Lithium Australia NL : Large-Scale Pilot Plant study exceeds design criteria

6 July 2017

• Initial design outcomes for the US$42m large-scale lithium processing pilot plant ("LSPP") using Lithium Australia's SiLeach™ technology, exceed all expectations
• Study outcome betters operating cost target - and without any by-product credits
• The LSPP can be cash positive with additional cost reduction upside from further optimisation and scale-up to commercial operating parameters
• Confirms upside of processing mica mineral resources not currently viable with conventional mineral processing technology
• End-of-year target for financial investment decision on constructing LSPP
• Immediate focus on further optimisation test work with Murdoch University and ANSTO Minerals, and securing partnerships with existing operators to source mica already mined, but not processed, with resulting low exposure to mining costs

A new study has found that a proposed large-scale US$42 million lithium processing pilot plant can be cash positive, and indicates that mica material can be a competitive source of commercial lithium products. The study also identifies multiple avenues for further substantial capital and operating cost reductions.

These are the key findings of the initial work released today by Lithium Australia NL (ASX:LIT) and CPC Project Design Pty Ltd ("CPC") in their design and evaluation of a Large-Scale Pilot Plant ("LSPP") based on the application of LIT's advanced SiLeach™ lithium processing technology. The pilot plant's design uses a base annual lithium carbonate production of 2,500 tonnes (~1/10th scale of a full scale production plant).

SiLeach™ eliminates the expensive roasting step in conventional lithium processing, with the technology capable of treating lithium bearing minerals currently being disposed of as waste from mining operations around the world, due to a lack of suitable mineral extraction technology.

The LSPP design and execution objective was to construct and operate a facility that demonstrates the scalability of the Sileach™ process with break-even operating costs of US$10,000 per tonne of lithium carbonate. The CPC study shows this should be readily achievable without reliance on by- product credits.

The study also concludes that:

• Recovery of high purity lithium carbonate that meets offtake specification, can be achieved;

• A LSPP will have a capital construction cost, including contingencies, of US$42 million;

• LSPP operating costs for a Malaysian based case, including the cost of feed material (estimated at US$365 per tonne on a 'free in store' basis or US$3,960 per tonne of lithium carbonate) but before accounting for by-product credits, are US$9,200 per tonne of lithium carbonate produced, which is below the LSPP study target break-even operating cost of US$10,000 per tonne of lithium carbonate;

• Hydrometallurgical plant operating costs of around US$5,600 - US$6,400 per tonne of lithium carbonate produced, without consideration of any potential by-product credits;

• By-product credits have potential to significantly reduce operating costs. However LIT has not included by-product value in this study as further test work is required. This work is currently in progress with LIT's technology partners;

• Potential to make further significant improvements to both capital and operating costs by:

  • improved water management, a key driver of the capital cost;

  • optimisation of reagent mix and usage;

  • improved control on neutralisation to minimise lithium losses;

  • optimising the trade-off of residence time versus recovery; and

  • economies of scale transitioning from pilot plant testing to commercial operations.

LIT's current preferred supply model is to source lithium mica from waste streams from already operating mines. LIT is also pursuing exploration activity to secure alternative supply. LIT currently has a footprint in Western Australia, South Australia, Queensland, the Northern Territory, Mexico and Germany. The sourcing of this mica is the Company's priority and this remains a critical requirement for the LSPP.

The successful commercialisation of LIT's SiLeach™ process provides the opportunity to produce lithium chemicals from silicates without the requirement for roasting. Application of the process creates a more direct supply conduit through to the lithium chemical end users, e.g. battery producers, rather than selling a lithium mineral concentrate for downstream "conversion" to lithium chemicals.

SiLeach™ is a disruptive process, capable of generating high-value lithium chemicals, potentially with lower operating costs than conventional processing. SiLeach™ is designed to improve sustainability of lithium resources, by processing minerals that are otherwise considered waste, and allowing greater resource recovery by reducing operating costs.

Optimisation studies will be undertaken during 2017, to improve both capital and operating costs, with a view of committing to construction of a LSPP by year end. Results of the optimisations will be reported as they become available.

In recognising an opportunity to recover lithium from materials commonly considered to be uneconomic, LIT in 2015 commenced investigating disruptive technologies to achieve a commercial outcome. This led to the development of the 100% LIT-owned SiLeach™ process which is capable of recovering lithium from any silicate including spodumene and lithium micas. This announcement relates to the processing of lithium micas, lepidolite in particular.

Laboratory scale test work, and pilot plant trials on lepidolite bearing material, undertaken by ANSTO Minerals (a division of the Australian Nuclear Science and Technology Organisation) formed the basis of the process design criteria (as shown in Table 1) prepared by CPC for the purpose of plant design, capital cost estimates, operating cost estimates and infrastructure studies required to evaluate operation of the LSPP.

The flowsheet used for the pilot plant testing by ANSTO which generated the data and formed the basis of the process design criteria evaluated by CPC, is shown in Figure 2.

Lepidolite

H2SO4

CaF2

Waste

Acid Leach

Waste

CaCO3

Impurity Removal 1

Ca(OH)2

future recycle

Impurity Removal 2

Na2CO3

CaCO3

Softening

Run 1A

Water, CaCO3, NaCl

Recycle (Li)

Evaporation

Elution

Ca IX

K2SO4

(by-product)

Na2CO3

Purification

LC Precipitation

Li2CO3 Product

Run 1B

During pilot plant testing, the process was split into two runs, 1A and 1B, operated from 12 to 17 September 2016 and 10 to 12 October 2016. Pilot plant operations resulted in the production of battery grade lithium carbonate as detailed in Table 2.