ACLARA ANNOUNCES UPDATED PEA FOR ITS FLAGSHIP CARINA MODULE After-tax NPV8 of US$1.5 billion using base case price forecast After-tax NPV8 of US$2.2 billion using incentive price forecast (excluding Chinese supply)
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ACLARA ANNOUNCES UPDATED PEA FOR ITS FLAGSHIP CARINA MODULE
After-tax NPV8 of US$1.5 billion using base case price forecast
After-tax NPV8 of US$2.2 billion using incentive price forecast (excluding Chinese supply)
TORONTO, ON, September 5, 2024 – Aclara Resources Inc. (“Aclara” or the “Company”) (TSX: ARA) is pleased to
announce the results of the Company’s updated preliminary economic analysis (the “PEA”) on its regolith-hosted
ion adsorption clay project located in the State of Goiás, Brazil, known as the Carina Module (the “Project”).
The technical report titled “Preliminary Economic Assessment Update - Carina Rare Earth Element Project - Nova
Roma, Goiás, Brazil” (the “Report” or “Carina Module PEA”) dated September 5, 2024 was prepared in accordance
with National Instrument 43-101- Standards of Disclosure for Mineral Projects (“NI 43-101”) by GE21 Consultoria
Mineral (“GE21”), a specialized, independent mineral consulting company located in Belo Horizonte, Brazil . The
Report, with an effective date of May 3, 2024, supports the disclosures made by Aclara in its August 9, 2024 press
release announcing the updated maiden mineral resources estimate (the “MRE”) for the Project (the “August 2024
Press Release”). There are no material differences in the mineral resources or results of the preliminary economic
assessment as described in the Report and the results disclosed in the August 2024 Press Release. The Report
has been filed and can be found under the Company’s profile on SEDAR+ ( www.sedarplus.ca) and on Aclara’s
website (www.aclara-re.com).
Highlights
• Robust economics
o After-tax Net Present Value (“NPV”) of ~US$1.5 billion using an 8% discount rate pursuant to the
base case price forecast projected by Argus Media (“Argus”)
o 27% internal rate of return over the 22-year life of mine and a payback period of 4.2 years
o Low initial capital costs of US$593 million and low sustaining capital costs of US$86 million
o Average annual1 net revenue and EBITDA of US$505 million and US$366 million, respectively
o High average net smelter return (“NSR”) of US$52.0 per tonne processed compared to a low
average production cost of US$13.6 per tonne processed
o Incentive price forecast scenario projected by Argus provides significant upside. This scenario is
supported by critical raw material regulations such as the European Critical Raw Materials Act
and the United States Inflation Reduction Act, which focus on creating supply chains beyond
China
o After-tax NPV of ~US$2.2 billion using an 8% discount rate pursuant to the incentive price forecast
by Argus (which excludes Chinese supply)
• Significant production of magnetic REEs and high product quality
o Average annual production1 of 191 tonnes DyTb representing approximately 13% of China’s 2023
official production2
1 Annual average does not consider the first year of ramp-up and the last year of ramp-down.
2 The resulting Chinese production of DyTb derived from its 2023 rare earth oxides quotas for mining production is approximately 1,520
tonnes (source: The Chinese Ministry of Industry and Information Technology).
