As a near-term upcoming lithium producer, how are you juggling the volatility in the lithium price?

Two years ago, in June 2023, we published our DFS, and later that year we were also awarded the mining lease. The fiscal terms negotiated at the time were based on lithium prices of US$3,800/t for spodumene concentrate, whereas today these sit at around US$600/t. The drop in prices has been severe, but nothing new in this cyclical industry. Most analysts project a correction in 2028–2029. Irrespective of when the market turns, at Atlantic Lithium, we want to build an operation that can withstand low-price periods rather than try to catch the cycle. Many developers and operators did not survive the last lithium downturn. We are now in another lithium winter, and we are very mindful of our capital structure, knowing that it was debt that plagued those operators who did not make it. While we cannot control the market, we can control our operating costs and production profile. As such, we have reviewed our entire cost structure to ensure we remain competitive while protecting our upside so we can still capture a future price spike. 

What caused the recent lithium price drop?

A sustainable lithium price that offers good margins for both hard rock miners and converters is somewhere between US$1,200 and US$1,500/t for spodumene concentrate, yet in 2022, prices spiked to US$6,000/t; a boom that could only be followed by a bust. Back in 2022, we started hearing a lot more talk about sodium-ion batteries and a real risk of substitution for lithium. These conversations have now faded. 

The lithium market is dominated by China - this is a matter of fact. China is very good at taking long-term views on securing its position in critical minerals, and there’s no doubt in my mind that what we see today is more than conventional supply-demand dynamics. Pricing interference through controlling inventory has led all base chemical prices, on which variants of hard rock material trade, to levels well below the incentive pricing needed for any new production to commence or for existing operators to expand. We are in a dysfunctional supply-demand balance and the price will bounce back, probably around 2028; the year when Atlantic Lithium should start production.

Considering the long lead time to production for lithium projects, how’s Ewoyaa positioned?

Lithium is an abundant mineral, but shovel-ready lithium projects are scarce. It takes about 10 years for a project to move into production. At Ewoyaa, we started fieldwork in 2016, and we still have two years of construction ahead. More than that, there are few jurisdictions where you can be almost fully permitted in two years. We are in Ghana - that is unheard of in countries like Australia, where I am based.

Could you also familiarize us with the process of ratification of your mining lease?

The last permitting item is the ratification of our lease. In Ghana, once the mining lease is awarded, it is a constitutional requirement that it be ratified in Parliament. After receiving our lease in October 2023, it took another eight months to get to Parliament in July 2024. Then elections came, which have impacted business in Parliament and delayed the ratification of the lease. 

Ghana is a country that relies heavily on mining, and the regulatory mechanisms are well-oiled. Whereas in other places the regulator is almost a barrier to progress, for us, it has been a true pleasure working with the responsible agencies in Ghana, who have guided us on how to expedite permitting and provided assistance when dealing with certain applications. We approached the new government in February, a month after it was installed in office, and we were pleasantly surprised by the understanding that both the regulator and the politicians showed about the drop in commodity pricing when we engaged them to seek a revision of the fiscal terms of our license.

Could you comment on your regional exploration strategy?

We have taken up over 700 km² across two adjacent tenements in Côte d’Ivoire as part of our strategy of building a pipeline for future reserves. So far, we’ve confirmed several outcrops of spodumene through assays, and we are completing a soil sampling program to identify auger drilling targets. We’ll apply the same methodical and low-cost exploration approach used in Ghana to our Ivorian licenses.