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Rhyolite Ridge: Investing in the future

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A lot has been happening with the Rhyolite Ridge lithium/boron project in recent months.

“On March 31, U.S. President Joe Biden announced plans to invoke the Defense Production Act to provide hundreds of millions in new subsidies for the mining of minerals critical for the wind, solar and electric vehicles industries. This increased political focus had already been felt by ioneer through the quarter with a clear shift in momentum for the Rhyolite Ridge Project,” ioneer Ltd. Managing Director Bernard Rowe said in the company’s report on the first quarter of 2022.

“We are encouraged by the pace of progress, the strong inbound enquiry from customers and maturing offtake negotiations, the clearer path to publishing of the Notice of Intent and start to the NEPA process. We anticipate a busy period of news flow over the balance of this year as real strides are made on each of the key workstreams as we near a final investment decision aligned to full project permitting.”

The day after the first quarter report was released, we visited with Rowe for an update on many aspects of the project, including permitting, the timeline, funding, and the rare Tiehm’s buckwheat that grows on the project property.

The Rhyolite Ridge project is about 40 miles southwest of Tonopah in Esmerelda County. Ioneer has stated that it is the only known lithium-boron deposit in North America, and one of only two known such deposits in the world. It is a large deposit which the company has said is expected to produce enough lithium to supply approximately 400,000 electric vehicles annually.

Permitting

Ioneer submitted its Project Plan of Operations to the Bureau of Land Management in May 2020, and in August 2020 the Plan of Operations was deemed complete and was formally accepted by the BLM.

The following month, University of Nevada, Reno personnel under the direction of the Nevada Department of Conservation and Natural Resources conducted a survey of the Tiehm’s buckwheat on the Rhyolite Ridge site and found a significant number of the plants had been destroyed. Studies indicated that at least 50% of the plants were damaged or destroyed, and this was the result of a herbivory event – the plants had been eaten by rodents, apparently ground squirrels.

Following that event, and after further discussions about the buckwheat plants, ioneer decided to work on a revised plan of operations. The original plan called for moving some of the buckwheat plants, but with the revised plan none of the plants will be moved.

Rowe said the primary change in the revised plan is that the mine now completely avoids the buckwheat, “but given that we were making revisions, we also took the opportunity to update some other parts of the plan as well.”

“We’re very close to resubmitting that revised plan of operations. The bulk of it remains exactly the same as what we drafted a couple years ago.”

“We think that with that plan of operations revised we would expect it fairly quickly to flow into the NEPA process, which culminates in a record of decision, which is the third permit that we need. We have the other two permits relating to air and water that were issued by the state. The third is the critical one that would allow us to commence construction.”

Timeline

Ioneer had been hoping to begin construction of Rhyolite Ridge by the end of this year.

Ioneer finished a feasibility study for the Rhyolite Ridge project around April 2020, and engineering work has continued since then, so from an engineering standpoint the project should be ready to go later this year.

“I’m confident that we will have the engineering and the funding in place to be able to commence construction by end of this year,” Rowe said.

However, with the revision of the plan of operations the permitting will take longer, so the project timeline has been changed.

Rowe said it generally takes the BLM about 12 months to process a plan of operations and issue a record of decision. The process could be a little faster for ioneer’s revised plan of operations, since it is similar to the original plan of operations which was submitted two years ago. In any case, ioneer is anticipating that with the submission of the revised plan of operations in the first half of 2022, they could receive the record of decision in the first half of 2023.

Construction could then begin in the first half of 2023. Construction is expected to take about 24 months, with about 400 to 500 people working on the construction. When the mine operations begin, ioneer plans to have about 200 to 300 people working at the mine.

Funding

Ioneer announced in September 2021 that they reached an agreement with international mining company Sibanye Stillwater Ltd. to establish a joint venture to develop Rhyolite Ridge. Sibanye Stillwater will contribute $490 million toward funding the project, which Rowe said is about 60% of the total capital required. Sibanye Stillwater and ioneer will each be 50% partners in Rhyolite Ridge, and ioneer will be the operator.

“They’re an excellent partner for this project,” Rowe said. “They’ve already got operations in the United States.”

