Winsome Resources targets capex savings with plan to retool Canadian diamond plant to process lithium from 59Mt Adina deposit
\nBoss Chris Evans says the company is fielding interest from strategic partners for offtake and downstream processing
\nJames Bay hopeful eyes \u2018sensible\u2019 long term spodumene price of US$1500-2000\/t after price volatility that has rocked EV supply chain<\/p>\n
Lithium prices have staggered in their volatility, with hard rock concentrate material climbing from US$500\/t to US$8,000\/t and back to ~US$1000\/t in under four years as demand for the metal in electric vehicle batteries has boomed.<\/p>\n
But an explorer hoping to be among the first to develop major lithium deposits in Canada says prices are turning around for the better.<\/p>\n
While chemical pricing in China is yet to move materially from two-year lows in the low US$13,000\/t range, spot prices for the spodumene concentrate sold by West Australian miners has lifted from US$850\/t to US$1150\/t in recent weeks.<\/p>\n
Winsome Resources (ASX:WR1)<\/a> MD Chris Evans, whose company owns the 59Mt Adina project in Quebec\u2019s James Bay lithium district, thinks a maturing lithium market will make pricing more predictable as it evolves.<\/p>\n \u201cI\u2019d probably say somewhere between US$1500-2000\/t is a sensible long term figure to use,\u201d he said.<\/p>\n Winsome took a major step to support the development of Adina yesterday by emerging as the buyer of bankrupt diamond miner Stornoway\u2019s Renard mine and concentrator 60km to the south.<\/p>\n It\u2019s not looking to diversify into diamonds. Stornoway has collapsed twice since opening Renard in 2019, with diamond prices tanking as badly as lithium in recent times.<\/p>\n But it will deliver a permitted 2.2Mtpa plant, 330 person camp and other critical infrastructure already set up to withstand the harsh Canuck winter. <\/p>\n A C$4m option fee will be paid by Winsome once the Canadian Supreme Court approves the acquisition so the explorer can assess the feasibility of converting the plant as it progresses studies on the development.<\/p>\n Looking down the line, Evans said Winsome has been in discussions with strategic investors over offtake and plans to feed Adina\u2019s product into a Canadian refinery producing lithium chemicals that are compliant for US carmakers with Inflation Reduction Act subsidy rules.<\/p>\n \u201cWith the model going forward, and the sort of talks we\u2019re having particularly with strategics is that these big price spikes are a sign of an immature industry and as the industry matures, going forward, there\u2019ll be more vertical integration,\u201d he said.<\/p>\n \u201cThat\u2019s one reason we\u2019re looking for a partnership with a converter.<\/p>\n \u201cThat means that there\u2019ll be pricing mechanisms built in there and again if we can feed that straight into an end user in Quebec or in North America, then there\u2019ll be pricing mechanisms to make sure all of us are protected from these wild swings that the spot price may do.\u201d<\/p>\n \u00a0<\/p>\n It remains to be seen just how much it will cost Winsome to repurpose the plant and develop its Adina deposit to produce a spodumene concentrate.<\/p>\n But recent project updates elsewhere in Canada have shown how inflation is impacting new lithium developments.<\/p>\n Based on benchmarking from other projects under study in Quebec like Arcadium\u2019s (ASX:LTM)<\/a> James Bay and Sayona\u2019s (ASX:SYA)<\/a> Moblan, Evans thinks the Renard plant could save as much a half a billion dollars for Winsome when it comes to capex.<\/p>\n \u201cThe processing plant at the moment is remarkably similar to what we would install. So there\u2019s a jaw crusher, a cone crusher, high pressure grinding rolls and then a two stage dense media separation,\u201d he said.<\/p>\n \u201cIf we were DMS only we would be putting something like that in \u2014 we may need another crusher and we\u2019d have to resize some of the screens.<\/p>\n \u201cIf you look at similar greenfield brand new projects, Sayona\u2019s Moblan just put out its definitive feasibility study and they had a capital cost of somewhere near a billion dollars. <\/p>\n \u201cJames Bay project put out its DFS late last year and they had a $700-800 million capex. If we assume ours would be around there somewhere for a greenfield project, I think it\u2019s fairly safe to say we will be saving half a billion dollars at least.<\/p>\n \u201cIt\u2019s hard to put a number right at the moment on how much it\u2019ll cost but it\u2019ll be a fraction of what a brand new project would cost.\u201d<\/p>\n The model is strikingly similar to one Mineral Resources (ASX:MIN)<\/a> has proposed to develop a third lithium plant in WA\u2019s Goldfields. <\/p>\n It is buying Poseidon Nickel\u2019s Lake Johnston nickel plant to add a flotation processing facility to its Mt Marion and Bald Hill DMS plants.<\/p>\n Evans said early test work suggested the material at Adina was coarse and could achieve lab recoveries of 65-80% with DMS only, though more testwork is needed.<\/p>\n \u00a0<\/p>\n Initial studies at Adina are expected to be completed in the second half of 2024, with a DFS to follow and hoped to wrap up by the end of 2025.<\/p>\n By that point the lithium market could look very different to what it does today given the pace and intensity with which the EV supply chain is moving.<\/p>\n But regardless of the shape of the market, geology and the scale of resource will always play a major role in whether you can turn a deposit into a mine.<\/p>\n Evans said Winsome will undertake drilling in the hope of converting at least 60% of its 59Mt at 1.12% Li2O resource into the indicated category.<\/p>\n As opposed to inferred resources, indicated resources can be used in reserves, which in turn can be placed with higher confidence into a mine plan.<\/p>\n But Evans is hoping more drilling later down the line can grow the resource further and push into Tier-1 territory.<\/p>\n \u201cThere\u2019ll be an increase in the size, but it won\u2019t be doubling the size yet,\u201d he said.<\/p>\n \u201cBut I think by the time we spend \u2026 our flow through money at the end of this year, our target\u2019s sort of 100 million tonnes at Adina and then to me that feels like a bit of a magic number and enough to support a DFS on by the end of next year.\u201d<\/p>\n \u00a0<\/p>\n <\/span>\u00a0 The post Shine On You Crazy Diamond: Lithium player Winsome looking left-field and long term to develop Canadian mine<\/a> appeared first on Stockhead<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"Savings to be made<\/h2>\n
How big can Adina get?<\/h2>\n
Winsome Resources (ASX:WR1) share price today<\/h2>\n\n
\n<\/span><\/p>\n