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o Average annual production1 of 1,350 tonnes NdPr contributing to a balanced mix of light and
heavy REEs in the final product
o Very high content of DyTb and NdPr in the mixed carbonate of 4.0% and 28.5%, respectively
o Concentration of REEs in the mixed carbonate of 91.5%3. High purity product facilitates further
separation and recoveries
• Expedited path to early production
o Memorandum of Understanding signed with the State of Goiás and Nova Roma Municipality in
Brazil to accelerate the analysis and evaluation of the permitting process and implementation of
the Carina Module
o Commissioning estimated to commence in 2029. The Company is evaluating the possibility to
expedite the production schedule to begin between 2027 and 2028
• Low environmental impact
o Process designed to minimize environmental impact: it does not use explosives; there is no
crushing nor milling; approximately 95% of the water used is recirculated; the main reagent is a
common fertilizer; no liquid residue is produced, negating the need of a tailings dam
o Minimal CO2 footprint is supported by a combination of low energy consumption and a high
percentage of renewable energy within the Goiás power grid
• Upside potential
o Exploration potential for lateral expansion to the east of the Carina Module as a result of recently
secured mineral rights adjacent to the Company’s existing mineral rights
o Metallurgical optimization program projected to commence in Q4 2024 will serve as additional
inputs for a prefeasibility study of the Carina Module and to form the basis for a new piloting
operation scheduled for Q2 2025
• Strong financial backing
o Key shareholders in Eduardo Hochschild and Hochschild Mining provide financial support to
advance the Project
o Strategic partnership with CAP S.A. in its Chilean subsidiary derisks project financing for the
Penco Module and allows Aclara to focus incremental corporate resources to the Carina Module
• Strong bedrock for vertical integration
o Adds to the Company’s Penco Module production of DyTb for a total DyTb annual average
production1 of 241 tonnes, which represents 16% of China’s 2023 official DyTb production
o Mixed REE carbonate produced expected to be separated and converted into metals and alloys
by Aclara Technologies Inc., the Company’s US based subsidiary developing REE processing
technologies
o Strategic partnership signed with VACUUMSCHMELZE GmbH & Co. KG aimed at developing a
mine to magnet solution
Aclara’s CEO, Ramon Barua, commented:
“The PEA highlights the Carina Module 's notable economic potential, with an after -tax NPV of US$1.5 billion based
on the base case price forecast , and US$2.2 billion when considering the incentive price forecast. These figures
underscore the Project’s status as a high-quality heavy rare earth asset , designed to deliver significant annual
dysprosium and terbium production, representing approximately 13% of China’s official output in 2023.
The medium to long-term outlook for rare earth elements, particularly heavy rare earths, remains strong due to their
global scarcity. Increasing international regulations are enhancing the develop ment of alternative supply chains
beyond China, and Argus's incentive price forecast indicates substantial upside potential for rare earths in response
3 Purity is expressed as REO equivalent.
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to future demand.
Our focus is now on expediting the path to early production. We have recently signed a Memorandum of
Understanding with the State of Goiás and Nova Roma Municipality in Brazil as a means to accelerate the permitting
process and facilitate the swift implementation of the Carina Module , with the goal of starting production between
2027 and 2028.”
Key Project Parameters Compared to Previous PEA
Table 1 and Table 2 list the relevant parameters associated with the Project’s operating and financial metrics as
compared to the previous preliminary economic assessment filed on January 23, 2024 (the “Previous PEA”):
• 25% increase in after-tax NPV from US$1.2 billion to US$1.5 billion using an 8% discount rate, despite
lower REE price forecast
• Slower growth of magnetic REE4 prices following the short-term deacceleration of electric vehicle demand
compared to the Previous PEA. In addition, lower expected increase in Nd price, partially offset by higher
expected increase in Dy price compared to the Previous PEA. REE price forecast provided by Argus aligns
well with global supply/demand fundamentals.
o Nd price compound annual growth rate 2023-2034: PEA 7% vs. Previous PEA 10%
o Dy price compound annual growth rate 2023-2034: PEA 12% vs. Previous PEA 11%
• ~30% increase in life of mine from 17 years to 22 years provides support for potential capacity increases
in the future
• Total capital costs (initial capital costs and sustaining capital costs) maintained at the same level as prior
estimates
Table 1: Key Project Operating Parameters Compared to Previous PEA
PEA Previous PEA
Unit Total Annual
Average* Total Annual
Average*
Mining and Processing
Life of Mine years 22 - 17 -
Total Process Plant Feed million tonnes (dry) 203.0 9.6 149.5 9.6
Total Waste Mined million tonnes (dry) 64.2 3.0 43.3 2.6
Strip Ratio - 0.3 0.3 0.3 0.3
Production
Total Rare Earth Oxides tonnes 99,931 4,736 70,307 4,498
Neodymium & Praseodymium (NdPr) tonnes 28,514 1,248 18,546 1,190
Dysprosium (Dy) tonnes 3,420 163 2,802 178
Terbium (Tb) tonnes 587 28 479 30
*Note: Annual average does not include the first year of ramp-up and the last year of ramp-down