Sibanye Stillwater’s Stillwater and East Boulder mines southwest of Billings, Montana are the only known significant source of platinum group metals in the U.S. and are the highest grade PGM deposit known in the world, according to the company.

“They’ve got a lot of expertise that ioneer will draw on as we move into production,” Rowe said. “They’re already a major supplier to the auto industry because platinum gets used in catalytic converters, along with palladium and other things that they produce.”

Ioneer is pursuing several potential avenues for the remainder of the funding for the Rhyolite Ridge project.

More than a year ago ioneer applied for a $500 million loan under the U.S. Department of Energy’s Advanced Technology Vehicles Manufacturing Loan Program. The program, which was authorized by the Energy Independence and Security Act of 2007, has $17.7 billion in loan authority.

The DOE’s Loan Program Office determined that ioneer’s loan application was “substantially complete,” and in December 2021 ioneer was invited into the LPO’s due diligence process.

“To my knowledge we are the only lithium company in the United States that’s been invited into the due diligence part of that program,” Rowe said. “That’s where the Department of Energy brings in external consultants, engineering and accounting and markets consultants, environmental and permitting consultants come in and do due diligence on the project and the company.”

“We’re right in the middle of that right now.”

“As we move forward over the coming months, we would hope to have an indication of whether we’re likely to receive that funding support.”

If ioneer does receive the ATVM loan, “combined with the investment from Sibanye, that would mean the project would be fully funded,” Rowe said.

In case ioneer does not receive the ATVM loan, Rowe said, “we’re working closely with Sibanye and Goldman Sachs to make sure we’ve got alternatives.

“One of the alternatives would be more traditional bank financing. But when you’ve got a partner like Sibanye with a strong balance sheet, and significant positive cash flows from operations, then of course, that opens the door to other financial instruments as well.

“So we’re looking at all of those options. But our top priority is with the Department of Energy’s loan programs office, and that’s progressing well.”

Future potential

Ioneer has said the Rhyolite Ridge Mine is expected to produce an average of about 22,000 tons of lithium and 175,000 tons of boric acid per year over a mine life of 26 years.

Rowe said these might be conservative numbers.

“It’s a large deposit, and it actually has got a lot more that’s already been drilled that’s not even in the mine plan, so it could go well beyond 26 years,” Rowe said. “We expect that it will go well beyond 26 years. It could easily be twice that. So it has the potential to be a 50-plus year operation.”

“Given the projected demand for lithium, particularly in the United States where we have no domestic production currently that goes into electric vehicles … we’re expecting that we will be expanding this operation in the future. It could well be that we will be looking at doubling or down the track even tripling the production of lithium. It’s possible. So 22,000 tons, I would look at that as a starting point for this deposit.”

Rowe said the possible future expansions will not have environmental concerns because the expansion areas are completely outside the area where there is Tiehm’s buckwheat.

“The demand for lithium is enormous,” Rowe said. “We could sell our material five times over with all the people that we’re talking to on uptakes.”

U.S. supply chain

Rowe said they are being very selective about which companies they will sell their lithium to.

“We’re saying this material is going to be mined in the United States and it’s going to stay in the United States, it’s going to be processed and refined in the United States, and it’s going to go into cars that are manufactured in the United States. That’s the direction our board has given us and that’s what we’re implementing.”

Lithium is needed for batteries for electric vehicles and for power storage for renewable energy sources, Rowe said, but unfortunately today the way the lithium supply chain is set up is not very environmentally friendly.

“The material gets mined, and then it gets shipped around the world for processing and refining. So even if the mine is very efficient, you end up with this large environmental footprint simply because you’re having these incredibly long logistical supply chains, shipping things around the world, and big tonnages of materials.

“The lithium industry is not good in this respect. Because when you look at where the raw materials are today, it’s Chile and Argentina and Australia. That makes up about 90-odd percent of the world’s lithium, from those three countries or those two regions.

“Do we make cars in Chile and Argentina or Australia? No, we don’t. Do we refine any lithium in those countries? No, we don’t.

“What happens to it? It gets loaded as a raw material, in the case of Australia, as spodumene. Which is only 6% lithium, and 94% waste. It gets loaded into ships and sent around the world, mainly to China.

“So you’ve got these very large CO2 footprints as a result of these very long supply chains.

