BGS Moving Forward: Big & Bad A$$, page-86

@Maigret1

BGS will be able to produce the equivalent amount of LCE at a much lower CAPEX as they won't need to build a tin, tungsten and potash processing plant in addition to a DMS plant and carbonate plant. This is likely why the IRR is so low in the study. BGS will be mining from surface via open pit, whereas EMH is mining underground and obviously BGS will be mining ore with more than twice (more than three times in early years) the lithium content than EMH's deposit = smaller DMS plant required, less mining, lower mining costs and lower processing costs.

Investors probably view the location as safer but I bet the location also contributes to the high CAPEX, and imagine the mining, regulatory, environmental and safety approvals required in Germany. BGS should be able to get up and running cheaper, faster, and if some sort of processing JV occurs with a Chinese company, then Africa is preferred for them - for those reasons and that they can bring their own people in.

As a rough guide, for every 1Mt of ore that BGS puts through their DMS plant, they will yield >200,000t of spodumene concentrate. Divide that by 8 to give a conservative estimate of annual LCE production = 25ktpa (can likely achieve more than 30ktpa on average, even higher in early years when the average feed grade will exceed 2% Li2O).

I would be very surprised if BGS' cash cost of production of LiOH exceeded US$4,000/t (refer to previous posts), this compares to EMH's $5,211/t for Li2CO3 ($3,483/t after credits but not including royalties & freight). Also worth noting is that LiOH appears to be slightly cheaper to produce and sells at a premium compared to Li2CO3. Factor all the above in, and BGS will be producing at a similar cash cost, selling at a slightly higher price, but the real kicker is the amount BGS can produce, for the same CAPEX will be significantly more, giving BGS a sweet IRR and much larger NPV.

I'm hoping a 50ktpa (or more) LiOH (and perhaps other Li salts) processing facility will be studied along with a minimum 2Mtpa DMS plant, with excess spod (above the annual requirements of the LiOH plant) to be sold for additional revenue (with a more attractive logistics solution). CAPEX would likely be in the same ballpark but the NPV and IRR should be more than double.