4 Magnetic REE include Neodymium (Nd), Praseodymium (Pr), Dysprosium (Dy) and Terbium (Tb).
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Table 2: Key Project Financial Parameters Compared to Previous PEA
PEA Previous PEA
Base Case
(Chinese Prices)
Incentive Case
(Non-Chinese Prices)
Base Case
(Chinese Prices)
Unit Total Annual
Average* Total Annual
Average* Total Annual
Average*
Financials
Net Revenue US$ million 10,554 505 13,091 626 7,355 474
Net Smelter Return US$/t 52.0 - 64.5 - 49.2 -
Basket Price (2029-2034) US$/kg 88.8 - 104.6 - 107.4 -
Basket Price (LOM) US$/kg 122.4 - 142.8 - 121.2 -
Production Cost US$ million 2,757 129 2,757 129 1,965 125
Unit Cost US$/t processed 13.6 - 13.6 - 13.1 -
Unit Cost US$/kg REO 27.6 - 27.6 - 27.9
EBITDA US$ million 7,586 366 10,072 485 5,243 340
EBITDA Margin % 72 - 77 - 71 -
Income Tax US$ million 2,334 118 3,172 154 1,532 101
Effective Tax Rate % 36.1 - 35.9 - 36.2 -
Initial Capital US$ million 592.6 - 592.6 - 575.8 -
Royalty Purchase Cost US$ million 6.5 - 6.5 - 6.5 -
Sustaining Capital US$ million 85.8 - 85.8 - 106.2 -
Financial Returns
Pre-Tax Net Present Value (8%) US$ million 2,337 - 3,051 - 1,880 -
Pre-Tax Internal Rate of Return % 32.2 - 40.5 - 35.7 -
Post-Tax Net Present Value (8%) US$ million 1,483 - 2,159 - 1,186 -
Post-Tax Internal Rate of Return % 26.5 - 33.1 - 28.6 -
Payback Period years 4.2 - 3.4 - 3.6 -
*Note: Annual average does not include the first year of ramp-up and the last year of ramp-down
Figure 1: Projected life of mine post-tax free cash flow – base case price scenario
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Sensitivity Analysis
A sensitivity analysis was undertaken to evaluate the impact on NPV through variation of the basket price,
discount rate, CAPEX, OPEX and metallurgical recovery rates.
The discount rate was evaluated by varying its value from 4% to 12% while the remaining attributes were evaluated
by varying their values from 80% to 120% (Figure 2).
Figure 2: Sensitivity analysis testing the impact on NPV
Mineral Resource Statement
The Carina Module’s mineral resources have been estimated using the results obtained from 283 auger drill holes
(2,101m), 80 reverse circulation holes (2,003m) and 3,789 samples. At a US$7.4/t NSR cut-off, the Carina Module
is estimated to contain 297.6 million tonnes (“Mt”) in the inferred mineral resource category @ 1,452 ppm TREO
containing an average Dy and Tb grade of 39 ppm and 6 ppm, respectively (Table 3). The MRE is reported in
accordance with the requirements of NI 43-101.
Table 3. Carina Module Inferred Mineral Resource Estimate (Effective May 3, 2024)
Mineral Classification Mass
(Mt)
Total Oxide Grade (ppm) Oxide Content (t)
TREO NdPr Dy Tb TREO NdPr Dy Tb
Inferred 297.6 1,452 284 39 6 432,003 84,565 11,573 1,897
Total 297.6 1,452 284 39 6 432,003 84,565 11,573 1,897
Notes:
1. CIM (2014) definitions were followed for mineral resources.
2. Mineral resources are estimated above an NSR value of US$7.4/t.
3. Mineral resources are estimated using average long term metal prices and metallurgical recoveries (see PEA for details).
4. Mineral resources are not mineral reserves and do not have demonstrated economic viability.
Project Description
The Project is based on standard open pit extraction techniques using conventional hydraulic excavators and 44t
payload haulage trucks to extract and deliver the clays to the process plant. The process plant has been located
close to the centre of mass of the mining operation to minimise the total haulage distance over the life of mine.
Given the friable nature of the clays and the shallow depth of the extraction zones, no aggressive nor energy-
intensive techniques such as drilling and blasting are required to extract the clays from the pits. Table 4 lists the
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key input parameters used in the mine design.
