Clean Air Metals Announces a PEA of the Current and Escape PGE-Cu-Ni Deposits of the Thunder Bay North Project, with post-tax NPV5 of C$378m, IRR 29.8%
Clean Air Metals Announces a PEA of the Current and Escape
PGE-Cu-Ni Deposits of the Thunder Bay North Project,
with post-tax NPV5 of C$378m, IRR 29.8%
Thunder Bay, ON, December 1, 2021 – Clean Air Metals Inc. (“Clean Air Metals” or the
“Company”) (TSXV: AIR; FRA: CKU; OTCQB: CLRMF) is pleased to announce results
from an independent Preliminary Economic Assessment (PEA) that was completed for its
Thunder Bay North Platinum Group Element (PGE) - Copper (Cu) – Nickel (Ni) Project
(“Thunder Bay North” or the “Project”) near Thunder Bay, Ontario, Canada. The PEA was
prepared by Nordmin Engineering Ltd. (“Nordmin”) of Thunder Bay, Ontario, and includes
a new stand-alone milling complex and waste storage facility (WSF) with mill feed from both
the Current deposit and the Escape deposit, part of the Thunder Bay North Project Mineral
Resource Estimate as amended, that was completed by Nordmin (see press release dated
January 20, 2021). All amounts are in CAD dollars, unless otherwise stated. Summary
results of the PEA are shown below in Table 1.
The PEA was independently prepared by Mr. Glen Kuntz, P.Geo., Mr. Kurt Boyko, P.Eng.
and Mr. Brian Wissent, P.Eng. of Nordmin, Mr. Lyn Jones, P.Eng. of Blue Coast Research,
Mr. Wilson Muir, P.Eng. of Knight Piésold Ltd., Mr. Kris Tuuttila P.Geo. (Limited) of DST
Consulting, and Dr. Geoff Heggie, Exploration Manager of Clean Air Metals, who are
considered "Qualified Persons" under National Instrument 43-101 Standards of Disclosure
for Mineral Projects. The technical disclosure in this news release is based up on the
information in the PEA prepared by or under the supervision of Mr. Kuntz, Mr. Boyko, Mr.
Wissent, Mr. Jones, Mr. Muir, Mr. Tuuttila, and Dr. Heggie.
Project Metrics (Table 1)
• The Project has a pre-tax net present value (NPV) of $425.0 million, and after-tax
NPV of $378.4 million, at a 5% discount rate.
• The pre-tax internal rate of return (IRR) is 31.1%, and the after-tax IRR is 29.8%.
• The capital payback is 2.4 years from start of production.
• Revenue’s average $239.8 million per year from sale of PGE and Copper mineral
concentrates.
• Total mined metal production over a 10-year mine life based on the present
resource base is expected to be 629 k oz Platinum, 618 k oz Palladium, 111 M
pounds Copper, 57 M pounds Nickel, 38 k oz Gold, 850 k oz Silver, or 2,886 k oz
PtEq1.
• 65.2% of total mineral production occurs in the first 5 years.
• Operating margin of 59% in the first 5 years and Life-of-Mine Operating margin of
53%.
• The Project is located in close proximity to key infrastructure near the City of
Thunder Bay, Canada.
1 Equivalency formula can be viewed in the following Link (Click Here)
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• Base case economics were calculated using a 2-yr trailing average price deck
(Table 2)
PEA Key Metrics
Table 1: Key Financial and Project Metrics
Project Metric Units Value
Pre-tax NPV @ 5% $M $425.04
After-tax NPV @ 5% $M $378.38
Pre-tax IRR @ 5% % (real) 31.1
After-tax IRR @ 5% % (real) 29.8
Payback Period from start of production Years 2.4
Initial Capital Expenditure (“Capex”) $M $367.17
Initial EPCM / Indirects (incl. in Capex) $M $41.16
Initial Contingency (incl. in Capex) $M $60.20
Maximum Production Rate Mtpa 1.3
Mine Life Years 10
Ramp-up Years Years 1
Long-hole Open Stoping Mill Feed kt 10,338
Drift and Fill Mill Feed kt 1,946
Total Mill Feed kt 12,284
Life of Mine Mill Feed Grade EqPt (g/t) 7.3
Total Revenue $M $2,245
Total Operating Costs $M $1,057
Pre-tax Operating Cashflow $M $1,188
Total Capital $M $536
Net Smelter Return (NSR) $/tonne mill feed $178.02
Operating Margin % 53%
Operating Costs
Underground Mine Operating Costs $/t mill feed $47.37
Processing Plant / WSF $/t mill feed $25.03
General and Administration (G&A)
Costs $/t mill feed $6.87
Royalties $/t mill feed $2.63
Transportation to Smelter $/t mill feed $4.71
Total Unit Operating Costs $/t mill feed $86.61
Notes: PtEq Grade = Total Metal Value in 1 Tonne ÷ Pt Price per Oz × 31.10348 g per oz and
includes total 6 metals (Platinum, Palladium, Gold, Silver, Copper and Nickel)
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The Company has not made a production decision at the Thunder Bay North Project and
there is no guarantee that a production decision will be made or that the production rates
at the Thunder Bay North Project will be achieved. There are no Mineral Reserves for the
Thunder Bay North Project currently. The information reported in the PEA for the Project
is preliminary in nature and includes Inferred Mineral Resources that are considered too
speculative geologically to have economic considerations applied to them that would
enable them to be categorized as Mineral Reserves. Inferred Mineral Resources are
based on limited geological evidence and sampling. The tonnage and grade of Inferred
Mineral Resources have significant uncertainty as to their existence and as to whether
they can be mined economically. There is no certainty that results for the PEA for the
Project will be finally realized.
