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REGINA, SK / ACCESSWIRE / January 9, 2024 / ROK Resources Inc. ("ROK" or the "Company") (TSXV:ROK)(TSXV:ROK.WT)(OTCQB:ROKRF), as a twenty-five (25%) percent shareholder and manager of operations of Hub City Lithium Corp. ("Hub City Lithium" or "HCL"), is pleased to announce the highlights of Hub City Lithium's Preliminary Economic Assessment (the "PEA") on the Viewfield Lithium Brine Project, Saskatchewan. The PEA outlines the estimated production of battery-quality lithium carbonate equivalent ("lithium carbonate" or "LCE") over a 23-year period, which represents an estimated pre-tax internal rate of return ("IRR") of 55% and a pre-tax net present value ("NPV") of $1.49 billion USD, at an 8% discount rate.
Preliminary Economic Assessment Highlights
- Pre-tax $1.49 billion USD NPV, at an 8% discount rate;
- Pre-tax IRR of 55% which represents a payout duration of 2.1 years;
- Total capital expenditures ("CAPEX") of $571 million USD inclusive of both direct and indirect capital costs, including $52 million USD in contingency;
- All-in operating costs ("OPEX") of $3,319 USD per tonne LCE, $40 million USD annually, including all direct and indirect costs;
- 23-year project-life producing a total of 282,090 tonnes of battery-grade lithium carbonate, an average of 12,175 tonnes LCE per year;
- Weighted average lithium concentrations of 128 mg/L from 7 target zones over the project life (range of 84 mg/L to 259 mg/L); and
- PEA encompasses approximately 11,000 net hectares, or 14% of Hub City Lithium's lands in Southern Saskatchewan.
Preliminary Economic Assessment Results
Values | |
| Production (LCE) | 12,175 tonnes/year |
| Project Life | 23.2 years |
| Total Capital Cost | $571 million USD |
| Average Annual Operating Costs | $40 million USD |
| Average Selling Price (LCE) | $20,000 USD/tonne |
| Pre-Tax Net Present Value (8% discount) | $1.493 billion USD |
| After-Tax Net Present Value (8% discount) | $1.066 billion USD |
| Pre-Tax Net Present Value (10% discount) | $1.213 billion USD |
| After-Tax Net Present Value (10% discount) | $0.859 billion USD |
| Cash Operating Costs | $3,319 USD/tonne |
| Pre-Tax Internal Rate of Return | 55% |
| After-Tax Internal Rate of Return | 45% |
| Payback Period (Pre-Tax) | 2.1 years |
| Payback Period (After-Tax) | 2.4 years |
| Profitability Index (PI8% Before-Tax) | 3.2 |
| Profitability Index (PI8% After-Tax) | 2.3 |
"We are very encouraged by the results of a best-in-class Preliminary Economic Assessment that highlights Hub City Lithium's resource quality" commented Cameron Taylor, CEO & Chairman of ROK. "We are very excited to be moving forward with the project development work in 2024, as we progress on the path to a commercial pilot and continue to advance efforts to optimize value creation for ROK and its shareholders."
Project Development
The PEA encompasses 11,000 net hectares of land at Viewfield project area, representing 46% of Hub City Lithium's Viewfield land holdings and only 14% of Hub City Lithium's total land holdings in Southern Saskatchewan.
The development plan employed in the PEA has been broken into three distinct units:
- Wellfield: includes all production wellbores, disposal wellbores and pipeline networks.
- Direct Lithium Extraction ("DLE"): includes infrastructure related to pre-filtration and DLE operations. Koch Technology Solutions ("KTS") was the DLE technical partner selected for the PEA.
- Concentration, Refining and Conversion ("CRC"): includes all infrastructure downstream of DLE required to refine and convert lithium chloride eluent into battery grade LCE. Saltworks Technologies ("Saltworks") was the CRC technical provider selected for the PEA.
Based on production testing and fluid analysis conducted by HCL in 2023 in the Viewfield project area, in addition to publicly available lithium testing throughout the area, it is expected to see lithium grades of 84 mg/L to 259 mg/L in the seven target members of the Duperow within the PEA lands. Over the life of the project, an average weighted concentration of 128 mg/L has been estimated.
Exploitation of the resource will occur in two production stages via multi-leg, horizontal wellbores. All project capital (minus end-of life capex) is allocated at the beginning of the project, with production estimated to commence in Q1 2027.