Table 4: Key Mine Design Parameters
Description Unit Value
Pit Optimization
Overall Slope Angle degree 25
Reference Mining Cost US$/t mined 2.13
Mining Recovery % 98.5
Mining Dilution % 1.5
Processing Cost US$/t processed 10.46
Selling Cost US$/kg REO 7.032
Federal Royalty % of revenue 3
REO Price US$/kg REO variable by REO
Pit design
Bench Height m 4
Berm Width m 3.5
Bench Slope Angle degree 38
Ramp Width m 12
Ramp Gradient % 10
Scheduling
Minimum Operational Area m 25
Plant feed Mt/year 9.6
Once the clay is delivered to the process plant, it will be washed using an ammonium sul fate solution to extract
the REEs from the clay surfaces. No crushing, grinding nor milling is needed to free the REEs from the clays as
they are extracted through a non-invasive ion-exchange reaction process whereby ammonium sulfate ions replace
REE ions on the surface of the clay thereby liberating the REEs into solution. The REEs in solution are then removed
through a pH-adjusted precipitation process and then passed through a high -pressure filter to remove any
remaining liquids, resulting in the production of a high -purity REE carbonate ready for shipment to a separation
facility. The process plant will have an average production rate of 4,736 t/year of REO within the concentrates.
Any unwanted impurities such as aluminium and calcium that have been extracted from the clays during the ion
exchange process are similarly removed through a precipitation process and then recombined with the washed
clays before being transported to a dry stacking storage facility for the first five years of the life of mine. Beginning
in year 6, the washed clays will be back-filled to the mined-out extraction zones to initiate the mine closure
process.
A water recovery system integrated into the process plant cleans and regenerates the remaining process liquors
such that they can be reintroduced into the feed. The treated water is reused in a closed circuit to reduce water
consumption thereby preventing the release of process water into the environment. This allows the process plant
to operate with the minimum of make-up water and allows the main reagents to be regenerated and reused within
the process plant.
Before the barren clays exit the process plant, they are washed with clean water within standard plate-and-frame
filter presses. This will remove any residual ammonium sulfate from the clays before they are returned to either a
dry stacking facility or used to back-fill the extraction zones to be safely used during revegetation.
The Project includes the necessary infrastructure to provide make-up water for the process plant, supply power
to the site, and provide a road network to service the operation, amongst others.
Electrical power for the processing plant, truck shop, administration offices, and other facilities will be supplied
by the national power utility through overhead power transmission lines from a sub-station located approximately
90 km from the project site.
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REE Market Outlook and Pricing5
Vehicle electrification, wind turbines and the transition to renewable energy sources will continue to drive demand
for REEs in terms of volume and , especially, value. This will primarily affect the REEs used in alloys to fabricate
permanent magnets (i.e., Dy, Nd, Pr, and Tb ). The supply of clean heavy REEs, especially Dy, has become
problematic because few projects target heavy REE deposits. For the medium term, the market will continue to
rely on China and Myanmar for heavy REE feedstocks.
The prices of permanent magnet REEs dropped significantly in 2023 due to a weak recovery from lockdowns in
China and economic challenges in other areas. The prices of Nd, Pr, and Tb fell 40–45% from early 2023 and July
2024. However, the Dy price outperformed the market, falling only 20 –25% over the same period, indicating a
more constrained supply of Dy as compared to other permanent magnet REEs. Argus expects permanent magnet
REE prices to increase steadily for the remainder of the decade, with the possibility of increasing at a faster rate
in the early 2030s absent additional supply from new projects or increases in the availability of secondary
(recycled) REEs. Dy prices are expected to continue to outperform the general permanent magnet REE market due
to a tighter supply/demand balance going forward . Between the years 2023 to 2034, Nd, Pr, and Tb prices are
predicted to rise at a rate of 5–8% per year, whereas Dy prices are expected to increase 12% per year.
According to Argus, there are two external factors which could have the potential to positively affect future REE
prices: so-called ‘green’ premiums; and critical material policies ( particularly within Europe and the US). Critical
materials policies and regulations being enacted globally, specifically the European Critical Raw Materials Act and
the United States Inflation Reduction Act, are focussed on creating raw material supply chains that are not reliant
on China, which could provide advantages to non -Chinese suppliers of REEs in terms of market access and,
potentially, pricing premiums. In May 2023, the US Department of Energy identified Dy as the most critical mineral
in terms of its importance to the energy sector and the risks of supply chain disruption.
