Resource upgrade highlights Latin Resources’ Colina as one of the world’s largest scale undeveloped lithium deposits
About 95% of the Colina resource, or 67.27Mt at 1.27% Li2O, is in the higher confidence measured and indicated categories
This is likely to improve the economics of the DFS that is expected to be released in Q3 2024
Further drilling at the Planalto prospect will take the broader Salinas project closer to the 100Mt mark
Special Report: One of keys to developing a mine is resource confidence and that is something Latin Resources now has in spades, with 95% of the Colina deposit resource in the measured and indicated categories.
In its latest resource update, Latin Resources (ASX:LRS) cranked up global resources at its Salinas project in Brazil (covering the Colina and Fog’s Block deposits) by about 10% to 77.7Mt grading 1.24% Li2O, or contained resources of 2.35Mt of lithium carbonate equivalent.
Importantly, the primary Colina deposit now has a high confidence indicated resource of 38.63Mt at 1.23% Li2O, 1.18Mt LCE or, and even higher confidence measured resource of 28.64Mt at 1.31% Li2O, or 927,800t LCE.
Resources in the indicated categories or higher have sufficient certainty to enable mine planning, meaning that the company can reasonably expect to see improved cash flow and mine life estimates in the DFS compared to the recent preliminary economic assessment (PEA).
Given that PEA was no slouch in its own right – with estimated after-tax NPV and IRR of $3.6bn and 132% respectively from total life of mine revenue of $12.6bn – this adds further validation to the company’s decision to be one of the first movers into Brazil’s red-hot Minas Gerais region.
Minas Gerais is of course home to Sigma Lithium’s (TSXV:SGML) Grota do Cirilo mine that has rather casually ramped up to its stage one nameplate capacity of 250,000tpa of spodumene concentrate without any troubles or commissioning issues.
This is in itself a positive for LRS given that Salinas is just down the road from Grota do Cirilo.
Block model of Colina showing resource categories. Pic: Latin Resources
One of the largest undeveloped lithium deposits
The result is pleasing for Latin Resources managing director Chris Gale, who said the latest resource update is another fantastic result from the company’s exploration team and significantly improved confidence in the Colina lithium deposit.
“This truly cements the project as hosting one of the largest scale undeveloped lithium deposits on a global scale,” he said.
“What is particularly pleasing to me is the likely impact on the economics of our upcoming DFS to be released in Q3 2024. The PEA we delivered in 2023 clearly demonstrated the compelling case for developing the Salinas Lithium Project, with robust economics including an IRR of 132% and Life of Mine revenue of A$12.6 billion (US$8.4 billion).
“We are proud that our early belief in this world class Tier One lithium deposit continues to be validated, and with each key milestone we have hit along the way, demonstrate the significant financial returns to be delivered to our shareholders.
“Latin is on the cusp of developing a fully sustainable lithium mine, becoming a Tier one, low-cost producer, with significant cost saving benefits and competitive market advantage from its geographical location in Minas Gerais, Brazil.”
Plan view of the Salinas project. Pic: Latin Resources
Growth potential and offtake funding discussions
If the resource upgrade isn’t enough to whet the appetites of investors, then the likelihood that more growth is on the cards.
LRS notes that diamond drilling is ongoing at Salinas with four rigs operating at the Planalto prospect, which offers further upside growth potential.
With the addition of Fog’s Block exploration target of between 7-18Mt at grades ranging from 0.8% to 1.1% Li2O, this could provide the company with the opportunity to reach past its 100Mt global resource estimate target.
The company has also meaningfully progressed discussions with various funding providers to support the development of the Salinas project.
It has received offtake proposals from a range of credible parties, including the offer of funding support in exchange for a portion of offtake.
These offtake proposals will be compared against a broader suite of project funding alternatives, including funding terms from banks, to assess the most competitive source of funding for Salinas.
LRS has also engaged with debt advisers in relation to a bank funding process, which will progress in parallel with the offtake process with the goal of finalising attractive funding.
This article was developed in collaboration with Latin Resources, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.
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