“When we look at Rhyolite Ridge, we want to keep the lithium in the United States, from a strategic perspective, but also from an environmental footprint perspective. And where’s the best place to process it and keep it? As close as possible to the mine. So if there are customers in Nevada, they represent a really attractive option for us to supply directly to them. We’re talking about a couple of hundred miles, not tens of thousands of miles around the world.”

As ioneer talks with companies interested in using lithium produced by the mine, they have completed several agreement so far.

A Memorandum of Understanding with Dragonfly Energy, a lithum-ion battery technology company based in Reno, was announced in December 2020. An MOU with NexTech Batteries, a lithium-sulphur battery technology company based in Carson City, was announced in March 2022. In June 2021 ioneer announced a binding offtake agreement with EcoPro Innovation Co Ltd, a cathode supplier for battery manufacturers. In February 2022 that offtake agreement was increased to 7,000 tons of lithium per year.

“With ioneer as a partner, we look forward to contributing to the electrification of transportation in the USA,” EcoPro Innovation President Anthony Kim said in the announcement.

“We want to support the industry as it grows and develops in Nevada to create jobs in Nevada,” Rowe said. “We think there’s a tremendous opportunity for that to happen.

“Nevada’s got the resources in the ground, there’s no question about that. So we can either dig them up and send them outside the state, and even outside the country for processing and refining and incorporation into batteries, or Nevada companies can get involved. And we’re really, really keen to support those Nevada-based companies that want to do that. NexTech and Dragonfly are two really good examples of that.

“We will do whatever we can to strongly support the development of those industries within Nevada to create jobs and technology and intellectual property, so that this is an economic opportunity for the long term for the state, and not just a short-term thing.”

“And you can expect to see from us at least one and probably two more binding uptakes on the lithium before the end of June. They will be directly into the U.S. supply chain for electric vehicles manufactured in the United States.”

Ioneer is based in Australia, but with its U.S. focus the company is working on getting a Nasdaq listing. Rowe, who founded the company and spends about half his time in Australia and half in Nevada, said they have been working on the Nasdaq listing for a while and expect it to come through this quarter.

“The reason for doing that is, yes, we’re an Australian company, we’re listed in Australia, but 90% of our team is in the U.S., and they’re mainly in Reno, in Nevada, and more than half of our directors are U.S. based, and our shareholder base now is about one-third U.S.”

“We’ve always stated, as this project develops … that it makes sense to transition this into more of a U.S. company. So that listing on the Nasdaq is part of that process. So it’s important for us.”

Many projects

There are a lot of lithium projects in the works around the country nowadays, with some of them proposing to produce quite a bit of lithium. Lithium Nevada’s Thacker Pass is planning to produce around 60,000 metric tons of lithium a year. Berkshire Hathaway’s Cal Energy is looking at ways to extract lithium from the superheated underground brine at the Salton Sea in Southern California, and the company said it may be able to produce 90,000 metric tons a lithium a year from its Salton Sea operations by 2027.

But Rowe said he thinks it will take time for some of these projects to get rolling.

“Some of them are more developed like us and our friends at Thacker Pass. And some of the other projects are, in my view, at a much earlier stage.”

“Because these deposits are not all the same. They’re not like gold mines or copper mines where you just use the same process and you get your material. Every deposit is different, and every deposit needs almost like a bespoke process for the extraction and refining of the materials at the mine site. So that takes time and money.”

“We’ve spent $110 million, $120 million on this project over the last six years. We’ve done all that test work, we’ve run pilot plants, we’ve had Fluor engineering working alongside us, and SNC-Lavalin as well. Top names in the engineering world. We’ve had multiple parties doing due diligence as part of the partnering that led to the deal with Sibanye.

“So we’ve done a lot of work, and that work has been carefully scrutinized, and we’re very confident around our process and our flow sheet.

“Whereas I think some of the other deposits out there, they still have a lot of that research phase of their work to complete before they can move into the construction and full-scale commercial production that we’re talking about. They will come in time.”

Recycling

Many people looking at the lithium market predict that although the supply curve will rise sharply in the years ahead, the demand curve will rise a lot faster than the supply.

