, two-phased operation aimed at producing a high-quality SC5.5 product and a 3% Li2O spodumene tails concentrate.
Figure 1: Proposed Colina Mine Open pit and Infrastructure layout
The Colina Project’s PEA was collaboratively prepared by experts from SGS Geological Services Group Canada, SGS Bateman Engineering Services, and MinSol Engineering.
This assessment was built upon the mineral resource estimate announced in June, comprising 45.2 million tonnes (Mt) at 1.32% Li2O, including 0.43Mt @ 1.34% Li2O Measured + 29.7Mt @ 1.37% Li2O Indicated + 15.0Mt @ 1.22% Li2O Inferred, showcasing the viability of a proposed 3.6 million tonnes per annum (tpa) standalone mining and processing operation with robust financial metrics for the Colina Project.
The PEA encompasses both Phase 1 and Phase 2 processing facilities, illustrating strong combined economics with a noteworthy combined after-tax NPV8% of $3.6 billion and a combined after-tax Internal Rate of Return (IRR) of 132%. This translates to a Total Life of Mine (LOM) revenue of $12.6 billion, accompanied by substantial free cash flow totaling $6.8 billion.
The Company anticipates an average LOM annual production of 405,000 tpa of 5.5% Li2O spodumene concentrate (SC5.5) with a Phase 1 capital expenditure of $253 million USD and an after-tax payback period of merely seven months.
Latin is confident that this PEA solidifies its position as a large-scale, cost-efficient producer with an integrated concentrate plant that adheres to environmentally sustainable production practices for both SC5.5 and SC3 spodumene concentrate, offering substantial cost savings and competitive market benefits due to its favourable geographical location.
Figure 2: The Colina Project Phase 1, 2 and Combined Revenue, Capital and Operating Costs (US$M, real)
Several key factors played a pivotal role in driving the robust outcomes of the PEA, notably the consistently high average feed grades of 1.24% Li2O observed across both Phase 1 and Phase 2.
Furthermore, Latin’s drilling results from August have consistently delivered positive outcomes, affirming the substantial potential for significant lithium mineralidation within the Colina Deposit’s uncovered pegmatite discovery.
Noteworthy achievements were also recorded in terms of average recovery rates, with the Dense Media Separation (DMS) circuit achieving an impressive 78.3% overall recovery rate, comprising 67.2% for SC5.5 and 11.1% for SC3. These results underscore the feasibility of a fully sustainable mine design, incorporating straightforward DMS processes, spodumene tails concentrate processing via spirals, a hydroelectric power supply, dry-stack tailings management, and water recycling practices to meet rigorous ESG standards.
The company expects Phase 1 production to initiate in 2026, followed by Phase 2, which is set to achieve an average production of 525,000 tpa of SC5.5 and 159,000 tpa of SC3, starting in 2029.
Key Opportunities Identified
The financial and technological study has brought to light several key opportunities for Latin, spanning resource growth, grade enhancement, expansion of regional and extension exploration efforts, improvements in mining and processing, and optimisation of commercial and shipping operations.
As a result of the positive outcomes from the PEA, Latin anticipates that discussions with potential offtake partners will gain momentum, offering prospects for advancing the Project.
Building on these robust findings, Latin is actively expanding its MRE through an ongoing resource drilling program, supported by eleven on-site drill rigs, integral to the Definitive Feasibility Study (DFS) and scheduled for completion in mid-2024.
Upon its completion, the DFS will assess the potential for a Phase 3 extension and expansion of production.
Figure 3: Colina Project development timeline
Given that the PEA is an estimate fraught with inherent uncertainties, the Company strongly advises investors against making investment decisions solely based on its results.
Latin’s Comments on the Promising PEA
Chris Gale, the Managing Director of Latin Resources, expressed great pride in the Company’s achievement of producing highly compelling economic results in the inaugural feasibility study conducted on the Colina Project.
“The low-cost capex and fast track to production in 2026 will hit the sweet spot of rising lithium prices many are predicting over the coming years,” he said.
“The Colina Project is on track to become one the world’s largest spodumene mines with very low operational costs.”
“The Company is very committed to developing a lithium mine with true sustainable mining practices, which will include hydro power, dry-stack tailings and recycled water systems The phased capital development strategy provides a viable ramp-up that self-funds its expansion to become a Tier one lithium mine. Minas Gerais is an excellent jurisdiction to support delivery of the Colina Project into a sustainable, large and low-cost spodumene operation on an accelerated basis. Latin Resource alongside Sigma Lithium will propel Lithium Valley, Brazil into one of the global top 4 lithium provinces.”
Tony Greenaway, the Vice President of Operations in the Americas for Latin Resources, characterised the PEA as an outstanding outcome for the Company, showcasing the Colina Lithium Deposit’s potential to emerge as a world-class lithium mine.
“As we move into the full definitive study phase for the Colina Project, we continue to aggressively explore our highly prospective tenement package, focusing on brown field Colina extensions, as well as new greenfield discoveries within our defined lithium corridor,” he said.
“The entire exploration team is confident that we will continue to make new discoveries in the wider project area like our new Fog’s Block Prospect, where we believe we will be able to define additional lithium resources that will continue to grow production and profitability.”
LRS’s Australian Stock Exchange-listed share price is currently trading at $0.24 (11.45am UTC+ 8 hours).