American lithium miner Piedmont Lithium Inc [ASX:PLL] share price is up 1.1% today. Rising on the back of the release of a new scoping study.
A detailed report showcasing the company’s plans for a Carolina-based project. A venture that Piedmont is dubbing ‘one of the world’s largest and lowest-cost producers of lithium hydroxide’.
So let’s dig into the details.
More than just a lithium project
The crux of this updated scoping study is thanks to changes within the actual project design. Improvements that the company has noted should yield better results across the board.
Lithium hydroxide production, for instance, is tipped to increase from 30,000 tonnes per year. Up 32% from previous estimates of 22,720 tonnes per year.
Which, when combined with revised and upgraded price estimates, has almost doubled Piedmont’s average annual EBITDA estimates. Calculating US$401 million worth of earnings at an annualised rate for the 25-year life of the project. Well above the US$218 annualised EBITDA estimate made in their study from last year.
As for whether demand and prices will meet these expectations, no one knows.
For now, the outlook and increased production is certainly going to be welcomed.
Beyond lithium though, the real standout from the report is the staggering increase in byproduct minerals. With Piedmont forecasting up to 714,000 tonnes per year worth of these materials. More than triple their estimated byproduct output from the previous study of 224,000 tonnes per year.
The majority of this is made up of feldspar, quartz, and mica. All of which are common industrial minerals with varying worth. But with the help of independent consultants, Piedmont estimates these byproducts could be worth up to US$79.50 per tonne.
That may seem fairly insignificant compared to the lithium, but it all adds up. And when we’re talking about the kind of volumes Piedmont could end up producing, it may be a noteworthy cherry on top for shareholders.
What’s next for the Piedmont Share Price?
As with any major mining project, this is all obviously tentative in nature. It will depend on how, when, and even if the project actually goes ahead.
Fortunately, Piedmont has provided an updated schedule in this regard.
Management outlines that they expect to complete an integrated definitive feasibility study (DFS) by September, the last report before a final financial investment decision will be made in December.
And then provided they decide to go ahead with the mine, design and contracting will begin as early as January 2022. With construction slated to start by April, provided there are no delays or problems.
That is obviously quite the long time frame for investors. Which again, is standard for these kinds of big projects.
But at the very least, it provides a rough guide as to when shareholders should be looking out for updates.
In the meantime, if you’re looking for more lithium investment ideas, Detailing what’s happening in the sector right now, and how investors can make the most out of this lithium boom. Including three mining plays to take note of at the moment.
Regards,
Ryan Clarkson-Ledward,
For Money Morning
PS: In this new report, Money Morning’s Ryan Dinse reveals why he is convinced that lithium is going to rebound in 2021. Get the FREE Report
