Name of the Project
Pilgangoora lithium/tantalum Stage 2 expansion project.

Location
Western Australia.

Client
Pilbara Minerals.

Project Description
A definitive feasibility study has delivered exceptional results and has reaffirmed the Pilgangoora project’s scale, quality, competitive forecast cash operating costs, robust operating margins, long life and exceptional economic returns.

The study has outlined a compelling business case for starting the expansion of the Pilgangoora lithium/tantalum project at five-million tonnes a year of run-of-mine ore production and processing capacity within months of starting the production of spodumene concentrate from the two-million-tonne-a-year Stage 1 operation.

The Stage 2 openpit mine is based on the processing of five-million tonnes a year of ore feed to produce a chemical-grade spodumene concentrate using an ore reserve of 80.3-million tonnes grading 1.27% lithium oxide or spodumene, 123 parts per million (ppm) tantalum pentoxide and 1.08% iron oxide.

Openpit mining will continue to be delivered by mining contractors using conventional drill-and-blast, load-and-haul operations.

Ore will be hauled using a skyway arrangement to a grade-based finger on the run-of-mine pad, and from there the ore will be blended and fed into the processing plant. Mine schedules and cost modelling assume that 100% of the ore will be rehandled to feed into the processing plant.

To maximise the upside potential of the processing plant to achieve a feed capacity higher than five-million tonnes a year, the processing plant design will retain the current two-million-tonne-a-year (Train 1) circuit in its current form and introduce a second three-million-tonne-a-year processing circuit (Train 2) to operate in parallel with Train 1. This compares with the prefeasibility study scenario that proposed two 2.5-million-tonne-a-year configurations.

Designing the circuit in this manner provides processing flexibility (upside) for the plant to achieve higher throughput capacity and/or processing a wider ore feed variation for nominal additional capital.

Waste will be hauled to the tailings management facility as part of cell construction or ex-pit waste landforms.

The mining fleet size in terms of volumetric capacity will remain largely unchanged; however, the number of drills, trucks and excavators needed during the mining operation will increase to accommodate the increased ore and waste mining to feed the processing plant.

The Stage 2 expansion will be a globally cost-competitive operation producing between 800 000 t/y and 850 000 t/y of high-quality spodumene concentrate over its 17-year mine life. However, Pilbara Minerals is confident the mine life will be extended through the conversion of mineral resources to ore reserves, based on the recent May 2018 mineral resource update, which showed a 35% increase in the total measured and indicated resource to 129-million tonnes, grading 1.35% lithium, 123 ppm tantalum pentoxide and 0.61% iron oxide.

Potential Job Creation
Not stated.

Net Present Value/Internal Rate of Return
The project has an after-tax net present value, at a 10% discount rate, of A$2.16-billion.

Value
Stage 2 capital expenditure is estimated at A$230.9-million.

Duration
Construction is expected to start in November 2018, and commissioning and first production is targeted late in the fourth quarter of 2019.

Latest Developments
Pilbara Minerals has announced the details of a proposed funding package providing the balance of the funding required to expand its Pilgangoora operation from two-million tonnes a year to five-million tonnes a year.

The funding package is underpinned by two of Pilbara’s key customers; Jiangxi Ganfeng Lithium and Great Wall Motor Company.

The funding package will comprise a $25-million offtake prepayment facility from Great Wall, satisfying its Stage 2 funding commitment, as well as a A$50-million equity placement to Jiangxi, satisfying its Stage 2 funding commitment.

Further, a proposed new $50-million Nordic bond will also be issued under the same terms and conditions of an existing Nordic bond, and will be implemented with bondholder consent in the current quarter.

The financing enables Great Wall and Ganfeng to secure their full Stage 2 offtake, envisaged in their original offtake agreements, allowing each company a total of 150 000 t/y from the Stage 2 production.

Included in Pilbara’s subscription agreement with Ganfeng, the company has also agreed to provide its offtake partner with a further 50 000 t/y of spodumene concentrate from any Stage 3 expansion, in exchange for a product prepayment facility of no less than $20-million.

Pilbara Minerals MD and CEO Ken Brinsden has said that with interest from the offtake partners to see the Pilgangoora project expand beyond the Stage 2 expansion, the company will now undertake studies to evaluate the potential Stage 3 expansion to at least 6.2-million tonnes a year, and potentially up to 7.5-million tonnes a year, as part of the engineering work currently contributing to the Stage 2 project.

The Stage 3 expansion will ultimately deliver up to one-million tonnes a year of spodumene concentrate.

The decision and timing for the delivery of the Stage 3 expansion will be subject to a range of factors, including final customer demand, financing, environmental approvals and further technical and economic analysis.

The Stage 3 expansion is not planned any time before early 2021.

Meanwhile, Pilbara has also initiated discussions with direct shipping ore (DSO) customers Atlas Iron and end customer Sinosteel to determine whether to continue with DSO operations.

Brinsden has noted that the DSO programme was instigated during the early stages of the Stage 1 construction to provide an early cash flow, but given the success of the Stage 1 operation, the company is now assessing the relative benefits of maintaining a separate DSO operation.

Pending the outcome of these discussions, the DSO operation has been suspended.

In addition, Pilbara has also entered into a nonbinding memorandum of understanding (MoU) with Korea’s Posco to evaluate an increase to the proposed jointly owned South Korean chemical conversion facility, from 30 000 t/y lithium carbonate equivalent (LCE), to 40 000 t/y LCE.

As part of the agreement under consideration, the existing offtake agreement for spodumene concentrate from the Pilgangoora project would increase from 240 000 t/y to 315 000 t/y over the life of the mine, to support the increased plant capacity.

The additional offtake to the expanded joint venture (JV) chemical facility will be supported by the Stage 3 expansion to the Pilgangoora operation, Brinsden has said.

Pilbara’s right to participate as a 30% JV partner in the chemical plant is required to be exercised before the end of February, with final documentation and board approvals to be completed by May.

Pilbara has said that due diligence activities to assess the proposed JV are currently under way.

Key Contracts and Suppliers
Trepanier (geology and resources); AMC Consultants (mining and mine design); Minnovo Engineers (process plant infrastructure, including plant capital and operating estimates); ATC Williams (tailings management facility and geotechnical) and Groundwater Resource Management (hydrogeology and hydrology).

On Budget and on Time?
Not stated.

Contact Details for Project Information
Pilbara Minerals, tel +61 8 6266 6266 or fax +61 8 6266 6288.