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Showing posts with label Kings Valley. Show all posts
Showing posts with label Kings Valley. Show all posts

Tuesday, February 5, 2013

Western Lithium Arranges US$20 Million Royalty Financing for Oilfield Drilling Additives Facility and Lithium Demonstration Plant

2 hours ago by Marketwire
Western Lithium USA Corporation ("Western Lithium", the "Company") (TSX: WLC)(OTCQX: WLCDF) is pleased to announce that it has entered into a Royalty Purchase Agreement with RK Mine Finance (Master) Fund II L.P. ("Red Kite") pursuant to which Red Kite has agreed to pay to Western Lithium up to US$20 million in consideration for the sale of a royalty on its Kings Valley Project, located in Nevada, USA.

An initial tranche of US$11 million will be funded concurrently with the closing of the royalty arrangement. A second tranche of US$9 million will be funded upon completion of the engineering and design of the lithium demonstration plant and once certain regulatory assurances have been received from the Bureau of Land Management with respect to the sale of by-products associated with lithium production, provided it occurs within three years following the date of the agreement. Closing of the royalty arrangement is expected to occur on or about February 6, 2013.

Western Lithium plans to use the initial funding tranche to construct a 10,000 ton per year process facility to produce Hectorite-based organoclay used in the oil and gas drilling industry. To make organoclay, the Company's Hectorite clay must be processed using an extruder and combined with several additives. Organoclay typically sells in a range of US$2,000 to $4,500 per short ton FOB shipping point, depending on performance. Engineering designs for a plant and negotiations for potential production locations are underway. Permitting of the Hectorite mine has commenced in Nevada and the Company is targeting to commence production and positive cash flow in early 2014 from the clay operation.

The Company has been producing pilot-scale samples of its products, which demonstrate thermal stability for application in high pressure high temperature (HPHT) drilling exploration environments. With the success of new directional drilling technology in recent years applied to shale gas and deep oil and gas drilling targets, the Company anticipates that there is a strong growth market for its thermally stable Hectorite products. 

Western Lithium's Hectorite clay is of high purity, which enables it to use a dry process to manufacture its products, that is expected to give the Company a cost advantage in the industry. A portion of the proceeds from the initial tranche will also be used to complete the design and engineering for a lithium demonstration plant.

The second tranche of funding is principally allocated towards the construction of a demonstration plant to test the viability of its lithium extraction process at a large scale. The Company released a pre-feasibility study in January 2012 (see news release dated January 27, 2012) that demonstrated competitive economics and a pre-tax net present project value of US$551 million at an 8% discount rate. Western Lithium believes that the next natural step is to work with an engineering technology group or strategic partner to further de-risk the process technology, in order to attract construction capital for the project.

Jay Chmelauskas, President and CEO of Western Lithium, commented: "Over the next year, we will focus our efforts on our specialty Hectorite drilling additive business with the expectation of generating positive cash flow for the Company in early 2014. In the longer term, we will construct a lithium demonstration plant to gain investment confidence with our project, and to realize the full potential of its asset value. We are positioning Red Kite and our shareholders and stakeholders to expected near term strong growth in the drilling industry and longer term strong growth in the lithium sector."
The royalty will be a gross royalty on all production from the Kings Valley Project. It will consist of a gross revenue royalty of 8% until the first and second funding tranches have been repaid. The royalty will then be reduced to 3.5% for the life of the project. Western Lithium will have the option at any time to reduce the royalty to 1.75% upon payment to Red Kite of US$20 million.

Western Lithium has agreed to pay a finder's fee to Haywood Capital Markets in respect of the transaction equal to 6% of the proceeds raised in both tranches. For the first tranche, the finder's fees will, subject to approval of the TSX, be paid as to US$429,000 in cash and US$231,000 in common shares issuable at the five day volume weighted average trading price of the common shares on the TSX for the five trading days immediately preceding the closing.

