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Tuesday October 27, 8:55 am Eastern Time
Company Press Release Raymor Resources Ltd.: Lithium Project
Partnership With Soquem Inc. Subsidiary of SGF Mineral Inc.
QUEBEC, QUEBEC--Raymor Resources Ltd. is pleased to announce the signature of a partnership agreement with SOQUEM INC. (''SOQUEM''), a subsidiary of SGF MINERAL INC., itself a subsidiary of SOCIETE GENERALE DE FINANCEMENT du Quebec, regarding the Lamotte Property which is wholly owned by Raymor. The deal has been approved by the boards of directors of the concerned companies as well as by the Alberta Stock Exchange.
The agreement gives SOQUEM an option to acquire:
An 10 percent undivided interest in the Property for the payment of 25 000 $ CDN to Raymor, as well as $425,000 in expenses for work on the Property under SOQUEM's management, by no later than May 31, 1999. As manager, SOQUEM will do metallurgical and characterization tests with a view to the production of commercial concentrates of spodumene, mica, and feldspath, the pertinent market studies, as well as a conceptual prefeasibility study for the project in order to confirm the results already obtained by Bumigene inc., a firm of mining experts.
An additional 10 percent undivided interest in the Property for the payment of 666,650 $ CDN in expenses for work on the Property under Raymor's management, for a total investment of 1 116 650 $ CDN. As manager, Raymor will prepare and submit for SOQUEM approval a work plan for completing the feasibility studies on development of the mine and construction of a processing plant for spodumene and its byproducts (mica and feldspar), as well as an environmental impact assessment in order to obtain the necessary permits.
If SOQUEM fulfills the above conditions, it will have the right to:
- Form a joint venture with Raymor; SOQUEM would hold a 10 percent and Raymor a 90 percent undivided interest in the enterprise; or,
- Waive its option for a 10 percent stake in exchange for 750,000 Raymor common shares; or
- Notify Raymor of its intention of acquiring an additional 10 percent undivided interest in the Property and eventually forming a joint venture with Raymor in which it would hold a 20 percent and Raymor a 80 percent in the enterprise.
The agreement gives Raymor the right to redeem SOQUEM's interest at double the amount invested by the latter within 60 days following completion of the feasibility studies.
The transfer of up to a 20 percent interest in the Property and the entire lithium project to a partner such as SOQUEM will ensure Raymor of the substantial investment (30 percent) required to finance every phase of the venture without substantially diluting its shares.
THE THREE-STAGE LITHIUM PROJECT
According to a technical/financial study conducted by Bumigeme Inc., an expert firm, last August as well as a recent market study by world-renowned industrial mining expert George C. Hawley, two studies commissioned by Raymor:
Phase 1, which will cost an estimated 18 M$ to $20 M$ CDN, involves starting an open-pit mine and building a production plant for spodumene and byproducts (mica and feldspar) with a capacity of 30,000 tons a year. This estimate includes the cost of all the necessary infrastructures. The feasibility studies will cost 1.1 M$ CDN. The ROI for this phase, based on a spodumene (over 5.2 percent Li2O) price of $200 US per ton, amounts to 25.35 percent with annual revenue totaling 8.7 M$ CDN. This does not include earnings from the sale of byproducts which will be assessed as part of the feasibility studies.
Phase 2, estimated at $18.5 million CDN, will primarily involve building a plant capable of producing up to 3,600 tons a year of high-grade lithium carbonate (over 99.98 percent Li2CO3) from spodumene to supply the world market, and a lithium metal production plant for Phase 3. The ROI for this phase, based on a price of 4.40 $ US per kilogram for high-grade lithium carbonate (over 99.98 percent Li2CO3), will be around 20 percent with revenue estimated at 21 M$ CDN per year.
The already attractive 20 percent ROI could easily be increased with Raymor's exclusive new process for producing very high-grade lithium carbonate.
Raymor's Exclusive Lithium Carbonate Production Process Raymor will begin testing a new process, to which it holds exclusive rights, for producing lithium carbonate with a very high grade of purity (over 99.98 percent Li2CO3) from spodumene. Based on initial laboratory estimates, the new process will reduce production costs by some 60 percent. If the estimated cost holds up, Raymor will produce very high-grade lithium at a much lower cost than with brine (Minsal, Chill) which represents the only possible serious competition.
Phase 3 remains to be defined by future studies. It will involve building a plant capable of producing up to 200 tons of metal lithium a year. At present, the cost is estimated at approximately 25 M$ CDN. Based on a price of $100 US per kilogram for lithium metal, revenue could amount to some 25 M$ CDN a year.
The feasibility studies for Phase 2 will begin during the feasibility studies for Phase 1 and be followed by those for Phase 3.
Lithium Market
Spodumene, Mica, Feldspath At present Canada's only spodumene producer is located in Manitoba. Recent studies indicate that the world market for the mineral is growing with major producers increasing their sales by 250 percent from 1994 to 1996. Moreover, 15 large users of spodumene in the glass and ceramics industry in Quebec and Ontario have been identified. Mica and feldspar, which respectively account for 5 percent and 15 percent of the ore, also represent a very interesting potential source of additional revenue because Canadian demand is presently filled by imports from the United States.
Lithium Carbonate
The world price for lithium carbonate now ranges from 1.76 $ to a maximum of 4.46 $ US per kilogram (sources: George Hawley, Mineral Pricewatch Review, Chemical Prices). Prices rose by 217 percent from 1993 to 1997, then dropped by 10 to 25 percent last year, and are expected to increase by 4.5 percent over the next ten years.
Lithium Metal
Experts predict a $500 million US increase in lithium metal sales over the next ten years. The metal is used primarily for batteries and aluminum alloys.
Key Facts about Raymor and the Lithium Project
- Raymor had 12.5 million outstanding shares as at January 1, 1998.
- Raymor is presently discussing a major project for completion of phase 3 of the lithium project with other partners.
- Drilling indicates that the reserves on the Lamotte Property could provide a supply of lithium for over 15 years (4.55 million tons at 1.07 percent Li2O).
- A compilation of recent drilling programs indicates potential reserves for an additional seven years (2.5 tons at 1.07 percent Li2O).
Lamotte Property
- The only known deposit in Quebec where an open-pit mine is economically viable.
- 100 percent owned by Raymor Resources Ltd.
- Surface area of 240 hectares.
- Reserves indicated by drilling: 4.55 million tons (1.07 percent Li2O) at a depth of 90 meters (suitable for open-pit mining) and another 2.5 million tons below 90 meters (300 feet).
- Numerous services nearby, a secondary road 0.5 km away, a natural gas pipeline, Hydro-Quebec power line and paved road. Moreover, the property is 20 km from the towns of Amos and Malartic, and 35 km from Rouyn-Noranda.
May 1996
- 30-ton ore sample taken from the property to produce spodumene and lithium carbonate at a Centre de recherche minerale (CRM) pilot- project plant.
June 1997
- The CRM submits its final report confirming the very high grade (over 99.07 percent Li2CO3) of lithium carbonate produced in the pilot tests and efficiency of the production process used. The lithium carbonate produced has the same characteristics as that formerly produced by Quebec Lithium (99.98 percent Li2CO3). Experts confirm that such a high grade could easily be achieved through continuous production.
July 1997 to September 1998
- Technical-financial study of the lithium project by Bumigeme Inc. and market study by George C. Hawley confirm the potential of the project.
- Active negotiations with various partners to sign an agreement covering all three phases of the lithium project.
September 1998 |