However, many companies are also working on lithium recycling. JB Straubel, who left Tesla to co-found Redwood Materials, a battery recycling company, has said that ultimately recyclers will be able to supply the majority of the market’s need for lithium.

Rowe said he believes this won’t happen for quite a while.

“Recycling will play an increasingly important part of the supply chain, there’s no question about that,” Rowe said. “However, we’re a long way from having enough materials to recycle.

“I started on this project six years ago, and I think the world was producing 250,000 tons of lithium. So we’ve gone from 250,000 to 500,000 tons over six years.

“The demand projection for 2030 is multiples of millions of tons. So you would need 10 years of past production and recycle all of it just to get enough for one year.

“It’s not going to fill the gap in the shortage of supply. So I’m in the camp of thinking there will be a gap between supply and demand well into the future.”

Insane prices

With the anticipation of the huge increase in demand for lithium to produce batteries, the price of lithium has skyrocketed in the past year.

On April 8 of this year, Elon Musk tweeted, “Price of lithium has gone to insane levels! Tesla might actually have to get into the mining & refining directly at scale, unless costs improve.

“There is no shortage of the element itself, as lithium is almost everywhere on Earth, but pace of extraction/refinement is slow.”

The tweet was accompanied by a chart showing the price of lithium climbing steadily from $4,450 a ton in 2012 to the insane level of $78,032 a ton in 2022.

The Rhyolite Ridge Feasibility Study said the mine’s all-in-sustaining cost to produce lithium will be about $2,500 a ton, after taking into account the credit offset from the boric acid.

So if a mine gets rolling and can produce lithium at $2,500 a ton while the price of lithium is $78,000 a ton, there could be big profits.

Rowe said he had seen the lithium hydroxide and carbonate prices go over $80,000 a ton in recent weeks, but he pointed out this is a spot price. Most lithium producers are selling their lithium under 12-month contracts, and those contract prices may be closer to the $40,000 range.

The dizzying changes in prices are the result of the current small market, Rowe said, and things should balance out as more lithium mines begin to come online.

“Most banks and analysts are predicting prices that are probably going to be in the high teens,” he said.

“At the end of the day, it’s a very difficult thing to predict. So we’re more focused on keeping our costs low, so that it doesn’t matter then whether the price is $10,000 or $20,000 or $30,000, we will be profitable under all phases of the price cycle.”

The buckwheat

The possible biggest obstacle to the Rhyolite Ridge project could be Tiehm’s buckwheat, a wildflower with yellow blossoms which apparently grows nowhere else in the world except on a 10-acre patch of land on the Rhyolite Ridge property.

On Oct. 1, 2021 the U.S. Fish and Wildlife Service announced a proposed rule to list Tiehm’s buckwheat as endangered under the Endangered Species Act.

On Feb. 2, 2022 the Fish and Wildlife Service proposed designating a 910-acre area as critical habitat for Tiehm’s buckwheat.

“I’m thrilled that the Fish and Wildlife Service has recognized the existential threats to Tiehm’s buckwheat and provided badly needed habitat protections,” Patrick Donnelly, the Great Basin director at the Center for Biological Diversity, said at the time.

In an earlier interview with Mining the West, Donnelly said attempts to propagate the Tiehm’s buckwheat in other areas had failed.

“They all died, so ioneer doesn’t have a plan,” Donnelly said. “Their plan is bunk and doesn’t reflect the consensus of the scientific community.”

“There is no compromise. They cannot hurt the buckwheat.”

Rowe said he strongly disagrees with the statement that there is a scientific consensus that ioneer’s plans can’t save the Tiehm’s buckwheat.

The public comment period for endangered listing and the critical habitat listing has closed, and Rowe said the Fish and Wildlife decisions are expected by September.

“We’re expecting it to be listed, and we’re expecting it to be critical habitat around the plant and we’ve taken that into account,” Rowe said.

“A primary reason for designating the critical habitat is around protection of insect pollinators, and we’re fully supportive of that. So we will avoid the buckwheat and make sure that the population is protected from weeds, from the herbivory, any threat, fire, human interaction, we will incorporate that into our project plan.

“And we will also enhance the pollinator population out at the site to ensure that those plants are preserved and protected.”.

“We’re also going to be having a major program around seedling growth.”

