THE BECANCOUR LITHIUM REFINERY:
PRE-FEASIBILITY STUDY
WATCH: CEO Alex Hanly discusses the key takeaways from the PFS
Lithium Universe Limited (ASX: LU7) is pleased to announce the results of its Preliminary Feasibility Study (PFS) for the Bécancour Lithium Carbonate Refinery in Québec, Canada.
The PFS confirms the viability of a strong lithium conversion project, even within a below-average pricing environment. The Company plans to build a reliable, low-risk lithium conversion refinery with an annual capacity of 18,270 tonnes, utilizing proven expertise from the Jiangsu processing model.
HIGHLIGHTS
• Positive, robust Bécancour Refinery PFS even in low pricing environment
• LU7 has a counter cyclical strategy – develop project, ready for price recovery
• Closing the Lithium Conversion Gap – growth in resource and end market projects
The Financial Model
Summary
- Economic viable with excellent pre-tax NPV8% of approximately US$779M
- IRR approximately 23.5% and payback of 3.5 years based on;
- Price forecast of US$1,170/t SC6 and US$20,970/t for battery grade Li2CO3
- Current spot price is approx. US$775/t SC6 and US$10,680/t for battery grade LC
- Operating at around US$3,976/tonne; capital cost estimate of US$494 million
- Expected annual revenue of approx US$383 million and EBITDA of around US$147 million
- Project break even at around US$780 /t (SC6) and around US$14,000 per tonne LC
WATCH: CFO John Sobolewski discusses the financial modelling used in the PFS
Detail
The project economics are positive and robust even at the proposed conservative price forecasts. The project is expected to deliver a pre-tax Net Present Value (NPV) of approximately US$779 million at a discount rate of 8%, with a pre-tax Internal Rate of Return (IRR) of approximately 23.5% and a steady state payback period of around 3.5 years. The financial model is based on conservative price forecasts: US$1,170 per tonne for spodumene concentrate (SC6) and US$20,970 per tonne for battery grade lithium carbonate. According to the section titled “Long-Term Spodumene and Lithium Carbonate Price Assumptions,” the Company’s directors consider the assumed prices of US$1,170 per tonne for spodumene concentrate (SC6) and US$20,970 per tonne for battery-grade lithium carbonate to be reasonable for the study. These prices are 5% lower than the consensus forecast provided by independent reporting agencies, banking commodities analysts, company disclosures, and technical reports. As demonstrated below in comparison to historical trends, the Company believes these long-term price assumptions are appropriate.
Plant availability and lithium recovery are assumed at 86% and 88% respectively. The plant financial model has a realistic ramp up rate with full production being achieved after three years.
At full production capacity, the project is expected to generate annual revenues of approximately US$383 million, with annual costs of in the region of US$236 million, including spodumene costs. This results in an annual EBITDA of around US$147 million, at an estimated gross margin of 38%. Post-tax, the NPV is estimated at around US$501 million at a discount rate of 8%. The capital cost of the project is estimated at around US$494 million, including a contingency of US$68 million or 16%. The detailed capital cost estimate is based on advanced design specifications derived from the reference plant model, ensuring a well-founded and reliable projection for the project’s financial planning.
Lithium Universe Bécancour PFS Summary Economics | Unit | Value |
Operation life | years | 20 |
Estimated Li2CO3 production | tpa | 18,270 |
Estimated Total Capital Costs | US$mm | $494 |
Estimated Sustaining Capital per annum | US$mm | $5 |
Estimated Before-tax Net Present Value @ 8% discount rate | US$mm | $779 |
Estimated Annual Revenue | US$mm | $383 |
Estimated Annual Costs inc Spodumene | US$mm | $236 |
Estimated Post-tax Net Present Value @ 8% discount rate | US$mm | $501 |
Estimated Before-tax Internal Rate of Return | % | 23.5% |
Steady state Li2CO3 conversion estimated all-in sustaining costs | $/t | $3,976 |
Steady state spodumene estimated purchase costs | $/t Li2CO3 | $8,965 |
Estimated annual steady state EBITDA | $mm/y | $147 |
Steady state estimated payback | years | 3.5 |
Have a question for the Lithium Universe Teamabout the Preliminary Feasibility Study or anything else?
We encourage you to jump onto our Investor Hub and ask us directly.
Price Forecasts
WATCH: LU7's CEO Alex Hanly, discuss the way the price forecast was calculated
Lithium Universe has taken a conservative approach to long term price forecasting, estimating US$1,170 per tonne for spodumene concentrate (SC6 Bécancour Port) and US$20,970 per tonne for battery grade lithium carbonate. These projections are based on recent market forecasts from independent reporting agencies, banking commodities analysts, company disclosures, and technical reports.
Lithium Universe Bécancour PFS Price Forecast | Unit | Value |
Spodumene SC6 Price | USD | 1,170 |
Lithium Carbonate Price | USD | $20,970 |
WATCH: LU7's Head of refinery, John Loxton, discusses the design philosophy used during the PFS.
The Design
Summary
- LU7 offers solution to worldwide lithium conversion failures and startup problems
- Using proven Jiangsu Refinery operating technology and lithium industry experience
- Producing up to 18,270 tonnes/year of green battery-grade lithium carbonate
- Smaller off-the-shelf style plant rather than large difficult-to-operate facilities
- Initial focus on lithium carbonate production – feed for LFP batteries
- Assumptions based on real operating data and experience – not new aspirant
Detail
The design of the Bécancour Lithium Carbonate Plant will be modelled after the proven Jiangsu facility, with targeted operational enhancements. The primary objective of this engineering study is to develop a comprehensive design and cost estimation for a standalone battery-grade lithium carbonate plant with an annual capacity of 18,270 tons per annum (tpa).
