More from UD hole - Cornish Lithium15 Oct 2021 18:09
Cornish Lithium told us today that in a few year's time the UK will need 75,000 tonnes of Lithium per annum. Without it, our car industry will not be able to satisfy the 50% local content requirement to export to the EU. Lithium batteries account for around 50% of an EV value, and 30% of that, is the cost of the lithium itself. Unless the UK can produce its own lithium, it is going to be very difficult to satisfy the 50% local content requirement. So our car industry and 800,000 jobs depends on the UK producing its own Lithium supply. Cornish Lithium has two possible projects to produce Lithium. One at Trelavour is in the china clay area of Cornwall and will be a hard rock project. The company is hoping to start producing Lithium from hard rock at Trelavour in 2025. It is aiming for 11,000 tonnes per annum using a new low energy process. The company is also aiming to produce lithium from brine at United Downs. The time frame is similar but initially it is envisaged that around 500 tonnes per annum will be produced there, rising hopefully to a similar figure as at Trelavour. British Lithium are said to be aiming to produce 20,000 tonnes per year from the St Austell area probably using a roasting method (high energy).
The conclusion is that the UK will still be very short of Lithium supplies. HMG appears to be aware of this situation and it is thought to be supportive.
The Lithium from brine approach is likely to use holes going down 2km. These are a fraction of the price of £20m of drilling down 5km. and although they yield lower level of lithium are thought to be far more economic per kg produced.
CL is drilling more holes at UD to scope out the likely level of resource.
The hard rock project at Trelavour is going to need significant capital expenditure as will the plant for UD. The company is clearly making soundings around institutions and government at the moment. First they anticipate a £20m-£25m raise in Q2 next year, by when they will have key information to give to potential investors. In 2023, it is likely we will see a bigger raise of around £200m - approx £120m of which is likely to be debt/project finance, and £80m of equity. Given the sharply rising price of Lithium, and the acute need for a resilient UK supply, I do not think HMG will let this fail. This may bode well for some help, either through ECGD loans or ECGD guarantees on loans from others. (The guarantees may halve the interest cost if gained.)
I hope that CUSN and other shareholders will impress on the company their enthusiasm, the desire for pre-emption rights and will be able to take part in the capital raises.
Sign In
Follow the stocks
