ioneer begins search for Rhyolite Ridge partner

[Redator]

ioneer (ASX: INR) (NASDAQ: IONR) says it has formally begun its search for a strategic partner in the Rhyolite Ridge lithium-boron mine project in Nevada after Sibanye-Stillwater (JSE: SSW)(NYSE: SBSW) pulled out earlier this year.

The formal strategic partnering process, says the Australian mine developer, follows its recently completed critical work that significantly improved the project’s value but also its projected costs.

In February, Sibanye-Stillwater walked away from the Rhyolite Ridge project, citing a “weak pricing environment”. The South African miner, which initially agreed to enter the project in 2021, had planned to invest $490 million for a 50% stake in the project.

Since then, ioneer has been looking for a “strong equity partner” to help accelerate the development of Rhyolite Ridge and advance it into production.

Unique lithium-boron project

In an interview with the Financial Times in April, ioneer’s managing director Bernard Rowe said he is “very confident that in the near term we’ll have that equity in place”, adding that the company wants to sell 40% of the project to one or two investors.

The proposed mine, located roughly 362 km north of Las Vegas, hosts one of the largest lithium-boron resources in the United States, and one of only two projects in the country that are currently in the advanced stage.

“The Rhyolite Ridge project is unique in the global lithium and boron sectors,” ioneer said in a press release Thursday, citing its capacity to produce both minerals on site, a dual revenue stream (75% lithium and 25% boron), and strong project fundamentals.

The company also noted that the project is shovel ready with a Class 2 capital cost estimate and 70% engineering complete. It also has all major permits in place and access to a $996 million loan from the US Department of Energy.

The partner search, according to ioneer, is expected to take four months. Goldman Sachs, acting as its financial advisor, will assist the company in the process.

Higher value, costs

Any new partner in Rhyolite Ridge would likely be involved in a more valuable, but more expensive project, than Sibanye. As it had confirmed to the Financial Times, ioneer is said to be “looking for a higher valuation” than before.

Earlier this month, ioneer announced a major upgrade to its 2020 definitive feasibility study by more than quadrupling the Rhyolite Ridge ore reserve, which in turn would support a much longer mine life at 95 years compared to 26 years.

Based on this reserve upgrade, the Rhyolite Ridge mine is expected to produce 17,200 tonnes of lithium carbonate equivalent and 60,400 tonnes of boric acid on an annual basis, including 19,200 tonnes of LCE and 116,400 tonnes of boric acid in the first 25 years.

The extended mine life and higher output also lifted the project’s after-tax net present value to $1.5 billion from $1.26 billion. Its costs, however, also rose to $1.67 billion, more than double the $800 million estimated previously.

Federico Gay, a lithium analyst at Benchmark, told FT that the Rhyolite Ridge mine would be expensive to build, but would be competitive compared with other lithium mines once operational.