Rock Tech is a cleantech company with operations in Canada and Germany on a mission to produce lithium hydroxide for electric vehicle batteries
Rock Tech Lithium's Guben Lithium Converter. (Credit: CNW Group/Rock Tech Lithium Inc.)
Rock Tech Lithium Inc. (TSXV: RCK) (OTCQX: RCKTF) (FWB: RJIB) (WKN: A1XF0V) (the “Company” or “Rock Tech”) is pleased to announce that it has reached a significant milestone in the preparation of construction of its lithium hydroxide converter and refinery plant in Guben, Germany, with the completion of the Front-End Loading stage 3 study (“FEL3”). The study includes detailed specifications for construction, commissioning, start-up, and operation, along with a purchase-ready major equipment cost estimates. The study was finalized by the Company’s German subsidiary Rock Tech Guben GmbH in collaboration with engineering partner AFRY AB, paving the final way for the Project’s construction phase. The profitability has been estimated to have a post-tax NPV (8%) of EUR 1,194m (USD 1,246m) – an increase of 43 per cent compared to the previous Bankable Project Study2. Additionally, Rock Tech has appointed Deutsche Bank AG as placement agent for the Company’s Converter-related financing.
With finalization of the FEL3 study, basic engineering is completed, and the Project is prepared to move to construction phase including final procurement negotiations and detailed engineering design.
The FEL3 study estimates the project’s profitability at a post-tax NPV (8%) of EUR1,194m (USD 1,246m) – an increase of 43 per cent compared to the Bankable Project Study. In particular, the increased long-term price assumptions of analysts for lithium hydroxide caused by the continued forecast of very high demand, lead to a higher basis for the margin calculations.
The FEL3 results in a much more accurate cost estimate with a variance of only +/-10% (AACE Class 2) and is based on existing definite offers of mainly European suppliers and service providers supporting purchase-ready major equipment cost estimates. Despite this enhanced accuracy, it can be clearly noted that the planning of capital expenditures remains stable and only increases by 4%, mainly due to inflation.
Execution planning and basic engineering is now comprised for all plant areas. Efforts involved significantly increased levels of basic engineering deliverables, and the preparation of cost estimates. Metallurgical testwork, which was in progress at the time of the BPS publication, has now been completed and was provided for expert review and interpretation by industry specialists.
Completion of these tasks has allowed for finalization of plant equipment selection and flowsheets. Lithium recovery assumptions made in the BPS have proven to be accurate with no changes required to production assumptions. A forward metallurgical testing work plan has been developed which will perform final optimizations, including bench and pilot scale testing, with material from the selected spodumene concentrate supplier. A competitive tendering process has been kicked off, with the assistance of an independent expert, to appoint an Engineering, Procurement and Construction Management (EPCM) partner for project execution.
Rock Tech is also pleased to announce that it has selected Deutsche Bank AG as a highly experienced placement agent with a proven track record in major equity financings.
“We are very pleased to have partnered with Deutsche Bank, a leading global investment bank, to lead our equity raising and partnership activities for the Converter financing. The completion of our latest detailed engineering study further substantiates the profitability and attractiveness of our project, and we are confident the next months will yield strong financing partnerships.” Sonja Rossteuscher, Rock Tech’s Chief Financial Officer says.
Rock Tech’s lithium hydroxide converter and refinery plant in Guben, Germany is planned for a production capacity of 24,000 tonnes of battery-grade lithium hydroxide monohydrate per year. It is going to be able to process spodumene concentrates from various origins, be it from the Company’s own mineral project Georgia Lake, Ontario, Canada or, for example, from Australia. Rock Tech has obtained the first partial permit (“TG1”) issued by the Brandenburg State Office for Environment in March 2023. The permit allows start of construction for all non-process buildings and site infrastructure and approves the general plant layout and functions for the spodumene to lithium hydroxide conversion. The Company submitted the second partial permit (“TG2”) in November 2022 and expects approval by Q4 2023. Targeted start of commissioning remains on track for Q4′ 2025, with first battery grade LHM being produced in Q1′ 2026.
The FEL3 initial capital costs have increased by 4% in Euro terms compared with the BPS as the last published study phase3. Improvements to the capital expenditure (CAPEX) estimate include improved engineering completed during the FEL3, more developed construction planning, and a refined understanding of freight requirements; all of which served as the basis for the FEL3 estimate and support a Class 2 level of certainty.
The further engineering process, to be done in close coordination with an EPCM contractor, will provide opportunities to further de-risk the CAPEX estimate by highlighting key areas where further negotiation with preferred suppliers will yield improved results. It is planned that the procurement team will work in conjunction with the selected financing groups to ensure a high level of confidence can be obtained from supplier pricing. This will allow the Company to make the Final Investment Decision in the second half of 2023.
Source: Company Press Release