Lithium Americas Corp. (TSE:LAC) (OTCQX:LHMAF) said Monday it has completed a 3D brine numerical model, used to simulate brine extraction from its Cauchari-Olaroz lithium-potash project in Argentina, which confirmed the size and production capacity of the resource.
The model allows the prediction of brine flow within the salar, or salt lake, as well as of the mine life, the lithium grade depletion over time and reserves.
The company said the modeling is supported by geological, hydrogeological and geochemical data collected through field programs at the site.
"A 3D brine numerical model is the ultimate tool to fine tune the mine plan in a brine development resource," said president and CEO, Dr. Waldo A. Perez.
"The model has also supported many of the critical assumptions in our Preliminary Economic Assessment (PEA) including the size, quality and estimated productive life of the Cauchari-Olaroz resource estimate - one of the largest lithium brine resource in the world.
"We are very pleased that the model also indicates that due to the exceptional geological characteristics of our salar, we are expected to require approximately 50% of the production wells originally estimated in the PEA to put phase 1 of the project into production."
Results of the model will be displayed at the company's booth at the Prospectors and Developers Association of Canada Convention (PDAC) in Toronto, Ontario.
"We continue to add value to our project and to demonstrate the technical capability of our team. We expect to deliver the definitive Feasibility Study with reserves and a mine plan in Q2 2012," added Perez.
The company's Cauchari-Olaroz lithium project comprises a significant portion of two adjacent Argentinean salt lakes, Cauchari and Olaroz, covering 82,498 hectares located in the "Lithium Triangle" region of South America.
Cauchari-Olaroz is considered the third-largest deposit of lithium in the world. The property has a total lithium and potash resource of 8.0 million tonnes and 25.4 million tonnes, respectively.
Major automotive players Mitsubishi Corp and Magna International are shareholders of the company, in addition to them both having off-take arrangements with Lithium Americas.
In late 2011, Mackie Research said that the company was "on track to becoming a leading player in the lithium market".
Indeed, an April 2011 preliminary economic assessment (PEA) completed by ARA Worley Parsons defined an operation with an eventual operating capacity of 40,000 tonnes of lithium carbonate per year, having an operating cost of $1,434 per tonne - considered to be among the most competitive costs of any lithium operation in the world.
Looking forward, Lithium Americas said the planned milestones for this year include an NI 43-101 reserves estimation calculated by AquaResource Inc. in the first quarter of 2012, which will include the 3D model reported today.
The 3D model was developed by AquaResource, with the involvement of Dr. Mark King, the Independent Qualified Person for Lithium Americas.
The model included additional data collected since the previous resource estimate filed in December 2010, including geology, hydraulic testing and brine results from five pumping well arrays and four sets of salt lake boundary tests, as well as a water balance analysis, completed in 2011.
The upcoming reserve estimate will be derived from the simulation of a conceptual production well system. The model predicts that the grade of the pumped brine will remain above 600 milligrams per litre lithium for a period of at least 50 years.
The model also shows that an annual production rate of 40,000 tonnes of lithium carbonate can be achieved over a period of 40 years, without extracting brine from outside of the property boundary. The predicted duration for which it can maintain a production rate of 40,000 tonnes of lithium carbonate per year within the model exceeds 50 years, the company added.
Using data from the upcoming reserves study, ARA WorleyParsons is expected to deliver a definitive feasibility study in the second calendar quarter of 2012.
After the feasibility study, Lithium Americas expects to start detailed engineering in the third quarter, which is expected to be complete in nine to 12 months.
During the second half of the year, the company also expects the approval of an environmental impact statement - a type of permit necessary to begin construction and mining at Cauchari-Olaroz.
Other near-term milestones include the completion of a certification and qualification process for its battery-grade lithium carbonate, the re-assembling of a pilot plant at the project, and the closing of financing and off-take agreements with strategic parties, Lithium Americas said.