America’s Next Great Lithium Mine?
Junior Firm Advancing Major Lithium Project in Nevada
Cypress Development Corp. (TSX-V: CYP)(OTC: CYDVF) — currently trading at approximately C$1 per share has commenced development of a pilot plant program for its 100%-owned, 5,430-acre Clayton Valley Lithium Project, Nevada.
Located midway between Las Vegas and Reno, the project is situated immediately east of Albemarle’s Silver Peak mine, which has been in continuous operation since 1966 as North America’s only lithium brine operation.
Exploration and development by Cypress has led to the discovery of a large, world-class resource of lithium-bearing claystone at Clayton Valley where the company is working toward a Feasibility Study and permitting of a mine and metallurgical facility.
Last month, the company announced development of a lithium hydroxide pilot plant at the del Sol Refining & Extraction facility in nearby Beatty, Nevada. The plant will enable Cypress to produce marketing samples to support negotiations with potential offtake and strategic partners while also providing essential data to be used in various economic studies including the aforementioned Feasibility Study.
Cypress CEO, Dr. Bill Willoughby — whom you’ll be hearing more from in a moment — commented via press release:
“The results from our internal scoping study were positive and demonstrated a number of benefits for using a chloride-based approach. While trade-offs do exist, we are confident at this juncture to design the pilot plant with focus on chloride leaching. A sulfate-based approach, as detailed in the project’s Prefeasibility Report, remains a viable alternative should new information prove otherwise. There was much effort put into completing this financing. Cypress is grateful for the work completed by the Cypress team, including our consultants, legal, and accounting personnel, and our professional and technical advisors. The Company is in a very strong position now and we can turn our full attention to accelerate project development work and rapidly advance the Clayton Valley Lithium Project towards production.”
Last year’s PFS (Prefeasibility Study) outlined a mill rate of 15,000 tonnes per day for 27,400 tonnes LCE/yr over a 40-yr mine life and 4.4-yr capex payback period using US$9,500 per tonne LCE.
The project’s after-tax NPV (-8%) came in at US$1.03 billion and 25.8% IRR.
That’s essentially a US$1B valuation for a company boasting a current market cap well below US$100 million.
As mentioned, Cypress Development is led by CEO, Dr. Bill Willoughby — a highly-accomplished mining engineer with nearly four decades of industry experience including as former president of International Enexco and leadership roles at Teck (Cominco).
Dr. Willoughby states, “This PFS is a major milestone for Cypress. These positive results take us closer to our goal of developing a world-class lithium deposit. Cypress' land position and resources afford us the opportunity for a long-life project with low operating costs and potential to be a significant source of lithium for the United States.”
Spanning 8.5 sq mi, the company’s Clayton Valley property is expansive — and, importantly, the resource calculation from last year’s PFS [929.6 million tonnes averaging 1,062 ppm Li or 5.2 million tonnes LCE] was derived using only a small fraction of the property (see aerial image below).
Hence, with the vast majority of the property yet to be explored, ample opportunity exists for resource expansion with which to extend the mine life well beyond 40 years (as calculated in the PFS).
The Clayton Valley Lithium Project boasts a number of potential cost saving advantages over conventional mining including its flat-lying orientation over a large area with mineralization occurring at-surface with almost zero overburden.
The company’s current modeling indicates a relatively straightforward leach extraction process at a low strip ratio of 0.29:1. And since it’s clay, Cypress can move straight into resource excavation without having to do any drilling or blasting.
Of course, that’s not to say that extracting lithium from clay is easy or even the norm. The vast majority of lithium production around the world is from lithium brines and hard rock pegmatites — making clay extraction a truly nascent subsector of the broader lithium industry.
To that end, the Cypress team is deploying its pilot plant program as a means of demonstrating its planned leach extraction process on a larger scale than anything it’s done in the past.
Metallurgical work performed to-date at the site has determined optimum conditions for leaching with results averaging an impressive 86.5% extraction of lithium into solution.
And although nascent, Cypress is certainly not alone in the lithium-from-clay world. The company’s Clayton Valley project is one of a handful of large-scale lithium clay projects in development in North America — including Ioneer Ltd.’s neighboring Rhyolite Ridge project and Lithium Americas' Thacker Pass project in northern Nevada.
And the timing could not be better for the company, and for speculators, with lithium playing an ever-increasing role in the global EV boom.
Bloomberg New Energy Finance projects that by 2040, 58% of all global vehicle sales will be electric. That’s over 55 million EVs being sold annually — a nearly 20-fold increase from the 3 million being sold today.
With a robust treasury of approximately C$20 million, Cypress is well-funded to accomplish its stated goals for 2021, which include, among other things, completing a pilot plant program and producing a Feasibility Study for its Clayton Valley Lithium Project.
