The Allkem Ltd (ASX: AKE) share price is charging higher again on Tuesday.
In morning trade, the lithium miner's shares are up 6.5% to a record high of $14.20.
Why is the Allkem share price rising today?
Investors have been bidding the Allkem share price higher today in response to announcements relating to its Olaroz and Sal de Vida operations in Argentina.
In respect to the former, Allkem has substantially expanded its resource in the Olaroz basin from 6.4 million tonnes of lithium carbonate equivalent (LCE) to 16.2 million tonnes of LCE. This comprises 5.1 million tonnes of measured resource and 4.6 million tonnes of indicated resource, with the remainder in inferred resource status.
This is expected to support a 25,000 tonnes per annum (tpa) expansion in capacity of the Olaroz Lithium Facility to a total 42,500 tpa.
What else?
In respect to Sal de Vida, the company has increased the total planned capacity to 45,000 tpa. This comprises stage one production of 15,000 tpa, which is up 40% on previous estimates, and the consolidation of stage two and three production into a single 30,000 tpa expansion.
The release also notes that management has revised its resource estimate to 6.85 million tonnes of LCE, which is a 10% increase from the previous estimate in 2021.
What's next at Sal de Vida?
Sal de Vida stage one construction has already begun and management is now targeting its first production during the second half of 2023. In the meantime, stage two construction will commence upon the completion of stage one construction, with production expected approximately 24 months thereafter.
The total initial project development capital expenditure is estimated to be US$271 million for stage one. This estimate includes wellfields to ponds, the lithium carbonate plant, non-process infrastructure, and various indirect costs.
Operating expenditure is estimated to be US$3,612 per tonne LCE for stage one. This is predominately made up of reagents and also includes labour, energy and transport costs.
And with management expecting LCE prices to gradually decline to around US$15,000 per tonne by the mid-2020s as new supply reaches the market before climbing to US$19,000 per tonne over the long term, Sal de Vida looks set to be a very profitable operation.
All in all, stage one has a pre-tax net present value (NPV) of US$1.23 billion at a 10% discount rate and pre-tax internal rate of return (IRR) of 50%. Whereas stage two has a pre-tax NPV of US$1.81 billion and pre-tax IRR of 38% on a standalone basis.
The Allkem share price is now up 184% since this time last year.
