Cypress Development (CYP) - US Critical Minerals Market Heating Up

Cypress Development Corp. is a Canadian advanced-stage lithium company which is focused on the advancement of its 100%-owned Clayton Valley Lithium project, located in Nevada.

The Clayton Valley Lithium project is a 5,590-acre land package located immediately east of Albemarle’s Silver Peak mine, which is North America's only lithium brine operation. The project’s lithium mineralisation occurs in montmorillonite clays to a depth of at least 150 m. The large flat-lying nature of the lithium claystone deposit enables the deposit to possess a low strip ratio of 0.29:1.

The lithium market, compared to various other commodities, has seen a positive year in hindsight. The lithium market is set to nearly double to 1.5 million tons in 2027, due to the growing electric vehicle (EV) market. Cypress Development Corp. is aiming to supply the US lithium market, which is set to grow due to EV suppliers located in the US such as Tesla, which plans to launch 10 to 12 new Gigafactories in the future.  

The pilot plant of the company is located at the Amargosa Valley site, which previously was a gold refinery. The previous operations of the site has led to it possessing the necessary permits as well as having previous employees which were trained and incorporated as operators of the pilot plant.

Cypress Development Corp. is at this stage not focused on signing offtake agreements for future production. The rationale is that should the company enter a joint venture agreement, it does not want the joint venture to be hindered or prevented by an existing offtake agreement.

The company will continue to produce data to support the completion of its planned feasibility study in the future whilst in parallel conducting optimisation studies to enable efficient  future operations.

Management

Cypress Development Corp. is led by William Willoughby who serves as the company’s president, CEO and Director. Willoughby has more than 38 years of experience in the mineral sector and previously served as the President and COO of International Enexco Ltd. which was acquired by Denison Mines Corp. in 2014.

Braam Jonker is the company’s Chief Financial Officer and has been involved in the financial sector of mining for more than 30 years. Jonker has been involved in the raising of more than CAD$ 750 million as well as the execution of several business recoveries and restructurings.

Spiros Cacos serves as the Vice President of Investor Relations for Cypress Development Corp. Cacos has over 20 years of investor relations experience in publicly traded mining companies ranging from exploration stage operations to production.

Corby Anderson serves as a technical advisor to the company and is a registered engineer with more than 40 years of experience. Anderson is a renowned expert in extractive metallurgy, mineral processing, recycling and waste minimisation. Adam Knight is the project manager of the company and has been involved in the mining industry for more than 26 years. He previously held the positions of consultant and project manager for Practical Mining LLC and has experience in both underground and surface mining. Daniel Kalmbaach rounds out the management team as the manager of Geology and has been involved in the geology of mining operations for more than 21 years.

The management team of the company is tasked with navigating the growing lithium market.

The lithium market

The global lithium market, compared to various other commodities, has seen a positive year in hindsight. The lithium market is set to nearly double to 1.5 million tons in 2027. Bill Willoughby explains that the lithium market has remained strong, with the demand for green energy serving as a driving factor for the market.

“On the lithium side, it's been strong and it continues to stay strong. That's a positive. Everyone knows the markets are rather opaque right now, but a lot of commodities are in the process of pulling back: gold, copper, you've seen declines there. Lithium has stayed strong. I think it will continue to have strength as long as the auto manufacturers and market stay strong. The demand for green energy is here and we're working to be a part of that.”

The majority of electric vehicles (EVs) use lithium as the key component of their batteries. The most common battery used in EVs is lithium-ion batteries, which on average hold 10 kg of lithium per battery pack of a single electric car. Willoughby explains that Cypress Development Corp. is aiming to supply the US lithium market, which is set to grow due to the EV supplier located in the US such as Tesla, which plans to launch 13 new Gigafactories in the future.  

“All the forecasts show several times growth from where we're at right now and growing to even better than 1 million tons per year of lithium carbonate demand by 2025. We're somewhere around 600,000 tons per year, I believe, worldwide. Our main focus is being a US domestic source of lithium. There are good optics on that right now. The US wants to source its lithium domestically and there's something like 13-gigawatt factories that have been announced coming online for the US.”

The company has thus far raised its funds from retail funds but plans to diversify its fundraising to more institutional backing as well as a possible joint venture. Willoughby explains that the joint venture will in all likelihood be a major lithium mining company or a chemical company.