About Red Kite
Red Kite provides mining companies with project financing and metal off-take agreements for initiation or expansion of mine production and is part of the Red Kite group. Red Kite operates across the global metals industry from offices in Bermuda, Denver, Hong Kong, London, New York, Shanghai and Sydney. Investors in Red Kite funds include college endowments, foundations, family offices, pensions and other institutional investors.
Western Lithium is developing the Kings Valley, Nevada lithium deposit into a strategic, scalable and reliable source of high quality lithium carbonate. The Company is positioning itself as a major U.S.-based supplier to support the rising global demand for lithium carbonate that is expected from the increased use of hybrid/electric vehicles. The Company is also pursuing the opportunity to be a supplier of specialty hectorite clay drilling additives to the oil and gas industry, and in particular, to support the growth of deep directional drilling applications in high temperature and high pressure environments.
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Cautionary Note Regarding Forward Looking Statements and Information: Certain disclosure in this release constitutes forward-looking statements and information. When used in this release, the words "will", "once", "provided", "plans", "targeting", "expected", "expectation", "anticipates", "believe" or comparable terminology are intended to identify forward-looking statements and information. The forward-looking statements and information in this release include, among others the completion of the Royalty Purchase Agreement, including both the first tranche funding and the second tranche funding, the Company's plans for and anticipated benefit from the construction of facitlities and development of hectorite based organoclay operations as well as the timing of commercial operations and positive cash flow, the results of design and engineering of lithium demonstration plant and the eventual construction of that plant. Such statements and information involve the application of certain factors and assumptions by the Company that are based on the Company's current beliefs as well as assumptions made by and information currently available to the Company. Although the Company considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect, and the forward-looking statements in this release are subject to numerous risks, uncertainties and other factors that may cause future results to differ materially from those expressed or implied in such forward-looking statements and information. Such risk factors include, among others, that actual results of the Company's development activities will be different than those expected by management, that the Company will be unable to obtain or will experience delays in obtaining any required government approvals, that the Company will be unable to meet all conditions required for funding under the Royalty Purchase Agreement, the ability to procure required infrastructure, equipment and supplies in sufficient quantities and on a timely basis and the conditions of the markets generally. Readers are cautioned not to place undue reliance on forward-looking statements and information. The Company does not intend, and expressly disclaims any intention or obligation to, update or revise any forward-looking statements and information whether as a result of new information, future events or otherwise, except as required by law.
The TSX has neither approved nor disapproved of the contents of this press release. Neither the TSX nor its Regulation Services Provider (as that term is defined in the policies of the TSX) accepts responsibility for the adequacy or accuracy of this press release.
Contacts:
Western Lithium USA Corporation
Investor Relations
604-681-3071
604-681-3091 (FAX)
info@westernlithium.com
www.westernlithium.com


SOURCE: Western Lithium USA Corporation
mailto:info@westernlithium.com
http://www.westernlithium.com

Wednesday, December 14, 2011

Western Lithium Pre-Feasibility Study Indicates $550 Million NPV and Supports Low Cost Lithium Production in Nevada

Western Lithium USA CorporationWestern Lithium USA Corporation

TSX : WLC
OTCQX : WLCDF



December 14, 2011 08:30 ET



RENO, NEVADA--(Marketwire - Dec. 14, 2011) - Western Lithium USA Corporation (TSX:WLC)(NASDAQ-OTCQX:WLCDF) ("Western Lithium" or the "Company") is pleased to announce the completion of a positive Pre-feasibility Study for its wholly-owned Kings Valley Lithium Project in Nevada, USA. Two scenarios were evaluated: A startup scenario based on mining and processing ore at a design throughput rate of 2,100 tonnes per day (13,000 tonnes per annum lithium carbonate), and a full production scenario to double production four years after startup (26,000 tonnes per annum lithium carbonate). The study demonstrates that the project could produce lithium carbonate at an estimated average cash cost, net of by-product credits, of $968 per tonne once full production of 26,000 tonnes per year lithium carbonate is achieved. Initial startup capital, including contingency is expected to be approximately $248 million. Incremental development capital to double lithium carbonate production to 26,000 tonnes per year is estimated at approximately $161 million. Sustaining capital of $40 million including contingency, is primarily composed of surface mine equipment, expansions of dry stack tailings and surface water management, and mine closure.

The study was undertaken by a collaboration of independent industry specialist firms including Tetra Tech, Inc. (Tt), Reserva International, LLC and K-UTEC AG Salt Technologies (K-UTEC). The study has been prepared in accordance with Canadian securities National Instrument 43-101 and Form 43-101F1 regulatory requirements. All amounts are stated in US dollars, unless otherwise indicated.
Project highlights for nominal production of 26,000 tonnes per year lithium carbonate:
  • Pre-tax Net Present Value (NPV) of $552 million with an Internal Rate of Return (IRR) of 24% at an 8% discount rate;
  • Operating cash costs, net of by-product credits, of $968 per tonne of lithium carbonate;
  • Cash operating costs distributed between the individual products are: lithium carbonate $3,011 per tonne, potassium sulfate $87 per tonne, sodium sulfate $36 per tonne;
  • Total cash operating costs per tonne (excluding credits) for lithium carbonate are $3,472 per tonne lithium carbonate;
  • Once full lithium carbonate production of 26,000 tonnes per year is achieved, average annual cash flow is projected to be $124 million per year;
  • Nominal production of by-product potassium sulfate and sodium sulfate of 90,000 and 100,000 tonnes per year, respectively;
  • 20 year mine life, processing 25.5 million tonnes of ore at an average grade of 0.40% lithium using a 0.320% cut-off grade;
  • Initial annual production of 13,000 tonnes lithium carbonate, increasing to 26,000 tonnes in year four;
  • Nevada supports a large diversified mining industry;
  • The project benefits from established infrastructure including road access, power supply and a local water source;
  • Based on commodity prices of $6,000 per tonne lithium carbonate, $600 per tonne potassium sulfate, and $75 per tonne sodium sulfate;
  • Overall recoveries are expected to be 87.2% for lithium, 77.7% for potassium and 82.7% for sodium.
Under the startup scenario, lithium carbonate production is expected to commence in 2015 at an annual rate of 13,000 tonnes per year. Full production of 26,000 tonnes per year is planned four years after initial startup, if demand for lithium increases.

