C RITICAL E LEMENTS A NNOUNCES P OSITIVE F EASIBILITY S TUDY W ITH A P RE - T AX NPV 8% OF $1 . 257 B AND A P RE - T AX IRR OF 48.2% F OR I TS R OSE L ITHIUM P ROJECT S EPTEMBER 6 , 2017 - M ONTREAL , Q UEBEC – Critical Elements Corporation (the “ Company ” or “Crit ical
1
PRESS RELEASE
C RITICAL E LEMENTS A NNOUNCES P OSITIVE F EASIBILITY S TUDY W ITH A P RE - T AX NPV 8% OF
$1 . 257 B AND A P RE - T AX IRR OF 48.2% F OR I TS R OSE L ITHIUM P ROJECT
S EPTEMBER 6 , 2017 - M ONTREAL , Q UEBEC – Critical Elements Corporation (the “ Company ” or “Crit ical
Elements”) (TSX - V: CRE) (US OTCQX: CRECF) (FSE: F12) is pleased to announce results of a
Feasibility Study on the Rose Lithium - Tantalum project (“Rose” or the “Project”) in James Bay, Qu é bec.
Unless otherwise stated, all figures are quoted in Canadia n dollars (“$”) and are reported on a 100%
equity project basis.
Highlights
Average annual production of 186,327 tonnes of chemical grade lithium concentrate
Average annual production of 50,205 tonnes of technical grade lithium concentrate
Average annual production of 42 9 tonnes of tantalum concentrate
Expected l ife of mine of 17 years
Average operating costs of $66.56 per tonne milled, $458 (US $ 344) per tonne of concentrate (all
concentrate production combined)
Estimated initial capital cost $341.2 milli on before working capital
100% equity basis for project
Average gross margin 63.6%
After - tax NPV of $7 26 million (at 8 % discount rate), after - tax IRR of 3 4.9 % and price assumption
of US $ 1, 5 00 per tonne technical grade lithium concentrate, US$ 750 per tonne chemical grade
lithium concentrate, US$ 130 per kg tantalum pentoxide
A nticipated construction time to start of production of 21 months
"The feasibility study is a major milestone for Critical Elements, which explains our superior competitive
situation. Th e excellent gross margin is a key indicator for the quality of this project , " s aid Dr. Steffen
Haber, President of Critical Elements Corporation.
"I’m very pleased with the delivery and the results of the most important milestone of Critical Elements t o
d ate," s aid Jean - Sébastien Lavallée, CEO and Chairman of the Board . " I would like to thank the joint
effort of our team to deliver a very strong feasibility study that show s a very solid project."
The Rose Lithium - Tantalum Project is 100% owned by Critical Elements . T he company ’s market strategy
is to enter the lithium market with a low - risk approach. The completion of the feasibility on the spodumene
plant is the first step to enter the market and establish the company as a reliable high quality lithium
su pplier. The low - risk approach is characterised by simple open - pit mining and conventional lithium
processing technologies.
The feasibility is based on a conventional truck and shovel open pit operation and a conventional milling
process to produce technic al and chemical grade spodumene concentrates and a tantalite concentrate.
The mine will excavate a total of 26.8M tonnes ore grading an average of 0.85% Li 2 O and 133 ppm Ta 2 O 5
after dilution . The mill will process 1.61M tonnes of ore per year to produce a n annual average of 236,532
tonnes of technical and chemical grade spodumene concentrates and 429 tonnes of tantalite concentrate.
2
The ore is contained in several parallel and continuous low dipping pegmatite veins outcropping on
surface. The ore zones are open at depth and a future underground operation is possible.
Over the life of mine, the open pit will excavate a total of 182. 4 M tonnes of waste rock and 11.0 M tonnes
of overburden. The average strip ratio is 7.2 tonnes of stripping per tonne of ore .
The environmental and social impact study was submitted to the federal and provincial environm ental
agencies at the end of J uly. Permit t ing is expected to take 18 months. During this time , Critical Elements
will carry out detailed engineering, select the construction contractors, and purchase long lead time items.
Construction and start - up is expected to take 21 months. Construction is expected to commenc e Q4 2018
while commercial production is expected to commence in Q3 2020. The Rose project will have a peak of
575 employees during construction and an average of 290 employees for commercial production.