Rowe said he knows of three areas in Nevada where Crosby’s buckwheat, a relative of Tiehm’s, was moved and seedlings were planted and there was successful propagation of the plant.

“Forty years later you can go out there, we’ve been out there, and those plants are still growing today. And they’ve propagated, naturally, they’ve expanded.”

“So there’s lots of evidence to show that it can be done.”

With such a small population, Rowe said, Tiehm’s buckwheat is “under significant threat from a number of different forces.”

“In our opinion without doubt the most significant is climate change. That’s what drives the droughts that we’re seeing.”

“Probably that has contributed to these herbivory events, which have been described before, in Nevada, on buckwheat by the BLM. This is not the first time this has happened, but they’re probably going to become increasingly common events.

“So rather than just simply saying, well, there are only 10 acres of these plants and we’ll fence them off and no one’s allowed to touch them, what we’re going to be doing is growing a lot more of these plants and getting them to grow in surrounding areas. So that in the future we can say that there’s not 10 acres, there’s 50 acres or 100 acres or 200 or 1,000 acres of these plants growing, which will make them much more resilient into the future, particularly in the face of climate change.”

“Just sort of pointing at mining and saying, oh, it will wipe out the plant, we strongly deny that. In actual fact, we see ourselves as the solution. We’ll spend the money, we’ve already been doing it, we’ve spent well over $1 million already researching and understanding this plant. And it’s through good science, that’s how you’re going to ensure that this plant survives into the future. Not by just putting a fence around 10 acres and saying it’s protected. It’s not.”

Rowe said the recent herbivory event may have happened because the wet years from 2015-17 caused an explosion in the number of small animals in the area, and then the return of drought conditions caused some of the animals to become desperate for a source of food.

“So of course they’ll go and eat things they otherwise wouldn’t perhaps when there are alternatives.”

“We do have to do something to address climate change,” Rowe said. “I think nearly everyone agrees on that. And the way to do it, as we all know, is that we have to decarbonize, and we have to take these steps of making the materials to be able to do that.

“But here, it’s actually a bit of a win-win in my view because you’re going to produce the raw materials, but some of the money that’s generated from producing those raw materials for electrification are actually going to be used to get Tiehms’s buckwheat on a pathway to where it can be sustainable for the long-term.”

“And it’s very doable. All the scientists that I speak to, specialists, they all say that this is an issue that can be relatively easily managed through good science and an appropriate program of protection and expansion of the population.”

“If the legitimate concern is around the plant, then we’re taking the appropriate steps to protect the plant, avoid the plant, and do the research and spend the money that no one else at this stage has been willing to do. So I think that the mine and the plant can happily coexist. That’s what we’re proposing to do. And if we demonstrate that we can do that, then I don’t see there should be any reason why anything gets held up.”

Rowe commented that there was some small-scale boron mining in the Rhyolite Ridge area in years past, and looking around it looks like there are actually more of the Tiehm’s buckwheat plants in the areas where there is some ground disturbance from the old mining. So ioneer had scientists do a study with drone photography.

“We counted every plant … and there are 7 to 10 times more plants growing immediately in and adjacent to the areas where there was disturbance. So it actually enhanced the population, the past exploration and mining disturbances.”

Rowe said they won’t do any disturbances to the Tiehm’s buckwheat with their mining, but it’s good to know as much as possible about the plant and what might be beneficial and detrimental.

“People have said it needs lithium and boron to grow in the soil, and that’s not true. In fact, the University of Nevada, Reno has grown it very successfully in alluvial soil that doesn’t have any lithium or boron in it. It actually grew better in that material than it did in any of the soils that the University tried to grow it in that has lithium and boron in it. So it can grow in areas where there is lithium and boron, but it doesn’t seem to need it, it just can cope with it.

“There is a lot of misinformation out there on where this plant will and will not grow.

“We don’t have all the answers at all, but we’ve at least been investing the money to research and understand the plant so that we can have effective outcomes. And if it shows that we can’t get it to grow anywhere else, then we can’t get it to grow anywhere else. Then we’re going to use some other strategies. But at the moment the evidence is strongly in favor of being able to grow it from seedlings, plant it into the ground in other areas, and it will grow.” 

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