Rock Tech Lithium (TSXV: RCK) is raising C$59.1 million to build a high-grade lithium hydroxide converter and refinery in Guben, Germany, and to advance its Georgia Lake lithium project in Ontario, 145 km northeast of Thunder Bay.
Rock Tech is offering a private placement of 9.5 million units to certain U.S. and international investors at a price of $4.20 (C$54.2) for approximately $40 million (C$51.9 million). Each unit will consist of one common share and one share purchase warrant. Each warrant will entitle the holder to purchase a Rock Teck common share for C$6.77 for a period of 30 months after closing.
About $31.5 million will be used to advance the company’s lithium hydroxide converter and refinery in Germany. Funds will go toward long-lead items such as pyro-kilns and crystallizers and general project costs.
The converter-refinery project has initial capital costs of $560.2 million and is estimated to produce revenues totalling $7.6 billion over the 20-year projected life. The project has a payback period of 64 months. Nameplate annual production will be 24,000 tonnes of lithium hydroxide from approximately 178,000 tonnes of spodumene concentrate sourced from multiple third parties. By-products including alumino-silicate, gypsum and sodium sulphate will also be produced.
Rock Tech has engaged Evercore Group to assist in securing financing for the converter and refinery project. It is anticipated that an independent expert’s report on the converter and a front-end engineering design study will be completed in the first half of 2022 with a final investment decision made mid-year. If approvals are received in a timely manner, construction could begin in mid-to-late 2022 with production in 2024.
The Georgia Lake property is 100%-owned by Rock Tech, which produced a preliminary economic assessment for the project in March 2021. Sporadic drilling occurred on the property during the 1950s and 1980s, then again from 2009-11 and 2016-18.
The Georgia Lake spodumene deposit has measured and indicated resources of 6.6 million tonnes grading 1.16% lithium oxide (Li2O). The inferred resource is 6.7 million tonnes grading 1.16% Li2O. A cut-off grade of 0.65% Li2O was used for both categories. Several pegmatite zones have been identified for open pit and/or underground mining.
Metallurgical tests using a combination of gravity separation (heavy liquid separation lab tests) and flotation recovered 81.5% of the lithium in a 6.2% Li2O concentrate.
At an 8% discount, the project carries a post-tax net present value of $299 million and an internal rate of return of 19.6%. Rock Tech puts the initial capex at $353 million and the sustaining capex at $75 million over the 11 years of mining.
(This article first appeared in the Canadian Mining Journal)