• TSX-V:
  • CYP

Projects

Clayton Valley Lithium Project, Nevada

Property Tour by CEO Dr. Bill Willoughby of Clayton Valley Project in Nevada

Clayton Valley Lithium Project, Nevada location map

Cypress owns 100% of the Clayton Valley Lithium Project totalling 5,430 acres in southwest Nevada, USA. The Clayton Valley Project is located immediately east of Albemarle’s Silver Peak mine, North America’s only lithium brine operation, which has been in continuous operation since 1966. Exploration and development by Cypress lead to the discovery of a world-class resource of lithium-bearing claystone adjacent to the brine field to the east and south of Angel Island, an outcrop of Paleozoic carbonates protruding up through the lakebed sediments. The Company is working towards a Feasibility Study and permitting of a mine and metallurgical facility for its large deposit of lithium-bearing claystone.

Clayton Valley Lithium Project, Nevada claims map

Lithium mineralization occurs within montmorillonite clays throughout the sediments to a depth of at least 150 meters. Metallurgical testing indicates low cost processing can be achieved by leaching with low acid consumption (126 kg/t) and high lithium recovery over 85% Li. These high extractions prove the dominant lithium-bearing minerals present are not hectorite, a refractory clay mineral which requires roasting and/or high acid consumption to liberate the lithium. 

Lithium enriched claystone at Clayton Valley Project in Nevada
Lithium enriched claystone at Clayton Valley Project in Nevada

Low Cost Opportunity

The key features of the Clayton Valley Project include the large flat-lying nature of the lithium claystone deposit. These features allow mining with a low strip ratio (0.29:1) due to minimal overburden and no interbedded waste. Surface mining will require no drilling or blasting in excavation. Metallurgical testing indicates low-cost processing can be achieved by leaching with low acid consumption (126 kg/t) and high lithium recovery over 85%. Self-generated power from a 2,500 tpd sulfuric acid plant is included in the project’s Prefeasibility Study costs.

In March 2021, Cypress announced the development of a lithium extraction pilot plant at del Sol Refining & extraction facility, south of Beatty, Nevada. The operation of the pilot plant will provide essential data for a planned Feasibility Study and enable Cypress to produce marketing samples to support negotiations with potential offtake and strategic partners. 

del Sol Refining & Extraction Facility, Nevada
del Sol Refining & Extraction Facility, Nevada
del Sol Refining Inhouse Assay Lab, Nevada
del Sol Refining Inhouse Assay Lab, Nevada

The Company will be using a chloride-based approach for the initial configuration of the pilot plant. Results from an internal scoping study demonstrated several benefits utilizing chloride-based leaching to liberate the lithium from the claystone in the areas of economy, process, and the environment. A sulfate-based approach, as detailed in the project’s August 2020 Prefeasibility Study below, remains a viable alternative.

Positive Prefeasibility Study

A positive Prefeasibility Study (PFS) for the Company's Clayton Valley Lithium Project in Nevada was prepared by Continental Metallurgical Services (CMS) and Global Resource Engineering (GRE). Todd Fayram, MMSA-QP (CMS), Terre Lane, MMSA-QP (GRE) and J.J. Brown, SME-RM (GRE). The Report has an Effective Date of August 5, 2020 and was amended March 15, 2021.

NI 43-101 Prefeasibility Study for Clayton Valley Lithium Project - August 2020Prefeasibility Study for Clayton Valley Lithium Project, Nevada - August 2020

Highlights of Prefeasibility Study:

  • Average production rate of 15,000 tonnes per day to produce 27,400 tonnes lithium carbonate equivalent (LCE) annually over a 40-year mine life.
  • Lithium Carbonate price of $9,500 per tonne.
  • Capital cost estimate of US$493 million, pre-production and operating cost estimate averaging US$3,387 per tonne LCE.
  • After-tax net present value (NPV-8%) of US$1.03 billion at 8% discount rate and 25.8% internal rate of return (IRR).
  • Production based on Probable Mineral Reserve of 213 million tonnes averaging 1,129 ppm Li (1.28 Mt LCE) based on a cut-off grade of 900 ppm Li.
  • Reserves and production plan derived from an Indicated Mineral Resource of 1,304 million tonnes averaging 905 ppm Li (6.28 Mt LCE) based on cut-off grade of 400 ppm Li.