Jay Chmelauskas, President of Western Lithium, stated, "As an electric car owner, the move to automobile electrification now seems obvious and imminent. Our deposit in Nevada has the potential to make the USA self sufficient in Lithium to support up to one million electric vehicles per year. Production of lithium in Nevada not only has the benefit of long-term mining and chemical industry jobs, but also has the potential to support downstream technology and manufacturing jobs in America. Lithium is the enabling metal for electric transportation."

Mr. Chmelauskas continued, "Upcoming key milestones for the Company include; submission of the Plan of Operations to the Bureau of Land Management initiating the formal permitting process (Q1 2012), starting construction of a lithium carbonate demonstration plant, and commencing work on a definitive feasibility study in 2012. We believe that there is a strong future for electrification and that the Stakeholders of Western Lithium and Nevada can strongly benefit and profit from this industry."

Project Overview
The Project is located in Humboldt County, Nevada, USA approximately 100 km north-northwest of Winnemucca along U.S. Highway 95 to Orovada and then 40 km west-northwest of Orovada, Nevada on paved State Highway 293. WLC has claims that encompass five areas of lithium mineralization. These five areas are covered by 1,049 Federal unpatented claims over an area of 8,480 hectares.
Lithium ore and waste rock will be extracted via an open-pit mine operation using end-dump haul trucks, hydraulic shovels, and a Wirtgen surface miner. Waste rock will be mined with a shovel/truck combination, while ore will be mined with the Wirtgen unit and direct loaded into haul trucks.
Mineral Reserves
Kings Valley Ore Reserves
at 0.320% Lithium Cut-off

Category
Tonnes
(millions)
Lithium
(%)
Potassium
(%)
Sodium
(%)
Proven 14.937 0.400 3.850 1.370
Probable 12.198 0.388 3.930 1.360
Total 27.135 0.395 3.880 1.360

The reserve estimate takes into consideration all geologic, mining, processing, and economic factors, and is stated in accordance with Canadian securities NI 43-101 and Form 43-101F1.

A National Instrument 43-101 compliant technical report will be filed within 45 days of this announcement.

Qualified Person
The Pre-Feasibility Study was supervised by Randolph P Schneider of Tetra Tech, Inc. He is a Qualified Person as defined by NI 43-101, and is independent of the Company, as defined by Section 1.5 of NI 43-101. Mr. Schneider has reviewed and approved the scientific and technical data in this news release.
Edwin C. Lips, PE, of Tetra Tech, Inc. was responsible for mine planning and the ore reserve estimate. He is a Qualified Person as defined by NI 43-101, and is independent of the Company, as defined by Section 1.5 of NI 43-101.
Western Lithium is developing the Kings Valley, Nevada lithium deposit into potentially one of the world's largest strategic, scalable and reliable sources of high quality lithium carbonate. The Company is positioning itself as a major U.S.-based supplier to support the rising global demand for lithium carbonate that is expected from the increased use of hybrid/electric vehicles.

Forward-Looking Statements
Certain of the statements made and information contained herein, including the mine plan, costs, financial estimates and other conclusions in the Pre-feasibility Study, the reserve estimates themselves, the timing of the commencement of development and commercial production, the completion of milestones necessary to commence commercial production, is "forward-looking information" within the meaning of the Ontario Securities Act. Forward-looking information is subject to a variety of risks and uncertainties which could cause actual events or results to differ from those reflected in the forward-looking information, including, without limitation, risks and uncertainties relating to commodity price fluctuations; uncertain political and economic environments; changes in laws or policies, delays or the inability to obtain necessary governmental permits, risks inherent in mine planning and development such as cost overruns, metallurgical and recovery factors and financing risks; risks associated with the estimation of mineral resources and reserves and the geology, grade and continuity of mineral deposits; the possibility that future exploration, development or mining results will not be consistent with the Company's expectations; actual ore mined varying from estimates of grade, tonnage, dilution and metallurgical and other characteristics; the inherent uncertainty of production and cost estimates and the potential for unexpected costs and expenses, and other risks and uncertainties, including those described in our Annual Information Form and each management discussion and analysis. Forward-looking information is in addition based on various assumptions including, without limitation, the expectations and beliefs of management, the assumed long term price of lithium; appropriate equipment and sufficient labour and that the political environment where the Company operates will continue to support the development and operation of mining projects. Should one or more of these risks and uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in the forward-looking information. Accordingly, readers are advised not to place undue reliance on forward-looking information. The Company does not assume any obligation to update forward looking statements except to the extent required by applicable securities laws.

Contact Information


Western Lithium USA Corporation
Brian Bergot
Investor Relations
604-331-9842
info@westernlithium.com
www.westernlithium.com

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