Lithium Universe Advances Quebec Refinery with $779M NPV and Strategic Partnerships

Strong Economic Foundations Amid Market Challenges

Lithium Universe Limited (ASX: LU7) has delivered a compelling Preliminary Feasibility Study (PFS) for its Bécancour Lithium Refinery in Quebec, Canada, underscoring the project's resilience even in a subdued lithium pricing environment. The study projects a pre-tax Net Present Value (NPV) of approximately US$779 million at an 8% discount rate, paired with an Internal Rate of Return (IRR) of 23.5% and a payback period of 3.5 years. These metrics reflect a robust financial foundation for the refinery, which is designed to produce up to 18,270 tonnes annually of green, battery-grade lithium carbonate.

The financial modelling assumes conservative lithium prices, US$1,170 per tonne for spodumene concentrate and US$20,970 per tonne for battery-grade lithium carbonate, highlighting the project's viability even under cautious market forecasts. Operating costs are estimated at around US$3,976 per tonne, benefiting from Quebec's low-cost green electricity sourced from Hydro Québec, which also contributes to a 95% reduction in greenhouse gas emissions compared to traditional facilities.

Strategic Location and Proven Technology Mitigate Risks

Situated within the Bécancour Waterfront Industrial Park, the refinery benefits from strategic access to major transportation infrastructure, including proximity to the St. Lawrence River port and Canadian National Railway. This location advantage, combined with the use of proven Jiangsu Lithium Refinery technology, positions the project to overcome the operational challenges that have plagued other lithium conversion plants globally.

Lithium Universe’s approach leverages the successful Jiangsu plant’s flow sheet, equipment, and supplier relationships, minimizing technology risk and operational uncertainties. This strategy is particularly significant given the history of lithium conversion failures in North America and Australia, where unproven technologies and design issues have led to costly delays and underperformance.

Closing the Lithium Conversion Gap in North America

The refinery aims to address a critical supply chain gap in North America, where lithium conversion capacity is currently insufficient to meet the rapidly expanding demand driven by electric vehicle (EV) and energy storage growth. With North America projected to require 850,000 tonnes of lithium carbonate equivalent annually by 2028, the Bécancour facility’s capacity will contribute meaningfully to reducing reliance on foreign supply chains, particularly those dependent on China.

In addition, the refinery’s cost competitiveness is enhanced by the US and Canada’s 25% tariffs on Chinese lithium chemicals, which elevate the effective cost of conversion in China to approximately US$4,812 per tonne, compared to Bécancour’s estimated US$3,976 per tonne. This tariff advantage, coupled with logistical savings and green energy benefits, underscores Quebec’s potential as a trans-Atlantic lithium conversion hub.

Partnerships and Progress Towards Definitive Feasibility

Lithium Universe has formalized a strategic partnership with Servitank, a Quebec-based chemical logistics specialist. This collaboration aims to streamline the supply chain for critical process chemicals, reduce costs, and explore sustainable management of secondary products such as alumina silicate and sodium sulphate. The partnership is a key enabler for operational efficiency and sustainability at the refinery.

On the project development front, the Definitive Feasibility Study (DFS) is advancing on schedule, with 80% of supplier pricing secured and engineering designs tailored to site-specific conditions. Led by industry veteran John Loxton and overseen by lithium expert Dr. Jingyuan Liu, the DFS promises to refine capital cost estimates and risk assessments, paving the way for project financing and execution.

Funding and Corporate Developments

To finance the estimated US$494 million capital expenditure, Lithium Universe plans to invite one or two strategic equity partners to acquire up to 49% ownership at the project level. Concurrently, the company is engaging debt advisors and initiating discussions with financial institutions and government agencies to secure project funding. These efforts are critical to advancing the refinery from feasibility to construction.

The company also announced board changes, with the resignation of Mr. Gernot Abl and the appointment of Chief Financial Officer John Sobolewski as interim Company Secretary. These changes reflect a streamlined leadership focus as the company intensifies its development activities.