Cypress CEO Dr. Bill Willoughby stated "This PFS is a major milestone for Cypress. These positive results take us closer to our goal of developing a world-class lithium deposit.  Cypress' land position and resources afford us the opportunity for a long-life project with low operating costs and potential to be a significant source of lithium for the United States."

The Project's large resource allows the mineral resources and reserves for the PFS to be derived from only a portion of the property (Initial Pit) showing a mine life of +40 years. All resources and reserves are pit-constrained by property and geologic boundaries.

Clayton Valley Lithium Project, Nevada Prefeasibility Pit Outline Map
Clayton Valley Lithium Project Prefeasibility Pit Outline map

Results for the PFS are:

  • Average annual production of 27,400 tonnes per year LCE
  • Mine life for PFS of +40 years
  • Lithium Carbonate price of $9,500 per tonne
  • Industry-low cash cost of US$3,387 per tonne LCE
  • US$1.03 billion NPV at 8% discount rate, after-tax basis
  • After-tax internal rate of return (IRR) of 25.8%
  • Capex payback period of 4.4 years

Sensitivity to LCE Price

The economic evaluation is reported in terms of LCE using an average price of US$9,500 per tonne. The price assumption reflects variations expected over time due to start-up and pricing for lithium products.

Sensitivity* to Price, Capex, and Opex

Variation

50%

Base Case

150%

Lithium Price $/t LCE
NPV-8%
IRR

$4,750
$-0.14 million
5.0%

$9,500
$1.030 billion
25.8%

$14,250
$2.142 billion
41.3%

Capital Cost
NPV-8%
IRR

$247 million
$1.252 billion
46.2%

$493 million
$1.030 billion
25.8%

$740 million
$807 million
17.8%

Operating Cost
NPV-8%
IRR

$1,664/t LCE
$1.407 billion
31.2%

$3,387/t LCE
$1.030 billion
25.8%

$4,993/t LCE
$647 million
19.7%

Note: IRR (internal rate of return) and NPV (net present value) are both shown after-tax

Production Plan

Mining and processing are based on a daily rate of 15,000 tpd of mill feed. Material will be mined by a track excavator and transported using semi-mobile feeder-breaker and conveyors. The stripping ratio is 0.29:1.

Lithium in the deposit is associated with illite and smectite clays. The lithium is amenable to leaching with dilute sulfuric acid leach followed by filtration, solution purification, concentration, and electrolysis to produce high-purity lithium.

Lithium Enriched Drill Core from Clayton Valley Project, Nevada

Lithium enriched drill core from Clayton Valley Project, Nevada

Metallurgical work by Continental Metallurgical Services (CMS) determined optimum conditions for leaching including time, acid concentration, and temperature. Tests show only minor differences occur with respect to sample depth, oxidation, or weathering state of the clays.

Large leach tests were performed on samples to provide slurry for rheology, filtration, and lithium recovery testing. The tests yielded average results of 86.5% extraction of lithium into solution and 126.5 kg/tonne for acid consumption.

Filtering Leach Solution from Clayton Valley Lithium Project, Nevada

Filtering Leach Solution from Clayton Valley Lithium Project, Nevada

Testing was conducted to determine a commercial means of solid-liquid separation. Specific conditions and equipment were identified. Solids from filtration tests simulating the final circuit were generated. The solids following single stage washing are suitable for handling by conveyor to a conventional dry-stack tailings facility.

NORAM Engineering & Constructors Ltd. and CMS designed and tested the flowsheet for recovering the lithium from solution. Testing was completed in March 2020 and report received in May 2020. The NORAM-CMS test program was successful in yielding a purified concentrated lithium solution suitable for the production of high-purity lithium hydroxide (LiOH).

