Ghana’s planned first lithium mine can trigger West African exploration

The Ewoyaa project, where Kolff targets first lithium production in the second half of 2024, can help Ghana achieve economic diversification away from gold, he says from Australia. “Everyone has the view that Ghana is a gold destination,” but the country and the region are underexplored with further lithium discoveries waiting to be made, he says.

Lithium is needed for the batteries in electric vehicles, and is also used in energy storage and consumer electronics. Tesla CEO Elon Musk has called for more entrants into lithium refining, calling the business a “license to print money.” Rystad Energy analyst Susan Zou has said the real problem is in terms of supply. The global known lithium mine capacity is about 25% short of the processing capacity of lithium carbonate and hydroxide in 2025, Zou estimates.

That shortfall means West Africa can play “a big role in a global decarbonised future,” Kolff says. The Ewoyaa resource was discovered by the company in 2016, 800 metres from Ghana’s national highway. Atlantic Lithium holds a combined 1,334km² of exploration licenses across Ghana and Côte d’Ivoire.

• Kolff hopes to secure a mining license from Ghana’s government in 12 months, and plans to publish an updated resource estimate late this year or early in 2023.
• The license would enable the company to break ground at the end of 2023, with the mine taking about 12 months to build.
• “It’s more of a quarry than a large-scale mine” and exploration drilling continues outside the scope of the current resource estimate, Kolff says.

A scoping study shows a life of mine revenue exceeding $3.4bn. Production could start as soon as the end of 2023 if the company decides to ship the pegmatites at the site without processing them into lithium.

That would allow faster cashflow generation with supplies being dispatched while the mine is still being built, Kolff says. The decision will be driven by pricing, with Kolff adding that he expects the current imbalance between supply and demand will still exist next year.

Cost increase

Atlantic Lithium, formerly called IronRidge Resources, trades on London’s Alternative Investment Market (AIM) and this week started trading for the first time on the Australian stock exchange. About a third of the company’s shareholders are in Australia, and the market tends to value lithium stocks more highly than the more “generalist” AIM, Kolff says.

Kolff, a former CEO of diamond explorer Tawana Resources, was appointed interim CEO in March following the death of Vincent Mascolo. No decision has been made on the timetable for appointing a permanent CEO.

The project is being co-funded by NASDAQ-listed Piedmont Lithium in the US, which has an offtake agreement for 50% of production and also owns 9.4% of Atlantic Lithium. The plan is to use the deep-water port at Takoradi, which is 110 kilometres from the project, to ship to Piedmont’s Tennessee plant.

Piedmont has agreed to provide $70m of capital expenditure to build the mine plus half of any cost overrun. The current cost estimate has risen from $70m to $125m, with $27m of the increase due to Atlantic Lithium’s decision to bring crushing in-house rather than outsourcing.

• That decision will increase operational efficiency, Kolff says.
• But half of the total cost overrun has to be found by Atlantic Lithium. The company has about $18m in the bank meaning that about $10m needs to be found, Kolff says.
• Half of the offtake has yet to be committed, giving scope to fund the overrun, he says. At the moment there is no need to dilute shareholders, though raising equity remains an option, he adds.

Bottom line

Lithium has the potential to reduce Ghana’s reliance on gold and turn it into a supplier of critical materials.