Patriot Battery targets 400,000 t/y at Quebec lithium project

Patriot Battery Metals (ASX: PMT)(TSX: PMET) is targeting initial lithium production capacity of 400,000 tonnes of spodumene concentrate at its flagship Shaakichiuwaanaan project, formerly known as Corvette, in Canada’s Quebec.

Unveiling the results of an awaited preliminary economic assessment (PEA) for the lithium project, Patriot said it had chosen a staged development of the CV5 spodumene pegmatite, via open pit and underground mining methods. According to the Canadian company, this approach would maximize earlier access to the high-grade Nova Zone, minimizing the environmental footprint. 

The scenario, it noted, also offers options and flexibility to unlock the potential of Shaakichiuwaanaan to become a lithium raw materials supplier in North America. The asset, the largest known lithium pegmatite mineral resource in the Americas, hosts vast spodumene crystals, which enhances processing efficiency and recovery rates, Patriot said.

The Vancouver-based miner noted the PEA incorporates a staged development strategy, with Stage 1 requiring an estimated initial net capital expenditure (capex) of C$640-million (around $470m).

This first phase lays the groundwork for production, followed by a Stage 2 expansion aimed at doubling output to 800,000 tonnes of spodumene concentrate per year. The estimated net capex for the Stage 2 expansion is C$408 million ($300m). 

The combined net cost to reach nameplate production for both Stage 1 and Stage 2 is estimated at around C$608 million ($447m), considering cash flows from Stage 1 and proposed tax credits Patriot said.

Upon completion of the second phase, the Shaakichiuwaanaan project could become one of the world's largest spodumene producers, providing spodumene concentrate with a 5.5% lithium oxide content, or SC5.5, in a stable jurisdiction.

Overall, the project is expected to have a pre-tax net present value of $3.6 billion, with a pre-tax internal rate of return of 38% at $1,375 per tonne. 

The payback period has been pegged at 3.6 years at an assumed average lithium price of 1,375 per tonne or $1,500 per tonne, with a 24 year mine life. 

Final investment decision by 2027

Chief executive Ken Brinsden said the results of the PEA demonstrate the potential for the company to become a global lithium leader and key supplier of lithium raw materials, despite the early stage of exploration.

“The flexibility and scalability [of the staged development pathway for Shaakichiuwaanaan] could allow us to adapt nimbly to evolving market conditions, while continuing to grow the resource base,” Brinsden said in a statement.

The executive said Patriot will only commit to development after considering the economic conditions that prevail or are foreseeable at the time that an initial production decision is made. 

The company aims to make a final investment decision by 2027, potentially enabling construction to proceed through 2028 and initial production to commence in early 2029. 

Patriot is simultaneously considering advancing to the Feasibility Study stage, as it believes that Shaakichiuwaanaan's anticipated low operating costs and expected IRA-compliant high-quality lithium output would make the company an attractive partner for downstream players.