Capital and Operating Costs

Capital and operating costs were estimated from vendor quotes, internal data and public information. The initial capital costs are estimated at US$493 million, including US$95 million in contingency (at 20%) plus working capital.  Operating costs are estimated to average US$16.90/tonne, or $3,387/tonne LCE.

Capital Cost Estimate

Area

US$ x 1000

Facilities

5,891

Mine

34,768

Plant

306,855

Infrastructure

25,907

Owners Costs

24,992

Contingency

94,704

Total Capital Cost

493,115

Operating Cost Estimate

Area

Avg Annual
US$ x 1000 

Mill feed
US$/t

Mining

10,787

1.98

Processing

77,758

14.27

G & A

3,550

0.65

Total Operating Cost

91,925

16.90

Acid plant operations are a major component in the operating costs and account for one third of the total operating cost based on a delivered cost of US$145 per tonne for sulfur. The acid plant has capacity to generate 93% of the power required by the operation and will have surplus power available when the operation is running. No allowances are made in the operating cost estimates for potential power sales or offsets.

The project has the potential to recover other by-products in addition to lithium including rare earth elements, most notably scandium, neodymium and dysprosium, that were identified in solution, and alkali salts. No values are given in the PFS for any by-product elements as these are still conceptual in nature.

Project Advancement

Interview with CEO Dr. Bill Willoughby, PE of Cypress Development – July 2020

The Prefeasibility Study supports further work with the recommendation to conduct a pilot plant study and initiating a Feasibility Study and permitting. The Company intends to invite proposals that can add value to the Project and Cypress through financial, technical, operating or marketing capabilities. Cypress Development is advancing its Clayton Valley Project in Nevada towards the production of high-purity lithium hydroxide (LiOH) suitable for tier one EV battery usage.

Lithium Enriched Clay at Surface at Clayton Valley Project, Nevada
Lithium enriched claystone on surface at Clayton Valley Project, Nevada

Sustainability and the Environment

The Clayton Valley Project has the potential to be a sustainable long-term low-cost producer of lithium. Key features of the claystone deposit include its large size, surface exposure and flat-lying nature. These features allow mining with negligible strip ratio of 0.29:1 due to minimal overburden and no interbedded waste, and no drilling or blasting in excavation. 

In December 2020, Cypress received a Biological Baseline Report for the Company's Clayton Valley Project. The 183-page report was prepared by consultants, Stantec Consulting Services Inc. of Reno, Nevada. Stantec performed the biological surveys for vegetation and wildlife in the spring, summer, and fall of 2020. In the surveys, no threatened or endangered species were found.

Lithium enriched claystone at Clayton Valley Project in Nevada
Lithium enriched claystone at Clayton Valley Project in Nevada

Environmental permitting requirements for the Clayton Valley Project are expected to be like other mines in Nevada. The permitting process consists of submitting a Plan Of Operations to the U.S. Bureau of Land Management, who will act as lead agency, conducting environmental baseline studies, and preparing an Environmental Impact Statement along with other permit applications prior to site development and operations.

Cypress Development is committed to creating value for all stakeholders, including the environment and communities around us, through sustainable and responsible mining.

Mining Infrastructure in Clayton Valley, Nevada

  • Well maintained state highways connect Silver Peak to the main road network in Nevada
  • Nevada has fostered a thriving mining industry with associated development expertise, construction and operations services and a mature regulatory environment
  • Single best mining jurisdiction in the U.S. and ranked 3rd globally by the respected "Fraser Institute's annual Survey of Mining Countries"
  • Graded and maintained gravel roads link Silver Peak to the southern half of Clayton Valley
  • Nearest rail system is in Hawthorne, Nevada, approximately 90 miles by road
  • Public use airport in Tonopah with two runways
  • Electrical connection is possible at the sub-station in Silver Peak
  • Water supply is currently served by the Silver Peak municipal water supply

Lithium Timing and Why Now?

