PUR lithium ore reserve up 250%, NPV upped to US$1.09BN in expanded study
Our Investment Pursuit Minerals (ASX: PUR) just released new economics for its lithium project in Argentina, and the numbers are a big step up from the original study.
PUR's Rio Grande Sur project hosts a 1.26Mt LCE JORC resource estimate within a salt lake in Argentina's Lithium Triangle.
Currently PUR is drilling the margins of the salt lake and its first hole just returned the project's highest ever grades, with a peak of at 995mg/L lithium (more than double the resource grade).
Today PUR released an addendum to the Pre-Feasibility Study (PFS) it put out back in February.
(a PFS is an economic study estimating how much a mine will cost to build and how much money it could make, so starting to dial in the business case to proceed)
Here are the key numbers for us:
- Ore reserve UP ~250% to 438,000 tonnes LCE (from 125,000 tonnes
- A staged expansion from 5,000tpa to 17,500tpa lithium carbonate production
- US$1.09BN NPV at a 26.2% IRR (the original PFS was a US$364M NPV)
- ~US$4.2BN in life of mine free cash flow over a ~27 year mine life
(source)
Upfront capital stays modest at US$119M to US$136.5M, with the much bigger Stage 2 build designed to be funded mostly from Stage 1 cash flow - which means less dilution for shareholders.
You can see our Deep Dive into the initial PFS here early in the year:
(source)
PUR also cost out an alternative lithium chloride product, delivering a US$951M NPV at a higher 27.1% IRR with the lowest capital intensity of the four scenarios.
One thing to note, the study uses a US$27,300/t long term forecasted lithium price - quite a bit above today's spot price of ~US13,700/t.
Lithium prices have been incredibly volatile over the past 10 or so years with some extremely high peaks and lulls.
This is the forecast used (with the prior 5 years), so it looks more reasonable over a longer time period:
(source)
PUR's modelling shows economics stay positive even at prices 30% below that reference:
As always with these kinds of economic studies, the numbers and $ figures are based on assumptions that may not prove correct and are highly sensitive to volatile lithium prices.
What we also like a lot is what is NOT in these numbers yet:
- The record grade drilling at Mito and Demasia is still to be added to the resource model
- Upgrading the existing Inferred resources could extend mine life to ~43 years
- No benefits from Argentina's RIGI tax incentive regime are counted yet, and the expanded project now clears the US$200M threshold to apply.
From here, PUR moves toward a Definitive Feasibility Study, plus pumping tests and an updated resource incorporating the new drilling.
PUR is currently drilling its lithium asset and released record grades last week
Assays results from the first hole in this program hit a peak grade of 995mg/L lithium.
(more than double the average grade of the current resource which is ~424mg/L Li)
(source)
And here is where those hits came from:
(source)
Sitting just to the north of PUR’s existing 1.26Mt Lithium Carbonate Equivalent (LCE) JORC resource - all of which sits inside PUR’s blocks INSIDE the Rio Grande Salar (salt lake).
Being outside of the current resource - there is a chance PUR’s project grows in size if we keep seeing results like last week’s on the edges of the salt lake.
All up, six samples came back above 900mg/L lithium and eleven over 800mg/L.
And PUR’s hole ended in mineralisation at ~560m, so the system remains open at depth.
Drilling is continuing with the fourth hole at the project, sitting in between last week’s results and the current resource area.
IF this hole hits lithium too, it could rapidly expand the area that gets added into the next resource estimate.
(of course no guarantees - exploration is risky and those assays are still pending)
You can see the Deep Dive we did on this when drilling got underway back in July:
PUR: Lithium back. Market back? Drilling just started on the “blue sky” target
What we want to see next from PUR
🔄 Lithium asset (Drilling started early July)
Last week PUR released the final assays from the first hole at this drill program, with 11 hits over 800mg/L Li. (source)
About six weeks ago PUR confirmed drilling has started at hole number 4 (the second from this program), in between the recently completed hole and the existing resource:
🔲 Drilling at PUR’s gold-silver project in Argentina
PUR just recently completed mapping work and an IP survey to define drill targets for the project.
PUR now expects to be drilling "in the near term". (source)
Drilling here is expected after rig mobilisation and site access is sorted (source)
See why we like that project from the acquisition in a Deep Dive here: PUR: Acquires Gold Project in Argentina - Gold price smashing records
