Anson Resources assessment confirms high returns from Utah lithium brine project

Anson Resources ASX ASN Paradox Brine project Utah Preliminary Economic Assessment
A three-stage development has been outlined for Anson Resources’ Paradox brine project with estimated $188 million project costs expected to be paid back in just over two years.

Anson Resources (ASX: ASN) has revealed an independent third party preliminary economic assessment (PEA) has produced “outstanding” economic projects for its Paradox brine project in the US state of Utah.

The PEA, equivalent to a JORC scoping study, outlined a three-stage development, beginning with production of 15,000 tonnes per annum of sodium bromide, then adding a 24tpa lithium carbonate pilot plant, and finally, expansion to 60,000tpa of sodium bromide and 15,000tpa of lithium carbonate.

Anson said the high economic viability and return on investment is due to the unique nature of the brine, which flows to the surface under its own pressure with high concentrations of minerals, including “world class” bromine grades.

The Paradox brine projects consists of 1,317 claims, 87 of which are subject to an earn-in agreement and the other 1,230 being 100% owned by Anson.

High returns, quick paybacks

For stage one, there is an internal rate of return of 40% over 25 years and the project development cost of US$121 million (A$188 million) is estimated to have a payback of 2.16 years.

Stage three will cost US$483 million (A$750 million) in capital outlay with a payback period of 1.47 years and an internal rate of return at 43%.

Anson said it has benefitted by taking advantage of existing wells, utilities and other infrastructure.

“The PEA also confirms the advantage of first extracting bromine to fast-track the project to cashflow that can then fund the development of plants to extract lithium and other minerals,” the company said.

The US$3.3 billion bromine market

The largest application for bromine-based compounds is in the production of flame retardants, accounting for 44% of all global consumption.

Clear brine fluids account for 17% of consumption, these being used in drilling fluids in deep, high-pressure oil wells.

Water treatment accounts for another 8%, mainly in China and the US. Other applications include pharmaceuticals, agricultural pesticides, dyes and lithium bromide.

Anson said the bromine market was valued at US$3.3 billion (A$5 billion) in 2019 and it is expected to grow at a compound annual growth rate of 5.8% to reach US$4.4 billion (A$6.7 billion) by 2024.

Bromine prices reached US$5,050 per tonne (A$7,712/t) in 2019 and are expected to hit US$5,280/t by 2024.

Anson said lithium carbonate prices are expected to reach US$12,000/t by the end of this year after starting 2020 at US$8,750/t.

But this is still a way from the peak price of US$25,800/t in November 2017.