Atlantic Lithium considering flotation at Ewoyaa, brings in specialists

13th Jul 2023 08:56

(Sharecast News) - Atlantic Lithium announced the appointment of DRA Global on Thursday, to conduct a scoping study for the inclusion of a flotation circuit at the Ewoyaa Lithium Project in Ghana.

The AIM-traded firm said the study would seek to evaluate the technical and commercial viability of using flotation to process fines and middlings as an additional downstream circuit to the planned Ewoyaa lithium dense media separation (DMS) processing plant.

It described DRA Global as an international engineering, project delivery, and operations management group with expertise in the mining, minerals, and metals industry.

The scoping study would focus on assessing the use of the fines material, currently intended to be sold as a low-grade secondary product, as potential feedstock for the flotation circuit.

Preliminary test-work and calculations had shown promising results, with expected recovery rates and concentrate grades of over 5% lithium oxide.

The company said the higher-value concentrate produced through flotation was intended to replace the current lower-grade secondary product, which would enhance the project's financial outcomes and reduce risks associated with fluctuations in the low-grade lithium market.

As part of the agreement, DRA Global would provide process design criteria, a processing flowsheet, and cost estimates for the additional flotation circuit.

The study was set to start shortly, with results expected in the fourth quarter of the year.

Atlantic said Ewoyaa's definitive feasibility study had already indicated strong economic outcomes and profitability potential.

The project was looking to achieve a steady-state operation of 2.7 million tonnes per annum, producing 3.6 million tonnes of spodumene concentrate over a 12-year life-of-mine.

It said the study predicted a post-tax net present value of $1.5bn, with free cash flow of $2.4bn from revenues of $6.6bn over the project's life.

The internal rate of return was projected at 105%, with an average annual EBITDA of $316m and a short payback period of 19 months.

Atlantic said the estimated capital cost for the project was $185m.

The study incorporated a mineral resource estimate of 35.3 million tonnes at 1.25% lithium oxide, and conservative pricing assumptions for the concentrate.

"Initial test-work has indicated the possibility of upgrading the lower-grade secondary product that we will be producing from the Ewoyaa Lithium Dense Media Separation plant to a higher margin spodumene concentrate product through an additional flotation circuit, downstream from the DMS plant," said chief executive officer Keith Muller.

"By increasing the production of concentrate, we believe that we reduce our reliance on the low-grade lithium-bearing products market and enhance our exposure to spodumene concentrate pricing upside.

"The higher-value product will generate greater revenues and, as such, the inclusion of the flotation circuit is expected to improve the financial outcomes indicated in the recent definitive feasibility study for the project."

At 0832 BST, shares in Atlantic Lithium were down 0.64% at 23.67p.

Reporting by Josh White for Sharecast.com.