Lithium Plus Minerals has outlined a six-year underground direct shipping ore operation at Lei with a post-tax NPV of A$325 million and initial project capital of A$87.7 million. The attractive economics remain dependent on approvals, funding, resource conversion and a lithium price assumption that is not secured by a binding contract.
- A$325 million post-tax NPV and 75.4% IRR
- 3.52Mt six-year Production Target at 1.37% Li₂O
- A$87.7 million initial project capital, excluding A$129.6 million sustaining capital
- 100% of Years 1 and 2 production classified as Indicated
- Environmental approval targeted for Q1 2027
Lei study sets out a low-capital DSO development
Lithium Plus Minerals Ltd (ASX:LPM) has put a sizeable economic case around its Lei lithium project in the Northern Territory, forecasting a post-tax NPV of A$325 million, a post-tax IRR of 75.4% and payback 1.8 years after first production. The proposed operation would mine underground, crush and screen ore on site, then haul it about 80 kilometres to Darwin Port for export.
The Scoping Study proposes a six-year mine life producing 3.52 million tonnes of direct shipping ore at an average grade of 1.37% Li₂O. Mining would ramp towards a target rate of 750,000 tonnes a year, with contractors supplying the underground fleet and mobile crushing equipment. That model keeps initial project capital to A$87.7 million, including a 15% contingency, although sustaining capital is forecast at a further A$129.6 million over the life of the mine.
The study builds on the Lei resource upgrade, which increased the resource to 5.22Mt at 1.50% Li₂O for 78.42kt of contained Li₂O. The study mine plan schedules 57% Indicated and 43% Inferred material by tonnes and contained lithium, but all production in Years 1 and 2 is drawn from Indicated resources. Indicated material accounts for 88% of cumulative production through Year 3 and 75% through Year 4.
The lithium price assumption carries the main valuation risk
Lithium Plus has assumed a DSO price of US$350 a tonne on a 1.5% Li₂O basis, translating to an average realised price of about A$458 a tonne CIF China at the mine plan’s forecast grade. The company says the assumption is supported by recent transactions in the Darwin region and published grade-banded assessments, but DSO in the relevant 1% to 2% Li₂O range has no recognised Western benchmark.
The sensitivity analysis makes the dependence clear. A 20% reduction in the assumed DSO price lowers pre-tax NPV from A$466 million to A$251 million, while a 20% increase lifts it to A$682 million. A combined downside case involving 20% lower revenue and 20% increases in operating and capital costs still produces a pre-tax NPV of A$139 million, according to the study, but that remains a modelled outcome rather than a contracted return.
Approvals and financing now stand between study and construction
Lei has a granted 20-year mining lease and a proposed export route through Darwin Port, where Lithium Plus has a non-binding heads of agreement with Darwin Port Operations. It also has a non-binding offtake memorandum with Canmax covering 50% of Lei DSO and spodumene concentrate. Neither the port arrangement nor the offtake framework is a binding operating or funding commitment.
The company has submitted its Supplementary Environmental Report and is targeting environmental approval by the end of the first quarter of 2027. A separate environmental mining licence is required before mining can begin. Lithium Plus is targeting a Pre-Feasibility Study, a maiden Ore Reserve and project finance before a Final Investment Decision in the second quarter of 2027, with construction modelled to start in the third quarter.
The Scoping Study is preliminary, with capital accuracy targeted at plus or minus 30% and overall study accuracy stated at minus 30% to plus 50%. No Ore Reserve has been declared. The next phase will need to test underground ground conditions, ventilation, water management, contractor costs and the conversion of Inferred material, while the company also weighs ore sorting that could improve product grade and potentially reduce the Northern Territory royalty rate.
Bottom Line?
Lei now has a compelling preliminary economic case, but the next valuation test is whether Lithium Plus can convert the price assumption, non-binding commercial arrangements and resource inventory into an approved, financed Ore Reserve-backed project.
Questions in the middle?
- Can Lithium Plus secure project funding without materially diluting existing shareholders?
- Will environmental approval and the subsequent mining licence arrive in time for the targeted 2027 construction schedule?
- How much of the 43% Inferred component can drilling convert before the Pre-Feasibility Study and maiden Ore Reserve?