Executive Remarks
Executive Chair Jim Gallagher, P.Eng. stated: “The initial PEA for the Thunder Bay
North Project brings together two previously independent deposits into one mining plan
which is relatively low risk, low capital, quick to production and generates robust financial
metrics. Given the significant potential upside with continued exploration drilling along the
known conduits and with the already identified massive sulphide targets we believe that
this PEA is a minimum base case that Clean Air Metals will continue to attempt to de-risk
towards prefeasibility.”
CEO Abraham Drost, P.Geo., stated that “the PEA sets a mine plan that allows the
Company to move forward with several de-risking objectives. These include:
i) converting mine plan-impacted unpatented mining claims to mining leases;
ii) engaging with regulators toward early commencement of the mine permitting
process;
iii) continuation of the environmental impact studies (EIS) led by Englobe/DST
Engineering;
iv) commencement of prefeasibility technical studies including optimization and
tradeoffs around mining, metallurgy and mill design; and
v) negotiation of Impact and Benefit agreements with affected First Nations and
Métis.”
Significant Production Potential
• The study considers a 1.3 Mtpa (million tonnes per year) 3,600 tpd mill throughput
ramp-access underground mining operation with over a 10 year mine (project) life
plus 2 years of construction. Early revenue is generated by mining near surface
production areas and prioritizing high grade near surface material from the high
head grades from the Lower Current and Bridge Zones grading 9.4 g/t PtEq insitu
for first 4 years of production.
• Operating costs average $86.61 per tonne mined with an NSR of $178.02 per
tonne over a 10-year life of mine (LOM).
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Development Capital
• Initial capital expenditures (CAPEX) are $367.17 million (includes EPCM of $41
million and contingency of $60 million) and ongoing capex for the life of the
project is $169 million.
Table 2: 2-Year Trailing Price Deck
Metal Unit 2 Year Trailing
(Aug'19 - Jul'21)
Platinum US$/oz 969
Palladium US$/oz 2,214
Gold US$/oz 1,723
Silver US$/oz 22
Copper US$/lb 3.09
Nickel US$/lb 6.86
Clean Air Metals will be hosting a webcast on Thursday, December 2, 2021, at 11:00
am (Eastern Time). Abraham Drost, Chief Executive Officer, and Jim Gallagher,
Executive Chair will provide an in-depth review of the Company’s PEA and will be
available to answer shareholder questions. Copies of the news release and
management’s presentation will be available on the Company’s website at
www.cleanairmetals.ca.
Pre-registration will be open Wednesday, December 1, 2021 and the webcast can be
accessed by clicking HERE or at the following URL:
https://onlinexperiences.com/Launch/QReg/ShowUUID=6A93091E-B89F-465F-AB82-
AFB9FCBF4B19&LangLocaleID=1033&GroupID=Onyx
A Chrome or Firefox browser is recommended. Please test your connection prior to joining
the webcast at https://onlinexperiences.com/Launch/StudioTest.htm
Mine Operations
The proposed Thunder Bay North operation involves underground mining at an average
rate of 4450 tonnes per day (tpd) (3600 tpd in ore and 850 tpd in waste) with an
accompanying process plant with a matching 3,600 tpd capacity. Shown in Figure 1 is the
proposed site plan with the mineable Current and Escape deposits.
Note: 2yr price deck provided by CRU as of Aug, 2021.
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Figure 1: Proposed Site Plan with Mineable Current and Escape Deposits
The Current deposit is accessed via a portal from surface and has a 12-month pre-
production development period, which allows for the Current deposit main decline system
to connect to the Current main fresh air raise and provide secondary egress for the mine.
Contractor decline development is assumed for the 12-month pre-production period as
well as the following 2 years.
The Escape deposit is accessed via a separate portal from surface. The main decline
development begins 12 months after the Current deposit decline begins and continues for
3 years, until the decline connects with the Escape main fresh air raise. Contractor decline
development is assumed for the Escape deposit.
The Current deposit pre-production development period is followed by a production ramp-
up period and achieves full production (3,600 tpd) in the first quarter of year 1. The Current
deposit production commences in the Current and Bridge mining zones and continues in
these areas for the first 3 years. In year 4, the Escape deposit begins production in the
High Grade Zone (HGZ) at 1,800 tpd and the Current deposit production rate is reduced
to 1,800 tpd. Figures 2 and 3 show long sections of the proposed Current deposit and
Escape deposit.