The global energy storage revolution is generating high demand for new sources of lithium (Li) with analysts forecasting significant demand increases for lithium carbonate and lithium hydroxide used in the production of lithium-ion batteries. Electric vehicles (EV) and grid energy storage are becoming a huge demand driver for lithium-ion batteries and the need for more lithium production. Battery giants and major automakers world-wide are scaling up battery production with mega-factories and are actively acquiring lithium through off-take and joint-venture agreements.

Lithium Demand Forecast by Benchmark Minerals

Lithium Demand Forecast by Benchmark Minerals - August 2018

Increasing battery production is driving demand for increasing lithium production with the completion of a US$5 billion large-scale lithium-ion battery gigafactory near Sparks, Nevada. Supply of lithium for the Tesla (NASDAQ: TSLA)Panasonic battery gigafactory should come from Nevada due to tax incentives received of US$1.3 billion over 10 years. There are over 150 large-scale battery mega-factories world-wide in the planned production pipeline to 2028 (Benchmark Minerals) and are based on lithium-ion batteries becoming an all purpose energy storage unit that are highly scalable.

Mining companies already producing lithium are attempting to increase their production through acquisition and joint-venture agreements. Rockwood Holdings was purchased by Albemarle (NYSE: ALB) in 2014 for US$6.2 billion. The purchase included the Silver Peak lithium mine located in Clayton Valley, Nevada.

Albemarle Silver Peak (Rockwood Lithium) Mine Complex, Clayton Valley, NevadaAlbemarle Silver Peak Lithium Mine Complex in Clayton Valley, Nevada

With the United States producing less than 2% of the world's lithium, the U.S. Government has designated Lithium (Li) as a “Critical Mineral” of strategic importance to the Nation’s economic and national security. The policy of the U.S. Government is to reduce the Nation's vulnerability to disruptions in the supply chain of critical minerals. The “Critical Mineral” designation favors domestic sources of lithium that offer a secure, reliable source of supply. The size of the resource makes Cypress' Clayton Valley Project a premier source that has the potential to significantly impact the supply of lithium that is produced in the United States.

Lithium Uses

The most important use of lithium is in rechargeable batteries for electric vehicles, home, business and grid storage systems, mobile phones, laptops and other consumer electronics. Lithium is also used in some non-rechargeable batteries for things like heart pacemakers, toys and clocks.

There is a very good reason why lithium in batteries has become the metal of choice. Lithium is the most reactive metal known, also the lightest, with an atomic number of 3. Used in batteries, lithium provides much better energy per volume ratio or energy density than an ordinary alkaline battery or other common rechargeable battery such as a nickel-metal hydride. This is in part because lithium is the third-smallest element after hydrogen and helium, and thus a lithium ion can carry a positive charge in a very small amount of space. Lithium-ion batteries can be recharged by running the anode and cathode reactions in reverse and the ability to be recharged many times over without much loss of capacity is another major advantage of the lithium-ion battery.

Lithium metal (Li) is also made into alloys with aluminium and magnesium, improving their strength and making them lighter. A magnesium-lithium alloy is used for armour plating. Aluminium-lithium alloys are used in aircraft, bicycle frames and high-speed trains.

Lithium oxide is used in special glasses and glass ceramics. Lithium chloride is one of the most hygroscopic materials known, and is used in air conditioning and industrial drying systems (as is lithium bromide). Lithium stearate is used as an all-purpose and high-temperature lubricant. Lithium carbonate is used in drugs to treat manic depression, although its action on the brain is still not fully understood. Lithium hydride is used as a means of storing hydrogen for use as a fuel.

William Willoughby, PhD, PE, Director & CEO of Cypress Development Corp. is a Qualified Person as defined by National Instrument 43-101 and has approved the technical information on this web site.



© 2021 Cypress Development Corp.
All rights reserved.