Lithium Universe buoyed by robust Bécancour refinery PFS results

Lithium Universe’s (ASX: LU7) Canadian critical minerals strategy has been boosted by positive results from a pre-feasibility study (PFS) into its Bécancour lithium carbonate refinery proposal that found the refinery can provide robust returns over an estimated payback period of just 3.5 years.

The newly completed study estimated a pre-tax net present value of around A$1.5 billion (US$779 million) using an 8% discount rate and a pre-tax internal rate of return of 23.5%.

Those numbers are based on a cautious price forecast of A$1,740 (US$1,170) per tonne for spodumene concentrate and A$30,922 (US$20,970)/t for battery-grade lithium carbonate equivalent.

Innovative strategies

The “low-risk” lithium conversion refinery is a key component of Lithium Universe’s development strategies.

In choosing the design of the refinery, the company has had a particular focus on bringing in proven expertise and having first-hand studies of top-of-the-range global lithium facilities, utilising China’s Jiangsu processing model as its basis.

“The successful completion of our PFS is a significant milestone for the company, especially given that we only launched in August last year,” chair Iggy Tan said.

“Early on, we recognised that bridging the lithium conversion gap in North America [by] leveraging our accumulated lithium expertise and the proven technology from Jiangsu was a clear and strategic path forward.”

Counter-cyclical outlook

Lithium Universe has developed a strategy that takes advantage of the recent decline in the global lithium market.

“Our counter-cyclical strategy is centred on advancing projects during market downturns, allowing us to strategically position ourselves for growth as the market rebounds,” Mr Tan said.

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

Market needs

Mr Tan said the Bécancour facility has been designed to produce environmentally friendly, battery-grade lithium carbonate that meets market needs.

The refinery is a key component of a Lithium Universe strategy aimed at closing the lithium conversion gap in North America via several development areas related to its Bécancour project.

The strategy is based on forecasts that a surge in North American battery manufacturing is approaching, with over 20 major manufacturers planning to deploy an estimated 1,000 gigawatts of battery capacity.

Supply issues

However, the company has also identified several supply gap issues looming regarding North America’s access to the necessary materials and processing technology to meet that demand as electric vehicle uptake grows.

As part of its strategy, the Bécancour refinery is designed to be able to overcome local supply shortages by processing spodumene feedstock from global sources such as Australia, Brazil and Africa.

Mr Tan pointed out that more than 90% of global lithium iron phosphate battery manufacturing is currently concentrated in China, with North America rapidly expanding its capacity.