Lithium Universe (ASX:LU7) and the Bécancour Refinery as lithium prices rebound

Lithium Universe has revisited the economics of its Bécancour Lithium Refinery in Québec against a backdrop of a sharp recovery in battery grade lithium carbonate prices, following completion of a Definitive Feasibility Study in February 2025 at what management described as the trough of the recent lithium cycle, when spot prices had fallen to around and at times below US$10,000 per tonne.

Highlights

• Spot battery grade lithium carbonate prices have doubled over the past 3 to 4 months to around US$24,000 per tonne, materially above the DFS long term price assumption of US$20,970 per tonne.
• The Bécancour DFS delivered a pre tax NPV8% of approximately US$718m, an IRR of approximately 21% and a payback period of approximately 3.9 years, based on conservative pricing and cost assumptions.
• The refinery is designed to produce up to approximately 18,270 tonnes per annum of battery grade lithium carbonate using proven continuous processing technology derived from the Jiangsu Lithium Carbonate refinery.
• The project is strategically located within Québec’s battery materials ecosystem, supported by low cost hydroelectric power, established infrastructure and proximity to North American end markets.
•  The company has recommenced engagement with spodumene suppliers, downstream customers, government authorities and potential strategic and financial partners as sector confidence improves.

The February 2025 DFS was completed during a period characterised by global oversupply, inventory destocking and production curtailments across both mining and lithium conversion operations, conditions that had driven battery grade lithium carbonate prices to around and at times below US$10,000 per tonne.

Against this backdrop, Lithium Universe elected to continue advancing detailed engineering, site selection, environmental planning and stakeholder engagement for the Bécancour project, positioning the development to respond as market conditions normalised.

The subsequent recovery in lithium prices has been rapid, with battery grade lithium carbonate more than doubling from approximately US$11,000 per tonne to around US$24,000 per tonne over the past 3 to 4 months, exceeding the DFS long term price assumption of US$20,970 per tonne that underpinned the project’s economic modelling.

The DFS financial outcomes, which included a pre tax NPV8% of approximately US$718m, an IRR of approximately 21% and forecast annual EBITDA of approximately US$148m, were derived using conservative operating assumptions, appropriate escalation allowances and a capital cost estimate of approximately US$549m inclusive of contingency.

From a technical perspective, the Bécancour refinery is designed around a flowsheet based on continuous processing technology proven at the Jiangsu Lithium Carbonate refinery, one of the world’s established hard rock lithium conversion facilities, with a nameplate capacity of up to approximately 18,270 tonnes per annum of battery grade lithium carbonate.

This design approach was adopted to mitigate the technical and execution risks that have historically affected western conversion projects, while situating the plant within a jurisdiction offering low cost renewable power, established logistics and direct access to North American battery and electric vehicle supply chains.

Executive Chairman Iggy Tan said the recent price environment had validated the decision to progress the project through the downturn, stating that

“the recovery in lithium prices clearly validates the Company’s counter cyclical strategy. We deliberately progressed the Bécancour Lithium Refinery through one of the most severe lithium downturns on record… With current spot prices now trading well above our long term DFS price assumptions, the Company is well positioned to commence the next phase of project advancement.”

In operational terms, Lithium Universe has commenced renewed discussions with spodumene concentrate suppliers, downstream lithium carbonate customers, government authorities and potential strategic and financial partners, while continuing to pursue long term offtake arrangements to secure feedstock and underpin future conversion capacity at Bécancour.

These engagements are taking place in a materially improved market environment compared with conditions prevailing at the time the DFS was completed.

The recovery in lithium pricing and the strengthening of sector sentiment have therefore shifted the context in which the Bécancour project is being assessed, with long term price assumptions now sitting below prevailing spot levels and the project’s technical and commercial foundations already established through the DFS process.

Within a broader industry setting marked by constrained conversion capacity outside China and increasing focus on secure western supply chains, Lithium Universe’s strategy of advancing engineering and permitting during the downturn has positioned the company to re enter development and commercial discussions as confidence returns.

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