- Stage 1: Wymark C, D and E (Years 1-7)
- These zones are the shallowest and highest concentration (160 mg/L to 259 mg/L) zones and will be produced first through to depletion
- Average LCE output during Stage 1 is 18,850 tonnes per year with average OPEX of $2,332 per tonne USD
- Stage 2: Wymark A, B and Saskatoon A, B (Years 8 onward)
- These zones are lower concentration (84 mg/l to 145 mg/L) and will be exploited after depletion of Wymark C, D and E
- Average LCE output during Stage 2 is 10,200 tonnes per year with average OPEX of $4,166 per tonne USD
Note: A recovery factor of 50% of Total Lithium in Place was estimated for the PEA
A total of 36 multi-leg production wells will be drilled to exploit 7 target members of the Duperow, in addition to 30 vertical disposal wells to dispose of spent brine and process water. A network of underground pipelines will be constructed to transport the large water volumes from the wellheads to a DLE site for extraction and concentration to lithium chloride, and from there the eluent will be transported via pipelines to a CRC site for refining and conversion into battery-grade LCE. A total of five DLE sites and two CRC sites will process a daily average of 62,000 m3/day of brine, resulting in an average output of 12,175 tonnes per year of battery-grade LCE.
Capital Costs
The anticipated capital costs are:
| Capital Costs | Description | Costs (Million USD) |
| Wellfield Infrastructure | Wellbores, associated equipment and pipelines | $138.9 |
| DLE and Surface Equip Infrastructure (Koch) | Pre-filtration and DLE | $147.9 |
| CRC and Surface Equip Infrastructure (Saltworks) | Concentration, Refining and Conversion | $232.5 |
| Contingency | Applied to direct capital costs | $51.9 |
| Total | $571.2 |
Operating Costs
The anticipated operating costs are:
| Description | Total Annual Costs (Million USD) | Cost Per Tonne LCE (USD) | |
| Wellfield | Electrical, field personnel, repair and maintenance, lease rentals and tax, etc. | $13.6 | $1,115 |
| DLE and Surface Equip (Koch) | Pre-filtration, electrical, gas, water, LSS media, field personnel, etc. | $8.6 | $711 |
| CRC and Surface Equip (Saltworks) | Chemicals, electrical, gas, field personnel, repair and maintenance, etc. | $18.2 | $1,493 |
| Total | $40.4 | $3,319 |
Sensitivity Analysis
The economic sensitivities are as follows:
| LCE Price (USD/Tonne) | After-Tax NPV 8% (Million USD) | After-Tax IRR |
| Base ($20,000) | $1,066 | 45% |
| Base -20% ($16,000) | $728 | 34% |
| Base +20% ($24,000) | $1,403 | 56% |
Lithium Pricing and Production
A detailed future pricing study for lithium carbonate was not completed for this PEA. A constant price of $20,000 USD per tonne of battery-grade lithium carbonate was chosen by reviewing publicly available pricing data and peer released economic assessments of similar lithium resources. Certain industry peers have used a constant price of $25,000 USD per tonne LCE in PEAs released over the last 12 months, however in light of current global pricing for lithium, Hub City Lithium selected a base case of $20,000 USD per tonne with price sensitivities included at +/-20%.
Taxes and Royalties
The PEA outlines the taxes based on both the Canadian Federal Government and the Province of Saskatchewan. The Saskatchewan corporate income tax rate is 12%. The basic Canadian federal corporate tax rate is 38% of the Company's income and 28% after federal tax abatement. After all tax holidays, the Company's net federal tax rate is 15%, with a total combined tax rate of 27%.
The majority of the Viewfield project area is on Crown land and is subject to Crown royalties. Within the Province of Saskatchewan, the Crown royalty rate is estimated at 3%, with a one-year royalty holiday for each facility hub. The balance of the Viewfield project area is subject to freehold royalties which commercial terms vary based on individual lease agreements.
Mineral Resource Estimate Incorporated into PEA
The following sets forth the total inferred resource incorporated into the PEA:
- Viewfield Phase 1 Total inferred resource net to Hub City Lithium is 692,288 tonnes LCE
- Concentrations in the 7 target zones of the Duperow range from 84 mg/L to 259 mg/L, with a weighted concentration of 128 mg/L
- Wymark D tested 259 mg/L, the highest recorded concentration to date in Canada
Viewfield Project Area - Q1 2024 Field Pilot
Subsequent to the press release dated December 5, 2023, Hub City Lithium completed its Treatability Study ("Study") with Koch Technology Solutions, whereby 1,000 litres of feed brine from the Viewfield project area was tested for compatibility with KTS DLE technology. The Study was done in preparation for a DLE field pilot (one of the first in Canada) on the Hub City Lithium well that previously tested 259 mg/L of lithium. The pilot, scheduled to begin in Q1 2024, will treat Viewfield brine and convert it into a highly concentrated lithium chloride eluent. It's expected to run for 3 to 4 months and will operate 24/7, processing approximately 6,500 - 9,000 litres of feed brine per day.