Table 1: Rose Key FS Results
Item Units
Production
Project life (from start of construction to closure) years
Mine life years
Total mill feed tonnage M t
Average mill feed grade
Li 2 O % Li 2 O
Ta 2 O 5 ppm Ta 2 O 5
Lithium Concentrate Production
% of Production, Chemical Grade %
% of Production, Technical Grade %
Mill recoveries
Li 2 O, Chemical Grade %
Li 2 O, Technical Grade %
Ta2O5 %
Payable
5% Li 2 O Concentrate, Chemical Grade t
6% Li 2 O Concentrate, Technical Grade t
Ta 2 O 5 contained in concentrate kg
Commodity Prices
5% Li 2 O Concentrate, Chemical Grade FOB port US$/t conc.
6% Li 2 O Concentrate, Technical Grade FOB port US$/t conc.
Ta 2 O 5 contained in concentrate FOB mine site US$/kg conta ined
Exchange rate
Project Costs CA$ US$
Average Mining Cost $/t milled 30.69 23.02
Average Milling Cost $/t milled 16.14 12.11
Average General & Administrative Cost $/t milled 12.15 9.12
Average Concentrate Transport Costs $/t milled 7.57 5.68
Project Economics CA$ US$
Gross Revenue $M 4,973 3,729
Total Selling Cost Estimate $M 152 114
Total Operating Cost Estimate $M 1,785 1,339
Total Sustaining Capital Cost Estimate $M 127 95
Total Capital Cost Estimate $M 341 256
Duties and Taxes $M 1,000 750
Pre-Tax Cash Flow $M 2,567 1,926
After-Tax Cash Flow $M 1,567 1,175
Effective tax rate
Discount Rate
Pre-Tax Net Present Value @ 8% $M 1,257 943
Pre-Tax Internal Rate of Return
Pre-Tax Payback Period years
After-Tax Net Present Value @ 8% $M 726 545
After-Tax Internal Rate of Return
After-Tax payback period years
Value
2.8
827,000
1,431,000
750
1,500
130
1 US$ : 1.33 CAN$
0.75 US$ : 1 CAN$
8%
48.2%
2.3
34.9%
3,070,000
19
17
26.8
0.85
133
75
25
90
87
40
39%
3
Property
The Rose property is located in northern Québec’s administrative region, on the territory of Eeyou Istchee
Jame s Bay . It is located on Category III land, on the Traditional Lands of the Eastmain Community ,
approximately 40 kilometers north of the Cree village of Nemaska. The latter is located approximately 300
km north - west of Chibougamau.
The Rose property is ac cessible by road via the Route du Nord, usable all year round from Chibougamau.
The mine site can also be reached by Matagami, via Route 109 and Route du Nord. Figure 1 shows the
regional location of the project. The project is located 80 km south of Goldc orp’s Éléonore gold mine and
45 km north - west of Nemaska ’s Whabouchi lithium project and 20 km south of Hydro Québec’s Eastmain
1 hydroelectricity generating plant. The Nemiscau airport services the regions air travel needs . The Rose
property site is locat ed 50 km by road from the Nemiscau airport.
The Rose property comprises 500 claims spread over a 26,100 ha area. Geologically, the Rose property
is located at the north - east end of the Archean Lake Superior Province of the Canadian Shield .
Figure 1 – Ros e Property Location
Reserve Estimate
A Mineral Reserve Estimate for 17 mineralized zones was prepared during this study. The estimation
assumed the production of a chemical grade spodumene concentrate with a price of 15 .66 US$ per kg
Li 2 O and a tantali te concentrate with a price of 130 US$ per Ta 2 O 5 . The recover ies were fixed at 85% and
64% for Li and Ta respectively. The grade - recovery curve used for resource estimate , which became
available after the mineral reserves were evaluated, was verified and f ound to have little in fluence on the
reserve estimate. The production of a higher value technical grade spodumene concentrate was not
assumed in the reserve estimate.
Based on compilation status, metal price parameters, and metallurgical recovery inputs, t he effective date
of the estimate is August 4 , 2017.
The estimate was prepared in accordance with CIM’s standards and guidelines for reporting mineral
resources and reserves.
4
Table 2 displays the results of the Mineral Reserve Estimate for the Rose Pr oject at the $29.7 NSR per
tonne cut - off for the open - pit scenario.
