Lithium Universe advances Bécancour refinery through FID to funding stage

Lithium Universe (ASX: LU7) has made a financial investment decision (FID) for its Bécancour lithium refinery in Canada after receiving positive results from a definitive feasibility study (DFS).

The project will now enter the funding stage after the DFS identified a net present value (NPV) of approximately $1.13 billion and an estimated full-rate payback period of 3.9 years.

The company has built the financial model on cautious price forecasts of $1,840 per tonne for spodumene concentrate and $33,000/t for battery-grade lithium carbonate equivalent.

Revenue expectations

At full production capacity, the company expects the project to generate approximately $603 million in annual revenue, with costs totalling around $371m.

This would lead to an annual EBITDA of approximately $233m and a gross margin of around 39%, with the post-tax NPV at an 8% discount rate estimated at approximately $707m.

The DFS increased the PFS capital cost estimate for the project by 11% to $865m, with the rise driven primarily by the inclusion of a $47m zero liquid discharge (ZLD) system to enable the recycling and reuse of all process water on-site.

The company based the capital cost estimate on advanced design specifications from the Jiangsu lithium refinery model in China to ensure robust financial planning and projection.

‘Economically viable project’

“The strong NPV and returns for the project indicate an economically viable project and the board has made the FID, with the project now proceeding to the funding stage,” chair Iggy Tan said.

“An equity and debt adviser will be engaged to lead the funding outreach program, aimed at securing strategic partners at the project level to support project financing.”

“We are dedicated to funding and constructing a proven, low-risk lithium conversion refinery in Québec, marking the first step toward establishing Québec as the lithium conversion hub for the transatlantic region.”

“We are confident that the Bécancour lithium refinery, with an annual capacity of 18,270 tonnes, will emerge as a leader in producing green, battery-grade lithium carbonate.”

Offtake discussions underway

Lithium Universe has commenced discussions for potential offtake agreements with original equipment manufacturers.

These will focus on establishing strategic partnerships with customers for battery-grade lithium carbonate, with an emphasis on EV demand growth in North America and Europe.

The company’s strategy is to focus its efforts on the growing EV supply chains, particularly considering the increasing commitments to battery manufacturing by groups such as Ford, General Motors, Stellantis, Toyota, LGES, SK Innovation and Samsung SDI.