Quality Assurance and Qualified Persons
The Preliminary Economic Assessment was prepared by Sproule Associates Limited ("Sproule") with the assistance of the contractors outlined below. All contractors completing the report are Qualified Persons as defined by
NI 43-101 and are independent of the Company. The National Instrument 43-101 PEA report will be filed on SEDAR+ (www.sedarplus.ca) within 45 days.
Sproule Associates Limited: Sproule is a global energy consulting and advisory firm that helps companies, investors and governments minimize risk and optimize business decisions. Ms. Meghan Klein ("Klein"), P.Eng., is the Senior Manager Engineering at Sproule and a Qualified Person for the PEA.
Red Tree Exploration Inc. ("Red Tree Exploration"): Red Tree Exploration is an independent Geological consulting company with experience in oil and gas, lithium and helium evaluations. Mr. Trevor Else ("Else"), P.Geo., is a Qualified Person for the PEA and the President of Red Tree Exploration.
Koch Technology Solutions: Koch Technology Solutions is a technology licensing business, a part of Koch Engineered Solutions. KTS creates value for its customers across a growing portfolio of technologies including the polyester value chain, the refining industry and lithium extraction fields. Mr. Marc Egbers ("Egbers"), is a Qualified Person for the PEA and the Director of Li-Pro Direct Lithium Extraction Commercial Solutions with KTS.
Saltworks Technologies: Saltworks is a team of engineers, scientists and builders focused on the innovation, construction and delivery of full-scale systems to treat industrial wastewater and refine lithium into a battery-grade product. Mr. Ben Sparrow ("Sparrow"), P.Eng., is a Qualified Person for the PEA and CEO of Saltworks.
Each of Klein, Else, Egbers and Sparrow are independent Qualified Persons in accordance with NI 43-101 and have reviewed and approved the technical contents of this news release.
PEA Cautionary Note
The PEA is preliminary in nature and includes inferred resources that are considered too speculative to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty the estimates presented in the PEA will be realized.
About ROK
ROK is primarily engaged in exploring for petroleum and natural gas development activities in Alberta and Saskatchewan. It has offices located in both Regina, Saskatchewan, Canada and Calgary, Alberta, Canada. ROK's common shares are traded on the TSX Venture Exchange under the trading symbol "ROK".
For further information, please contact:
Cameron Taylor, Chairman and Chief Executive Officer
Bryden Wright, President and Chief Operating Officer
Jared Lukomski, Senior Vice President, Land & Business Development
Lynn Chapman, Chief Financial Officer
Phone: (306) 522-0011
Email: investor@rokresources.ca
Website: www.rokresources.ca
Abbreviations
| Li2CO3 | Lithium Carbonate |
| H2O | Water |
| Na | Sodium |
| Ca | Calcium |
| Cl | Chlorine |
| SO4 | Sulphate |
| Fe | Iron |
| Al | Aluminum |
| Cu | Copper |
| Ni | Nickel |
| Wt% | Weight Percentage |
| Wppm | Weight Parts per Million |
| Mg/l | Milligrams per Litre |
| EDITDA | Earnings Before Interest, Taxes, and Depreciation |
| M3 | Cubic Meter |
Cautionary Statement Regarding Forward-Looking Information
This news release includes certain "forward-looking statements" under applicable Canadian securities legislation that are not historical facts. Forward-looking statements involve risks, uncertainties, and other factors that could cause actual results, performance, prospects, and opportunities to differ materially from those expressed or implied by such forward-looking statements. Forward-looking statements in this news release include, but are not limited to, statements with respect to the Company's objectives, goals, or future plans and the expected results thereof. Forward-looking statements are necessarily based on several estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties and other factors which may cause actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include but are not limited to general business, economic and social uncertainties; litigation, legislative, environmental, and other judicial, regulatory, political and competitive developments; delay or failure to receive board, shareholder or regulatory approvals; those additional risks set out in ROK's public documents filed on SEDAR+ at www.sedarplus.ca; and other matters discussed in this news release. Although the Company believes that the assumptions and factors used in preparing the forward-looking statements are reasonable, undue reliance should not be placed on these statements, which only apply as of the date of this news release, and no assurance can be given that such events will occur in the disclosed time frames or at all. Except where required by law, the Company disclaims any intention or obligation to update or revise any forward-looking statement, whether because of new information, future events, or otherwise.
Neither the Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Exchange) accepts responsibility of the adequacy or accuracy of this release.
SOURCE: ROK Resources Inc.
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