Core Lithium (CXO) - Funded to Production in Q4/22 & Chinese Off Take

ASX listed Core Lithium Ltd (ASX: CXO) is well-positioned to be Australia’s next lithium producer. The share price has gone from $0.28 to almost $0.60 in less than 6 months with Core Lithium's market cap increasing to almost $900M.

Core Lithium is currently developing its Finniss Lithium Project, located near Darwin Port in the Northern Territory of Australia. The company expects to start construction on the Finniss Lithium Project before the end of 2021. According to Stephen Biggins, the Managing Director of Core Lithium, production at the Finniss Lithium Project is anticipated to start before the end of 2022.  

Matthew Gordon was able to chat with Stephen Biggins about the company’s recent achievements and milestones. These include a final investment decision (FID), the structuring and implementation of its engineering, procurement and construction (EPC) contracts, and an extra $34M of financing from Ganfeng Lithium, one of the world’s largest lithium companies. Ganfeng is involved in the entire lithium supply chain, ranging from lithium resource development, refining and processing to battery manufacturing and recycling.

Company Overview

Core Lithium is an Australia-based mineral exploration company. The company is focused on the development of the Finniss Lithium Project and other prospects in the Northern Territory (NT) and South Australia. The Finniss Lithium Project is located 25 kilometers (km) from Darwin Port, Northern Australia. The project lies within the areas for lithium in the Bynoe Pegmatite Field, NT and covers an area approximately 500 square kilometers of its tenements.

Core Lithium has started construction at the Finniss Lithium project and is now setting up road access and pipelines and has commenced development of the office buildings. Since we last spoke in July, the FID has been completed and the key mining contracts are now in place. The company has completed the last piece of financing with A$34M from Ganfeng Lithium and also has an off-take agreement with the largest lithium producer in the world.

Core Lithium aims to be in production by the end of 2022 and the company is on schedule and is fully funded with contracts in place to meet this timeline of first production of high quality lithium concentrate.

Alongside Ganfeng, Core Lithium has an off-take agreement with Yahua which links the company to the Tesla supply chain. Core Lithium is linked to the best lithium companies in the world to sell their product and is now in a unique position on the ASX as the only new Australian lithium producer looking to start production by the end of 2022.

Core Lithium is well financed and is focused firstly on the delivery of the Finniss Lithium project and after that will look at significantly expanding the production of lithium concentrate in the next few years. The company also aims to undertake feasibility studies on downstream lithium processing with the potential to produce lithium hydroxide in the future.

Management

Stephen Biggins has 25 years of experience as a geologist and as an executive in the mining industry both in Australia and internationally. Under the guidance of Biggins, Core Lithium has discovered, defined, and acquired one of the first and largest lithium resources in northern Australia, namely the Finniss Lithium Project.

Biggins is no stranger to leading a project from initiation to production. Biggins' track record includes victories such as the Cannon Gold Mine in Western Australia. Biggins led the acquisition and discovery of the Cannon Gold Mine between 2005 and 2010. He further brings with him the extensive experience of building prospective portfolios of lithium, gold, uranium, and base metal exploration projects in Australia, Asia, and Africa.

Apart from Biggins, Core lithium boasts an experienced and well-rounded management team.

This management team consists of Greg English, Heath Hellewell, Malcolm McComas, Simon Iacopetta, Blair Duncan, Sean Buxton, Robert Sills, and Jarek Kopias.

English serves as Non-Executive Chairman and is a double threat being both a qualified mining engineer and lawyer. With more than 20 years’ experience in multicommodity projects throughout Australia and Asia. English identifies other high-quality exploration assets.

Hellewell serves as Non-Executive Director and is an exploration geologist with over 20 years of experience in gold, base metals, and diamond exploration in Australia and West Africa. Also serving as Non-Executive Director is McComas who had previously been an investment banker. McComas has been placed in many leadership roles in several global organizations. Some of these include acting as the head of investment banking at County NatWest (now CitiGroup) for 10 years and operating as the director of Grant Samuel.

Simon Iacopetta is Chief Financial Officer (CFO) and was most recently CFO and Company Secretary of Terramin Australia Limited, an ASX listed precious and base metals developer. Iacopetta also previously served as Chief Financial Officer of gold miner Ramelius Resources Limited.