Our own Gerardo Del Real of Junior Resource Monthly caught up with CEO, Dr. Bill Willoughby, for an in-depth discussion of all-things Cypress Development.
Cypress Development Corp. (TSX-V: CYP)(OTC: CYDVF)
CEO Dr. Bill Willoughby on Progress at Flagship Clayton Valley Lithium Project, Nevada, and Closing of Oversubscribed C$19.5 Million Financing
Dr. Bill Willoughby: I'm doing great. It’s nice to be with you.
Gerardo Del Real: Thank you so much for taking time. I've had a lot of interest in Cypress, and I want to get into the asset. I want to get into what, obviously, is a surging megatrend that isn't slowing down anytime soon: the electrification of everything and how Cypress and shareholders can benefit from it.
But for those that aren't familiar with you and your past success, can you give us a brief background on yourself and some of the successes you've had? You've been great at monetizing assets in the past, obviously. And then, we'll get into Cypress and the company.
Dr. Bill Willoughby: Well, sure. I came to Cypress in 2017. Before that, I had been in a couple of different junior companies and with a major. All along, I've been working in project development and mining and was with a company, Teck Cominco, for about 18 years before that.
So I've got some background there in hydrometallurgy from those days and also the junior companies after that. I did a doctorate in Mining Engineering & Metallurgy at the University of Idaho back in '89. So I've been around the block for a few years.
We've got a really great team. I want to speak more to that with Cypress. We've got a metallurgist out of Butte, Montana, Todd Fayram, who's been involved with this project all along; has done a lot of his ideas and thinking through there. Another fellow out of Colorado School of Mines, Corby Anderson, has been instrumental in working with us on this project.
And then we have a great team-building up around moving the project forward. A good mining engineer out of Nevada, Adam Knight, and our consulting geologist, Dan Kalmbach, all working on the team together.
Gerardo Del Real: Excellent! Let's talk about the project; the Clayton Valley Lithium Project. Again, for those not familiar, in Nevada. Can you tell us a bit about the project itself?
Dr. Bill Willoughby: Yeah. Well, this is unique in that it's a lithium clay. And the clay was deposited in a lake environment. It's in Clayton Valley, which is a closed basin; sits about halfway between Las Vegas and Reno.
|Lithium||A designated U.S. strategic mineral forecast for significant growth in demand|
|Claysonte||Extensive surface deposit in unique setting adjoining Albemarle’s Silver Peak brine operation|
|Nevada||In top 3 most favorable mining jurisdictions (Fraser Institute 2017-2019) 3 hours from the Tesla Gigafactory|
|Advanced Project||First Drill Hole - February 2017
Preliminary Economic Study - October 2018
Positive Prefeasibility Study - August 2020
There's a number of clay projects coming along. Some of these you might be familiar with, or your listeners.
There's Lithium Americas' Thacker Pass Project up north of Winnemucca; ioneer Ltd. has Rhyolite Ridge to the west of us by about 40 miles; and in Mexico, there's Bacanora's Sonora Project.
So the unique thing about these is they're in clays. Lithium contents range from a thousand to several thousand parts per million. They're quite extensive; large resources in each one of them. And it's a new type of deposit as far as lithium production goes.
Most of the lithium in the world comes out of either brines or hard rock pegmatites. So no one's really gotten into commercial production yet with lithium clays. But there's four right there that are at the feasibility stage now. So we're all moving forward and looking at different ways of extraction.
Gerardo Del Real: You have a market cap that's a fraction of the net present value from the pre-feasibility study that was published back in August of last year. Can we go into the pre-feasibility study a bit?
And then, let's get into what the approach will be moving forward as far as development. And you and I joked off air that I had a lot of questions regarding NDAs. And so I want to make sure that listeners and readers are aware that we joked that... The first rule of Fight Club is you don't talk about Fight Club!
Dr. Bill Willoughby: Right!
Gerardo Del Real: I know the NDAs prevent you from discussing a lot of the questions that I received. But we will get into... I would like to get into... the mine's state moving forward. Do you plan on developing this on your own? Are you open to a potential joint venture?
But let's talk pre-feasibility study. Again, you're trading at a fraction of the net present value. Can you walk me through that a bit?
Prefeasibility Study Results (August 2020)
After-Tax Cash Flow Analysis (US Dollars)
|Internal Rate of Return (IRR)
|Net present value (NPV 8%)
|Base case price for lithium carbonate
15,000 tpd for 40 years
|Average production lithium carbonate
|Capital Cost Estimate
$493 million over 2 years
|Net Lithium Recovery
|Operating Cost for Lithium
Dr. Bill Willoughby: Yeah. Well, you would expect to not be fully valued at your NPV on a project anyway. Where we're sitting today is reasonable in my view of where we are right now and where we're going to go forward. So what we designed on the project was a mine that would produce about 27,000 tonnes a year of lithium carbonate or lithium carbonate equivalent.