“[retail investors have] provided us with the capital we need to get through the pilot stage and feasibility. As we move further, we're looking more to conventional financing and a possible joint venture partner to come in and help. That could be a major miner or a chemical company, or even on the power side. Our process is power intensive: green energy, solar, and geothermal, probably will wind up being a component of that. We're looking at a lot of creative options in that regard.”

Clayton Valley Lithium Project

The Clayton Valley Lithium project is a 5,590-acre land package located in southwest Nevada. The project is located immediately east of Albemarle’s Silver Peak mine, which is North America's only lithium brine operation. The project’s lithium mineralisation occurs in montmorillonite clays to a depth of at least 150 m. The large flat-lying nature of the lithium claystone deposit enables the deposit to possess a low strip ratio of 0.29:1.

The preliminary metallurgical results have shown that lithium may be recovered through acid leaching, with leaching consumption rates low at 126 kg acid per ton mineralisation and a recovery rate of 85%.

The company published a pre-feasibility study of the Clayton Valley Lithium project in 2020, with the study amended in March 2021. The highlights of the amended study include an average annual production rate of 15,000 tons per day to produce 27,400 tons of lithium carbonate equivalent (LCE) on average over a 40-year life of mine. The capital costs associated with the project are USD$ 493 million with an average operating cost of USD$ 3,387 per ton LCE. The project’s NPV8% is estimated to be USD$ 1.03 billion and its internal rate of return is projected to be 25.8%.

Pilot plant and feasibility study

Cypress Development Corp. in late 2021 announced that it had initiated its pilot plant.  The plant is located at the Amargosa Valley site, which previously was a gold refinery. Willoughby explains that the site had already held the necessary permits as well as had previous employees which were trained and incorporated as operators of the plant.

“It was under USD$ 2 million. That's quite reasonable. We were fortunate in that we acquired, by lease, a site about 100 miles south of the project in Amargosa Valley. That site was a former gold refinery, so it already had the building, the permitting, and everything was in place. Personnel were available to us, so we trained them as operators for the pilot. That saved us a couple of million dollars and jump-started the program by 6 months to a year.”

The company announced at the end of December 2021, that it had begun testing at its pilot plant. The aim of the pilot plant initially was to prove the concept of the direct lithium extraction (DLE) process, with the plant now moving into an optimisation stage where the company is aiming to optimise the recovery circuit through the adjustment of various factors.

“We've been operating our pilot plant for about 9 months. We've collected most of the data that we actually need to do the feasibility study, and the pilot plant now is moving more into the demonstration optimization mode where we're looking to try some different ideas on the process itself, working on the extraction of the lithium from the clay. I think the direct lithium extraction, the DLE portion of it is working well, but we are continuing to operate the pilot plant in more of a demo mode and show people that it works and gain more data that way.”

Future

Cypress Development Corp. is at this stage not focused on signing offtake agreements for future production. The rationale is that should the company enter a joint venture agreement, it does not want the joint venture to be hindered or prevented by an existing offtake agreement.

“We've had conversations [regarding offtake agreements], but we haven't got to the point of saying we want an off-take agreement, we don't want to encumber the project with anything other than keeping ourselves open to options of financing and possible partners at this point. We obviously don't want to do an off-take agreement that might limit a major miner coming along and jumping in with us.”

The company will in the future also look to additional sources of funding including governmental grants. The US Department of Defence (DoD) as well as the Department of Energy (DoE) has various grants and funding initiatives available for US-based lithium operations to enable the production of lithium in the country.

“We've had some discussions with the DOD, that type of funding could become available to us. More likely, the point we jump in on it is after we have the feasibility study completed and we are fairly well along in the permitting process. We intend to kick off our permitting NIPA process here in another month or so. We will have the documents together and put that in front of BLM.”

Cypress Development Corp. is in a strong financial position with the company having CAD$ 30 million in its coffers. The company’s cash position is such that it will be able to conclude the feasibility study of the Clayton Valley Lithium project.

“We probably have close to CAD$ 30 million in the bank right now. Enough to finish off our feasibility study and get well into permitting. We will be looking for additional financing down the road. We don't like to draw down the bank account to nothing.”

The company will continue to produce data to support the completion of its planned feasibility study whilst in parallel conducting optimisation studies to enable more efficient operations.

“One thing that's critical to us is the acid consumption. We're currently in the ballpark of 120kg/t on the consumption of hydrochloric acid, we would like to see that number way lower. Rather than build a bigger acid plant, we'd like to cut the consumption of the acid down and then be able to keep or even exceed that target production of the plant.”

To find out more, go to the Cypress Development website