Duncan serves as Chief Operating Officer (COO) and has an extensive mining background in commodities like coal, gold, copper, nickel, vanadium, iron ore, and lithium.

Regarding the Finniss Lithium Project, Buxton is employed and serves as the project manager. Buxton specializes in operations and general management of both open pit and underground mines.

Filling out the management team is Sills as Commercial Marketing Manager and Kopias as Company Secretary

Cash Position

The Finniss Lithium Project hosts 15 million tons of 1.3% lithium oxide (Li2O) and covers over 500km2 of land. The Finniss Lithium Project is within proximity to much-needed infrastructure such as railways, roads directly to Darwin Port, and power stations. 

In March 2021 the federal government awarded major project status (MPS) to the Finniss Lithium Project. This recognition by the Commonwealth of the strategic significance of the project to Australia provides Core Lithium with extra support from the Major Projects Facilitation Agency. Further advantages include a single-entry point for Australian Government approvals, project support, and coordination with state and territory approvals.

Core Lithium has further coupled with the ERM Group, an environmental consultancy firm, to provide a carbon footprint evaluation, life cycle analysis, and sustainability assessment for the Finniss Project. The initial greenhouse gas assessment of the initial seven-year mine life of Finniss confirmed that the project is well below industry standards for emission intensity. This green lithium production will serve the country well, specifically with tax cuts and lower carbon taxes.

A definitive feasibility study (DFS) and scoping study (SS) on the Finniss Lithium Project was released by Core Lithium in 2021. Some of the highlights of the DFS included an average annual production of 173,000 tons of high-quality lithium concentrate at a C1 Opex of US$364/t and A$89m Capex. These low Opex and Capex readings are made possible through simple and efficient DMS (gravity) processing of some of Australia’s highest-grade lithium mineral resources. The Finniss Lithium Project also has an initial life of mine of 10 years.

Ore Reserves within the grants and BP33 deposits coupled with standard open pit mining operations and the construction of the simple 1Mtpa DMS processing plant will lead to Finniss having a production capacity of up to 197,000 tons of lithium concentrate per annum.

Core Lithium has already established offtake agreements with both Ganfeng Lithium and Yahua Industrial Group Co. Yahua Industrial Group Co. has recently announced a deal to supply battery-grade lithium hydroxide to US electric vehicle manufacturer Tesla, the most well-known electric vehicle manufacturer in the world. This news led to the share price of core lithium almost doubling. Under the Yahua-Tesla agreement, it is expected that Core’s Finniss Lithium Project will be a key source of spodumene LiAl(SiO3)2 concentrate for Yahua to fulfil its mandate with Tesla. Yahua currently holds a three-year, 75,000 tons per annum offtake agreement with Core. 

The Future of Core Lithium and the Finniss Project

With a simple build process due to its in-place EPC contract, it is likely that Core Lithium will be able to set the Finniss Lithium Project into production by the end of 2022. 

A long-term objective of Core Lithium is to explore the potential of adding downstream processing opportunities at the Finniss Project. One such opportunity would be the production of lithium hydroxide. The downstream value potential is given by the project’s synergies with the adjacent Middle-Arm industrial infrastructure. This infrastructure near Darwin is fuelled by the rapid expansion of global lithium-ion battery markets. The lithium-ion battery markets must be able to meet the ever-increasing EV and renewable energy markets.

Biggins believes that with Core Lithium being on a finite schedule, well-funded, and with the correct people and contracts in place, they will be able to meet their timeline to the first production. Expansion plans like investing tens of millions of dollars in exploration and resource drilling are already in place according to Biggins. Biggins admits that Core Lithium already has plans for stage 2 of the project. The plans include significantly expanding production towards 2024. Biggins adds that funding should be readily available should it be needed.

For now, however, Core Lithium is focussing first and foremost on the delivery of the Finniss Lithium Project within budget, on time, and safely.

Biggins is very optimistic about Lithium demand and of Core Lithium being in a place to supply that demand. Core Lithium has some of the best lithium customers in the world that they can rely on to sell their product to. The price of lithium is heading through the $2,000t mark and Core Lithium is in exactly the right place at the right time.

To find out more, go to the Core Lithium Website