In an effort to account for critical raw material regulations, Argus has modelled an incentive price for magnetic
rare earths, where the rare earths market effectively has a dual pricing model (Chinese and non -Chinese) that
forecasts the level that REE prices would have to reach to incentivize the supply of REE from producers outside
of China. Under the incentive price scenario, the forward curve for Dy grows at 15% per year, compared to 12% per
year in the base case scenario (Table 5).
Table 5: Dysprosium Price Forecast
2022 2023 2028 2034 2023 vs
2022
(%)
2028 vs
2023
(%)
2034 vs
2028
(%)
CAGR
2023–
2034
(%)
Dy
Base Case Price* (US$/kg) 384 331 595 1,100 –14 80 85 12
Incentive Price (US$/kg) 384 331 515 1,400 –14 56 170 15
Total supply (×1,000 t REO) 1.7 2.6 3.6 4.4 50 39 23 5
Total demand (×1,000 t REO) 2.8 3.3 5.3 7.0 16 62 32 7
Surplus/deficit index (2018 = 100) 98 96 77 43 – – – –
*99.5–99.9% fob China
The following provides an example of illustrating the potential decoupling of rare earths prices between those
sourced from and outside of China, modelled using gallium, germanium and antimony. In September 2024, China
will be adding antimony to its export controls for certain metals (in addition to gallium and germanium , which
were made subject to its export controls in August 2023). US-delivered prices for antimony have increased
approximately 25% as compared to prices for antimony sourced from China, while prices for gallium and
germanium sourced on an ex-works China basis have reflected a potential premium of up to 85% in the case of
gallium (currently a premium of 45%) and up to 25% in the case of germanium (currently a premium of 10%)
(Figure 3). The incentive pricing scenario seeks to emulate a situation where the main economies such as the
United States, Europe and Japan are required to supply rare earths outside of China supported by critical materials
policies/regulations being enacted in such countries.
5 Argus Media
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Figure 3: Chinese and non-Chinese sourced Antimony, Gallium and Germanium price evolution since January 2023
In consideration of the price forecasts provided by Argus, the basket price of the Carina Project has been modelled
through the life of mine, reflecting expected commercial discounts (Figure 4 and Figure 5).
Figure 4: Evolution of basket price vs. commercial discounts throughout the Carina Module life of mine in base case
scenario (Chinese)
Figure 5: Evolution of basket price vs. commercial discounts throughout the Carina Module life of mine in incentive
scenario (non-Chinese)
17% 16% 15% 15% 14% 13% 13% 13% 13% 13% 13% 13% 13% 12% 12% 12% 12% 12% 12% 12% 13% 13%
66
77 82 87
100 109 112 115 118 121 125 129 132 136 139
152 152 152 152 152
132 132
0%
10%
20%
30%
40%
50%
60%
0
40
80
120
160
200
2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 2049 2050
Commercial Discounts %
Basket Price US$/kg
Commercial Discounts (%) Basket Price ($/kg)
16% 14% 14% 13% 13% 12% 12% 12% 12% 12% 12% 12% 12% 12% 12% 11% 11% 11% 11% 11% 12% 12%
79
95 104 111
130 134 137 141 145 149 153 157 162 166 170
185 185 185 185 185
162 162
0%
10%
20%
30%
40%
50%
60%
0
40
80
120
160
200
2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 2049 2050
Commercial Discounts %
Basket Price US$/kg
Commercial Discounts (%) Basket Price ($/kg)
0
5,000
10,000
15,000
20,000
25,000
30,000
Jan-23 Apr-23 Jul-23 Oct-23 Jan-24 Apr-24 Jul-24
$/t
Antimony ingot min 99.65% ex-works China
Antimony ingot min 99.65% fob China
Antimony Regulus grade II min 99.65% Sb du Rotterdam
Antimony min 99.65% cif US
— Argus
0
200
400
600
800
Jan-23 Apr-23 Jul-23 Oct-23 Jan-24 Apr-24 Jul-24
$/kg Gallium min 99.99% ex-works China
Gallium min 99.99% cif Main Airport
— Argus
0
500
1,000
1,500
2,000
2,500
3,000
Jan-23 Apr-23 Jul-23 Oct-23 Jan-24 Apr-24 Jul-24
$/kg
Germanium metal (zone refined ingot) min 99.999% ex-works China
Germanium metal min 99.999% cif main airport Europe USD/kg
— Argus