This facility will be engineered to process spodumene concentrate sourced globally. The required feedstock for the plant will be 140,000 tpa at 6% Li2O grade however, the plant has been designed to receive grades as low as 5% Li2O. Typically, industry-supplied spodumene averages around 5.5% Li2O. The design of Bécancour is based on the successful Jiangsu Lithium Carbonate Plant, the Bécancour plant will uniquely integrate renewable electricity, enhancing the sustainability of the process and product. Hatch Engineering, which was responsible for building the Jiangsu plant, has been selected as the engineering partner for this project.
Bécancour Lithium Refinery 3D Model
(Click image to enlarge)
Initially, the projected output was 16,000 tpa based on a 5.5% spodumene feed. However, following recent test results, revised recovery rates, and the current production capacity of the Jiangsu plant at 20,000 tpa, the target output for the Bécancour refinery has been adjusted to 18,270 tpa. The Company remains confident that this revised target is both realistic and achievable.
Design Challenges
LU7 has focused on addressing key challenges that have hindered previous lithium refinery projects: a lack of operational expertise and the absence of proven, continuous process refining technology in the West. The company’s solution is straightforward: leverage the proven success at the Jiangsu Refinery and assemble a team of lithium experts who successfully built and operated the Jiangsu Lithium Refinery for Galaxy Resources. Hatch Engineering, the firm responsible for constructing the Jiangsu plant, has been selected as the engineering partner for this project.
To mitigate technology risks, LU7 will adopt a “copy and paste” strategy from the Jiangsu plant, utilizing the same process, equipment, and supplier strategy. By employing proven equipment designs, the engineering work required for the Preliminary and Definitive Feasibility Studies is significantly reduced. Additionally, with the same supplier strategy, LU7 can benefit from the original supplier’s design and construction experience, minimizing costs and time associated with repeated detailed engineering. All lessons learned modifications from Jiangsu have been integrated into the proposed Bécancour plant design.
The Bécancour lithium refinery is designed to produce 18,270 tonnes per annum (tpa) of lithium carbonate, processing spodumene concentrate from global sources. Initially aimed at 16,000 tpa, updated recovery rates and design optimisation have increased this target to a more realistic 18,270 tpa. The facility will feature a purification unit to ensure high-quality, battery-grade lithium carbonate, optimized for use in lithium-ion batteries. This focus on lithium carbonate, rather than lithium hydroxide, aligns with Lithium Universe’s expertise and its application in Lithium Iron Phosphate (LFP) cathodes, which are valued for their stability and extended shelf life.
WATCH: Non-Executive Director Jingyuan Liu dives into the reasons for choosing Lithium Carbonate over Lithium Hydroxide in the Preliminary Feasibility Study (PFS)
The Locaton
Summary
• Québec ideal trans-Atlantic lithium conversion centre, comparable to China
• Feedstock from Canada, Brazil and Africa – end market North America
• Critical cost benefits – cheap green power, transport mine/end market savings, US/Canada tariffs
• 95% GHG emission reduction with Hydro Québec’s green energy
Detail
The Company believes Québec is emerging as an ideal trans-Atlantic hub for lithium conversion, offering a strategic alternative to China. With feedstock readily available from Canada, Brazil and Africa, Québec is well-positioned to supply the growing North American market. Its competitive edge lies in access to low-cost, green energy priced at just US$0.026 per kWh, making the lithium refining process both cost-effective and sustainable.
The US Inflation Reduction Act (IRA), European Battery Passport, and Canadian critical minerals mandates are expected to reshape the North American battery market by encouraging domestic production and reducing reliance on Chinese suppliers. With proposed tariffs of up to 25% on Chinese lithium imports and battery components, this creates a strategic advantage for domestic refiners. Québec’s close proximity to lithium-rich regions such as James Bay, home to 500Mt of +1% Li2O deposits, and major spodumene producers in Latin America and Africa, enhances its competitive position in the global market.
Have a question for the Lithium Universe Teamabout the Preliminary Feasibility Study or anything else?
We encourage you to jump onto our Investor Hub and ask us directly.
The Proposed Site
Lithium Universe has executed an option agreement on a key property within the Bécancour Waterfront Industrial Park (BWIP). Bécancour, situated on the southern side of the St Lawrence River, equispaced between Montreal and Québec City. The address is Boulevard Bécancour (Highway 30 / Route 132), in the Bécancour Industrial Park in Bécancour, Québec. The Option Agreement relates to an area of 27 hectares or 270,000sq.m, at current market prices in the region. The option term lasts 36 months from signing, with an initial monthly option fee of CAD $63,135 for 24 months starting February 2025, which will be deducted from the final purchase price.
WATCH: LU7 Director Dr. Jingyuan Liu take a tour of the proposed lithium Refinery site at Becancour.
Positioned near a major highway, the site seamlessly connects to the extensive North American highway network. Additionally, the facility benefits from daily service by the Canadian National Railway (CN), enabling cross-continental transportation from east to west and north to south, linking key ports on the Atlantic and Pacific coasts. The Port of Bécancour, operational all year-round, boasts a water depth of 10.67 meters, accommodating vessels of varying sizes. It features a pier extending 1,130 meters into the St. Lawrence River, equipped with 5 berths and a roll-on/roll-off ramp, further solidifying its strategic fit as the location for the Company’s proposed Lithium Carbonate Refinery due to its ability to easily access international spodumene supply whilst the Canadian internal spodumene supply develops.
