Atlantic Lithium takes major stride toward production at Ewoyaa in Q4
( ) , an Africa-focused lithium explorer, issued a quarterly activities and cash flow report for the 3 months ended December 31, 2023.
Atlantic had an eventful quarter with the granting of a historic mining lease for its flagship Ewoyaa project in Ghana, making it the first lithium project in the country to be greenlit by the government. The milestone significantly derisked and advanced the project toward production.
Others milestones for Ewoyaa included the completion of a flotation scoping study, confirming the viability of a downstream flotation circuit; an authorisation from a regulator to divert transmission lines that traverse the Ewoyaa licence; and the award of a bulk customer permit for the project's energy needs, expected to result in a 30-50% power cost reduction.
In terms of exploration, Atlantic reported multiple broad intervals of spodumene at Ewoyaa, including a 106m continuous pegmatite interval - the longest reported in the 2023 drilling programme to date - observed outside the current mineral resource estimate (MRE). Ewoyaa was also granted the highly prospective Bewadze and Senya Beraku licences in the eastern portion of Atlantic's Cape Coast portfolio in Ghana.
Additionally, a maiden JORC compliant feldspar mineral resource estimate (MRE) was reported for Ewoyaa of 15.7Mt at 40.2% feldspar, including 13.7Mt (87%) in the Measured and Indicated categories. Feldspar is a by-product of spodumene production that Atlantic aims to supply to the Ghanaian ceramics market, potentially enhancing the value of the project.
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The grant of the mining lease for Ewoyaa represents a major milestone and endorsement from the government of Ghana, significantly advancing the project toward production. The agreed terms position Ewoyaa as one of the lowest capex and opex hard rock lithium projects globally, with strong commercial metrics and profitability potential for a 2.7Mtpa operation, producing a total of 3.6Mt of spodumene concentrate (approx. 350,000tpa) over a 12-year mine life (LOM).
The project's updated definitive feasibility study determined a post-tax NPV8 of US$1.3bn, with free cash flow of US$2.1bn from LOM revenues of US$6.6bn and average LOM EBITDA of US$280m per year. C1 cash operating costs were estimated at US$377/t of concentrate Free-On-Board Ghana Port, after by-product credits, with an AISC of US$675/t.
Ewoyaa's development cost is estimated at US$185m. Atlantic's main partner on the project is US-based Piedmont Lithium who has committed US$70m and 50% thereafter of the total capex. Additionally, Ghana's Mineral Income Investment Fund has agreed to invest US$32.9m (US$5m already invested). Atlantic is also advancing an offtake partnering process due to complete in Q1 2024. As it stands, once in production Atlantic will own 40.5% of Ewoyaa, Piedmont will own an equal 40.5%, Ghana's Mineral Income Investment Fund will own 6%, and the government of Ghana will own 13%.
Overall, Ewoyaa boasts very strong underlying fundamentals, including proximity to existing infrastructure, potential for resource growth as indicated by recent drilling outside the current MRE, and impressive economic outputs as indicated by the DFS. The abovementioned feldspar maiden MRE and results of the flotation scoping study represent potential for further upside. Following December's £4.2m fundraise, Atlantic is funded to cover its share of development costs for the project.
An upgrade to Ewoyaa's mineral resource estimate (MRE) is expected in Q3 2024. Commencement of construction is targeted for late 2024, and initial production for early 2025.
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