North American Lithium Project Resumes as Sayona Quebec Takes Charge

France: Sayona Quebec has announced the successful reopening of the North American Lithium (NAL) operation, which is currently the only major source of spodumene concentrate in North America. The mine has set a target of producing 226,000 tonnes of spodumene concentrate in the upcoming four years, with the initial shipment scheduled for July 2023. Sayona has secured two major buyers for the mine's product, with LG Chem committed to purchasing 200,000 tonnes over four years and automaker Tesla agreeing to buy 125,000 tonnes over three years.

Sayona Quebec has invested a total of $153 million in the acquisition and restart expenses of NAL in Abitibi, Quebec to ensure successful production. The mine has a turbulent history with multiple ownership changes and struggles with commercial production, ultimately leading to shutdowns and bankruptcy filings. In 2017, the mine resumed operations but was forced into care and maintenance again in 2019 due to a decline in Lithium prices. NAL, previously owned by Contemporary Amperex Technology Co. Ltd (CATL), also filed for bankruptcy protection in the same year.

In August 2021, Sayona Quebec, a joint venture between Sayona Mining from Australia and Piedmont Lithium from America, acquired NAL. Prior to this acquisition, the operation had already received significant capital investments from its previous owners, which included the construction of various facilities such as an open pit, crushing plant, mill, flotation plant, and more. According to Patrick Brindle, Piedmont's Executive Vice-President, and Chief Operations Officer, approximately $400 million had been invested in the operation before Sayona took over. With this investment, Sayona was able to focus on process improvements during the 18-month period it took to revive the operation from care and maintenance.

Sayona has invested a significant amount of capital to enhance the performance of the mill. This investment was made by leveraging the knowledge and experience gained from prior operations and the management team. The focus was on identifying ways to improve mechanical availability, throughput, recovery, and grade by de-bottlenecking the operations. The success of this program lies in the execution of management's recommendations, which were incorporated into a comprehensive brownfield upgrade program. Although the operation is still in its ramp-up phase, there are plans to further optimize its performance. This includes adding an extra crushed ore storage dump, completing a lift of the tailings dam, and upgrading the substation.

Sayona has recently released a definitive feasibility study on April 14th, which provides an overview of the NAL mine alongside the company's Authier Lithium project situated in the Abitibi region. NAL's after-tax net present value is around $1.4 billion, considering an eight percent discount rate and a 20-year life of mine. Further, the potential to expand the life of mine is expected, with a 50,000-meter drilling program lined up for the current year. The confirmed and probable reserves of NAL encompass 235,500 tonnes of contained Lithium oxide from a grading of 1.08 percent in 21.7 million tonnes. Besides, Sayona aims to release a pre-feasibility study in the first half of this year concerning the potential completion and restart of NAL's Lithium Carbonate plant.

Electric vehicles (EVs) are the primary catalyst driving demand for Lithium, as it is a crucial component in the production of batteries. Currently, 60% of Lithium produced is utilized in battery applications, a figure that could escalate to 95% by 2030. However, the metal's supply being inadequate in the coming decade if new projects do not come online. The IEA predicts a three- to seven-fold surge in demand by 2030, contingent on countries' decarbonization efforts, while supply may fall short by 55% of what is required.

Despite the anticipated demand, the near-term economic outlook presents a different picture. The spot price for battery-grade Lithium Carbonate, which went up to almost 600,500 Chinese yuan (approximately $117,000) per tonne in November 2022, has seen a sharp decline in 2023 due to CATL's decision to offer considerable discounts to automakers. Supply is expected to grow at an annual rate of 34%, outpacing the annual demand growth rate of 25%, until 2025.

Quebec is currently home to various spodumene projects, including Nemaska Lithium's Whabouchi mine and Patriot Battery Metals' Corvette property. The demand for alternative sources of Lithium is also rising, with E3 Lithium's extraction plan from Alberta's Leduc aquifer. However, Brindle sees significance in becoming the first significant provider of battery metals in North America, demonstrating the feasibility of creating a battery metals market in the region.