ABR delivers positive Scoping Study update
Published on: | by Trevor Hoey
American Pacific Borate and Lithium (ASX:ABR) advised the market on Thursday that the Scoping Study relating to its Fort Cady borate and lithium project located in Southern California was progressing quickly, and importantly, supported the potential for production of a lithium by-product.
The initial results are based on 33 historic drill holes, 17 production wells, pilot plant operations, metallurgical tests, laboratory derived data engineering studies and previous feasibility studies.
While this provides substantial data to work with, management emphasised that the information collated to date was based on low-level technical and economic assessments that are not sufficient to support the estimation of ore reserves.
However, flow sheet, mass balance, reagent consumption and operating cost estimates suggest the production of a high purity boric acid is achievable.
However it is the early stages of this company’s development, so if considering this stock for your portfolio you should take all public information into account and seek professional financial advice.
Preliminary C1 operating cost (direct costs including expenses incurred in mining and processing) estimates are viewed by management as encouraging. The addition of lithium by-product credits should enhance the financial metrics of the project.
Based on yet to be validated metrics, ABR’s Executive Director, Anthony Hall said that the likely EBITDA margin was around US$500 per tonne, which would in turn deliver an EBITDA payback of less than two years.
Underpinning these assumptions were operating expenditure estimates of between US$345 and US$383 per tonne. In terms of the commodity price, Hall noted that boric acid prices in North America were hovering between US$800 per tonne and US$1000 per tonne.
Lithium not factored into early estimates
ABR is due to release the maiden JORC Compliant Mineral Resource Estimate and Scoping Study in the fourth quarter of 2017.
The company’s early stage estimates suggest that funding in the order of US$80 million-US$90 million (phase 1) will be required for commercial scale operations.
Commenting on these developments, ABR’s Managing Director, Michael Schlumpberger said, “We are very excited with the initial results of our boric acid project scoping study work and we appear likely to deliver a study showing low, high margin and a proven commercial processing route”.
While Schlumpberger noted that the initial focus is on delivering a compelling boric acid operation, he believes there is a strong chance that the company can deliver real lithium carbonate upside that will enhance the project metrics.