Our goal is to produce lithium hydroxide monohydrate out of the project. So that's an end product we want to attain. But our production rate was 27,000 tonnes in the PFS; that was based on mining 15,000 tonnes a day. So a relatively small-ish mine as far as excavation goes.
One of the benefits of our project; it's flat lying, it's right at the surface. There's barely any overburden on it, and what overburden we have is like a veneer of gravel. So it lends itself to a really low strip ratio. It’s a clay; it doesn't require drilling and blasting. So you can excavate it with an excavator, throw it on a conveyor, and take it to a mill.
The mill is going to be acid bleach extraction; either sulfuric acid or hydrochloric acid. We are looking at the latter right now as an option. But probably that's the first thing we're going to look at going forward is the extraction using hydrochloric acid in our pilot plant program.
But from the plant perspective, it's fairly straightforward. We do leach extraction, get the lithium into solution, separate the solids out from the liquids. And then from there, we go into a direct lithium extraction process, most likely using some form of ion exchange of membranes in reverse osmosis to get to the point where we've got a solution, which we can then concentrate and make a lithium product from.
So all of the basic parts of it look fairly straightforward to us. And what we're engaged in right now is working towards a pilot plant program, which will demonstrate this on a larger scale than what we've done in the past.
Gerardo Del Real: Do you have a timeline for those pilot plant results? I know a gentleman, Stuart Semple, wrote in and asked what the timeline looked like and the same for a feasibility study.
Dr. Bill Willoughby: Yeah, well, my timeline is always as fast as possible. And the very first thing we want to do is... we do have a metallurgical facility space in one leased south of Beatty. It's actually a gold refinery, so it's already permitted and has chemical permits for the materials we want to handle there. It's a little ways from the project but it's a reasonable distance. So we can bring down our bulk sample and test it there.
Then, we've already started the process of ordering up some equipment for it. We've already got the thickeners ordered and they're being refurbished at this moment in Winnemucca. So things are moving along. Hopefully, we get this thing put together sometime in the space of around May or so. And then, have her up and running, our pilot plant program, during the summer.
Path to Production
|H1 - 2021
Complete Study on Chloride Leach
Conduct Pilot Plant Test Program
Submit Plan of Operations
Begin Environmental Impacts Statement
|H2 - 2021
Secure Water Source
Complete Feasibility Study
Prepare Plan of Operations
Obtain Record of Decision
Being Project Construction
Gerardo Del Real: Excellent. And given your track record, are you looking to build this yourself, Bill; you and the team? Or is monetizing it an option with an attractive enough offer?
Dr. Bill Willoughby: Yeah, down the road. I think we don't have a For Sale sign on us right now. We're looking at the production scenario and what we can do to advance it. We're obviously open to other parties coming in, taking a look and, say, joint venturing with us — particularly if they have things to offer.
But right now at this point, we're carrying forward as though we're going to take it all the way to production, which my team is completely capable of doing.
Gerardo Del Real: You just closed a financing for nearly C$20 million; an oversubscribed financing, I should mention. How do you plan to allocate the funds here?
Dr. Bill Willoughby: Oh, that's definitely going into the pilot plant program first and foremost. We've got some things to do on water supply and acquisition. So we'll take a look at that and see if we can make progress there. And, basically, we've just got a nice treasury right now to do the work that we've always wanted to do.
We've been at this lean junior company stage quite a while. But now with this financing, which I have to say thanks to PI Financial for carrying us through that. That was great; their team did a great job. Our team worked really hard on getting this financing closed. It puts us, probably, in the best financial position Cypress has been in for quite a while. So I'm quite happy with where we're sitting today.
Gerardo Del Real: Fantastic! You answered my next question. I was going to ask you about the water. But it sounds like you have your finger on the pulse of that. And it sounds like that's likely something you can't comment on right now as well, right?
Dr. Bill Willoughby: Exactly. You don't just sort of show your cards while you're at the table.
Gerardo Del Real: Agreed! Bill, it sounds like there's an exciting couple of quarters ahead of us. Again, I don't believe that the electrification of everything is a fad or something that is going to go away anytime soon, especially with, frankly, we have government mandates now to go greener, right, and a pivot towards electric.
So I think you're in the sweet spot of the cycle. Is there anything else that you'd like to add?
Dr. Bill Willoughby: Oh, I think that was good. Every day, you see something new coming out on the EVs. I recently saw a Ford Mustang and it was an all-electric. So I think it is here to stay, and it's a great place to be for where our project is. So all of these cards seem to be lining up for us.
Gerardo Del Real: Agreed. Sir, thank you so much for your time. I'm looking forward to having you back on as you check the boxes off here this year. Quite a list!
Dr. Bill Willoughby: Excellent!! Yeah, thank you for the time. Appreciate it and thank your readers too.