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Figure 2: Current Deposit Long Section (Facing South-West)
Figure 3: Escape Deposit Long Section (Facing South-West)
The underground production was scheduled based on 3,600 tpd mill feed and 850 tpd
waste, excavated using a fleet of 10-tonne load-haul-dump loaders (LHD), and hauled with
40-tonne trucks, using the Current and Escape declines to haul material to surface.
The underground mining inventory was determined using Deswik’s Mineable Shape
Optimizer (MSO) software tool. The MSO uses the geological block model to generate
shapes (e.g., stopes) based on economic and geometric parameters as listed in Table 3.
The mining underground inventory is a combination of the four mining areas (Current,
Bridge, Beaver-Cloud, and 437) within the Current deposit and the two mining areas (HGZ
and Boundary) within the Escape deposit. The underground inventory spans along a strike
length of 3.3 km and to a depth of 700 m within the Current deposit and spans along a
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strike length of 1 km and to a depth of 500 m within the Escape deposit. The underground
stope inventory is constrained by a crown pillar, extending 30 m below the unconsolidated
sediments below Current Lake.
The Current and Escape deposits will be mined via a combination of conventional
underground long-hole open stope and drift & fill mining methods, backfilled with a
combination of cemented paste back fill (CPB), cemented rock fill (CRF) and
unconsolidated rock fill (URF). Stopes are designed to be accessed and excavated via
overcut and undercut development cross-cut drifts, which connect to the main declines.
The main declines provide ventilation, haulage to surface, and mine access. Table 3
shows the underground design parameters and Table 4 shows the underground MSO
cutoff.
Table 3: Underground Design Parameters
Parameter Value
Long-hole Open Stoping Size
Length (Maximum) 20 m
Height (Maximum) 25 m
Width (Range) 5 m to 15 m
Drift and Fill Stoping Dimensions
Height 5 m
Width 5 m
Development Drift Dimensions
Ramp 5 m (height) x 5 m (width)
Cross-cut 4.5 m (height) x 5 m (width)
Mining Dilution & Recovery
Underground (UG) Mining Dilution 9.6%
UG Mining Recovery 95%
Resources Used for MSO and UG Design Measured + Indicated + Inferred
Table 4: Underground MSO Cutoff
Parameter Unit Current Bridge
Beaver
- Cloud Boundary HGZ
Direct Mining Cost (LHOS) $/t mill feed $34.7 $28.5 $30.8 $32.0 $34.5
Direct Mining Cost (DAF) $/t mill feed $44.0 $43.8 $46.5 $47.7 $52.9
Milling / WSF Cost $/t mill feed $23.0 $23.0 $23.0 $23.0 $23.0
Indirect / G&A Cost $/t mill feed $10.0 $10.0 $10.0 $10.0 $10.0
NSR Cutoff (LHOS) $/t mill feed $67.7 $61.5 $63.8 $65.0 $67.5
NSR Cutoff (DAF) $/t mill feed $77.0 $76.8 $79.5 $80.7 $85.9
Note: NSR calculation includes mining dilution and recovery, milling recoveries, smelter payables and
deductions, royalties and transportation. LHOS – Long Hole Open Stoping DAF – Drift and Fill
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Mineralogy
Copper is contained primarily as chalcopyrite and approximately two-thirds of the nickel is
in sulphide form, primarily as pentlandite. The remaining nickel is mostly hosted by
magnesium-silicate minerals, chiefly serpentine and olivine. The platinum, palladium, and
gold mineralization is very fine grained, however they are closely associated with all
sulphide minerals, including pyrite and pyrrhotite, and recovery of the sulphides will
therefore bring along the majority of the precious metal values. Gangue silicates consist
of serpentine, amphibole, chlorite, mica and feldspar. Copper and nickel sulphide material
liberation indicate a moderately fine grind is required for good recovery of the sulphides.
Metallurgical Test Work
A flotation development program was completed on one master composite and ten
variability composites from the Current deposit and three variability composites from the
Escape deposit. Flowsheet options considered include separate copper and nickel
concentrates, separate copper and bulk concentrates, and a single bulk concentrate. A
flowsheet was developed, consisting of primary grinding to a P80 (80% passing) of 65
microns, sequential flotation of copper bearing minerals, followed by nickel or bulk
flotation. Regrinding of the copper rougher concentrate to a P80 of ~25 microns followed
by two stages of cleaning achieved concentrate grades of ~25% copper. Nickel
concentrate grades up to 11% nickel were achieved with fine regrinding to a P 80 < 20
microns, but resulted in low nickel and PGE recoveries to a selective nickel concentrate.
Replacing the nickel concentrate with a bulk concentrate eliminates the Ni regrind and
improves overall metal recovery. Platinum, palladium and gold recovery is closely linked
with sulphur recovery. High recoveries of the precious metals are possible if all the
sulphides are floated, however the rejection of any of the sulphide minerals leads to an
attendant drop in PGE and gold recovery. Table 5 shows the consolidated concentrate
average milling recovery for each payable metal.
Table 5: Consolidated Average Milling Recovery
Payable Metal
Consolidated
Average Milling
Recovery
Platinum 82%
Palladium 86%
Gold 80%
Silver 68%
Copper 95%
Nickel 51%