ioneer quadruples Rhyolite Ridge reserves, costs double

[Redator]

Australia’s ioneer (ASX: INR) has quadrupled ore reserves at its Rhyolite Ridge lithium-boron project in Nevada, US, sharply increasing both the project’s mine life and its development cost.

The company’s flagship project now hosts 1.92 million tonnes of lithium carbonate equivalent (LCE) and 7.68 million tonnes of boric acid equivalent (BAE). This reserve boost extends the expected mine life to 95 years, up from 26 years outlined in the 2020 definitive feasibility study.

Annual life-of-mine production is now pegged at 17,200 tonnes of LCE and 60,400 tonnes of boric acid, a compound widely used in construction, agriculture and pharmaceuticals. Nearly half the mineral resource has been converted to reserve, making Rhyolite Ridge the world’s largest known lithium-boron deposit, according to ioneer.

The extended mine life and higher output come at a cost. Capital expenditure has more than doubled to $1.67 billion, up from around $800 million. All-in sustaining costs (AISC) have risen to about $7,500 per tonne of LCE, though the first 25 years of operation are expected to average a lower AISC of $5,745 per tonne.

The good news is that the project’s post-tax net present value has increased to $1.5 billion from $1.26 billion, with a revised “unlevered” internal rate of return of 14.5%, down from 20.8%.

“Today’s updated reserve and mine plan allows ioneer to match prevailing market conditions and blend or prioritize ore to produce a valuable boric acid co-product, whose market is uncorrelated with the project’s primary lithium product,” managing director Bernard Rowe said. “No other lithium project offers this level of flexibility and economic advantage.”

Market headwinds

That flexibility could prove vital. Lithium prices have plummeted since their 2022 highs, causing investor caution. In February, ioneer lost its would-be joint venture partner Sibanye-Stillwater (JSE: SSW)(NYSE: SBSW), partly due to the weak pricing environment.

Still, the company remains optimistic. It plans to focus on high-boron ore during the first 25 years of production, which could yield around 19,200 tonnes of LCE and 116,400 tonnes of boric acid annually. Boric acid is projected to account for roughly 25% of revenue over that period, helping to support margins when lithium prices are under pressure.

“In periods of low cycle lithium pricing, like today, we plan to prioritise the high-boron ore production to optimise the relative proportion of total revenue derived from boric acid,” Rowe said. 

Shares in the company jumped more than 4% on the news, closing in Sydney at A$0.13 each, which leave ioneer with a market capitalization of A$295 million (about $190 million).

Rowe recently said the company aims to sell 40% of the project to one or two investors.