Lithium Power International Limited (ASX:LPI) Managing Director and CEO Cristobal Garcia-Huidobro and Executive Director and CFO Andrew Phillips discuss the Environmental Approval for the company's Maricunga lithium brine project in Northern Chile, what this means for the project, and what’s planned.
Rachael Jones: Hello. I'm Rachael Jones for the Finance News Network. Joining me today from Lithium Power International (ASX:LPI) is MD and CEO Cristobal Garcia-Huidobro, on Skype over in Chile. And in our Sydney studio we have CFO Andy Phillips. Welcome.
Andy Phillips: Hi Rachael.
Cristobal Garcia-Huidobro: Thanks Rachael.
Rachael Jones: So Cristobal, firstly to you, congratulations on your environmental approval. What does this mean for the project?
Cristobal Garcia-Huidobro: Thank you, Rachael. This is basically the final milestone on advancing our Maricunga project, and it really reinforces our continued strong relationship with the Chilean government. I'm pretty sure the subsequent commencement of the construction here in Chile of the project will generate very positive effects, both for the local communities and for the country.
Rachael Jones: And would you remind us what the environmental impact assessment involved and what impact Maricunga will have on the environment?
Cristobal Garcia-Huidobro: Well, an environmental impact assessment, it's a quite big report. It comprises more than 11,000 pages, and it took us almost three years to be prepared. Maricunga, in general terms, is a very -- how can I say it? -- environmentally friendly project. Probably, as in any project, the construction phase will be the more complicated one. But, however, once the operation starts, the project has very few impacts.
Rachael Jones: And part of that submission included the impact on indigenous people. What does it mean for their access to the salt flat or the salar?
Cristobal Garcia-Huidobro: Well, Rachael, that's a very important question as indigenous communities have been central for development since the beginning of this company. So, specifically regarding your question, the answer is at this point they will have free access, and probably the access is going to be improved from what it is now. You have to remember that the salar is at almost 4,000m in height. The nearest indigenous community lives at around 60km from there. So our main impact on those communities, it's going to be because of increasing all the traffic, because of the trucks, especially during the construction period.
Rachael Jones: Thanks, Cristobal. Now moving over to you, Andy, now that you have approval for the project, what's next?
Andy Phillips: We are working towards the funding of the project. We're working with a number of offtake partners or potential partners internationally. And we've had discussions with them for the last 6 to 12 months. We've also been talking to some debt funders, so we're looking at a debt equity kind of mix for the overall project development. And now that we've got the EIA out of the way, it's going to be moving quite quickly ahead.
Rachael Jones: And Andy, what are the economics of the project and what's the capex?
Andy Phillips: The DFS or definitive feasibility study was released about a year ago. It's a very, very robust project. We have got a 20-year mine life at 20,000 tons of lithium carbonate equivalent per annum. The NPV at the time we did the DFS was US$1.3 billion and the capex is around US$560 million to build the project.
Rachael Jones: Thanks, Andy. Now back to you, Cristobal, to the last question, is there anything else you'd like to add?
Cristobal Garcia-Huidobro: Yes, Rachael, and I think it's something that a lot of people are questioning. It's basically what's going on with the agreement with Codelco. So, to be very clear, we're in the middle of the due diligence with that, and everything's moving forward as expected. And we are again expecting to have that finalised, or to have that definitive agreement ready, by the beginning of the second half of this year.
Andy Phillips: And just to add to Cristobal's comment, LPI is not only the Maricunga. Of course, Maricunga is our flagship. We've also been working in the Greenbushes area in Western Australia. End of last year, we got approval to explore, and we've done some field work in the last two months of last year, showing some pretty interesting prospects. And we are looking at putting together a work program for the first half of this year to pursue that further.
Rachael Jones: Andy Phillips, thanks for the update.
Andy Phillips: Thanks for having me.
Rachael Jones: And Cristobal over in Chile, congratulations once again, and also thanks for the update.
Cristobal Garcia-Huidobro: Thanks Rachael.