Table 2 – Mineral Reserve Estimate
Tonnage NSR Li 2 O_eq Li 2 O Ta 2 O 5
(Mt) ($) (%) (%) (ppm)
Probable 26.8 148.99 0.96 0.85 133
Total 26.8 148.99 0.96 0.85 133
Category
The Independent and Qualified Person for the Mineral Reserve Estimate, as defined by
NI 43 - 101, is Patrick Frenette, P.Eng, M.Sc.A, of InnovExplo Inc. The effective date of the
estimate is August 4 , 2017.
The model includes 17 mineralized zones.
Calculations used metric units (metres, tonnes and ppm).
The number of metric tons was rounded to the nearest thousand. Any discrepancies in the totals
are due to rounding effects. Rounding followed the recommendations in NI 43 - 101.
InnovExplo is not aware of any known environmental, permitting, legal, title - related, taxation,
socio - political, marketing or other relevant issue that could materially affect the Min eral Reserve
Estimate .
Resource Estimate
Innov E xplo updated the mineral resource estimate from the 2011 PEA for 23 mineralized zones. The
mineral resource was updated on a block value basis using current pricing and cost parameters.
The effective date of the estimate is A ugust 29 , 2017, based on compilation status, metal price
parameters, and metallurgical recovery inputs.
Given the density of the processed data, the search ellipse criteria, the drill hole density and the specific
interpolation paramet ers, InnovExplo is of the opinion that the current mineral resource estimate can be
classified as Indicated and Inferred resources. The estimate was prepared in accordance with CIM’s
standards and guidelines for reporting mineral resources and reserves.
Table 3 displays the results of the Mineral Resource Estimate for the Rose Project using $30 NSR per
tonne cut - off for the open - pit mine and $110 NSR cut - off for the underground mine .
Table 3 – Mineral Resource Estimate
Tonnage NSR Li 2 O_eq Li 2 O Ta 2 O 5
(Mt) ($) (%) (%) (ppm)
Pit-constrained 30.0 161 1.04 0.93 150
Underground 1.9 159 1.02 0.94 114
Total Indicated 31.9 161 1.04 0.93 148
Pit-constrained 2.0 137 0.90 0.79 153
Underground 0.8 149 0.96 0.88 126
Total Inferred 2.8 141 0.92 0.82 145
Category
Indicated
Inferred
The Independent and Qualified Per son for the Mineral Resource Estimate, as defined by NI 43 - 101, is
Pierre - Luc Richard, P.Geo., M.Sc., of InnovExplo Inc. The effective date of the estimate is August 29 ,
2017.
These Mineral Resources are not Mineral Reserves as they do not have demonstrate d economic viability.
The model includes 23 mineralized zones.
Results are presented in situ and undiluted.
Sensitivity was assessed using cut - off NSR values for $5 - 10 increments from $20 to $150. The mineral
resource is reported at a cut - o ff of $30 NSR fo r the open - pit and of $110 NSR for the underground
potential based on market conditions (metal price, exchange rate and production cost).
A range of densities was used on a per - zone basis based on statistical analysis of all available data.
A minimum true thickness of 2.0 metres was applied, using the grade of the adjacent material when
assayed or a value of zero when not assayed.
High grade capping was done on raw assay data based on the statistical analyses of individual
mineralized zones.
5
Compositing was done on drill hole intercepts falling within mineralized zones (composite lengths vary
from 1.5 m to 3 m in order to distribute the tails adequately).
Resources were evaluated from drill holes using a 2 - pass OK interpolation method in a block model (block
size = 5 m x 5 m x 5 m).
The inferred category is only defined within the areas where blocks were interpolated during pass 1 or
pass 2 where continuity is sufficient to avoid isolated blocks being interpolated by only one drill hole. The
indicated categor y is only defined by blocks interpolated by a minimum of two drill holes in areas where
the maximum distance to the closest drill hole composite is less than 40 metres for blocks interpolated in
pass 1.
The number of metric tons was rounded to the nearest thousand. Any discrepancies in the totals are due
to rounding effects. Rounding followed the recommendations in NI 43 - 101.
InnovExplo is not aware of any known environmental, permitting, legal, title - related, taxation, socio -
political, marketing or other relevant issue that could materially affect the Mineral Resource Estimate.
Feasibility Study
The parameters used for the feasibility study are the following:
- Open pit mining rate of 1,610,000 tpy
- Spodumene process plant with a 4,900 tpd nominal capacity
Mining Operation
The mineralization is hosted within outcropping pegmatite dykes subparallel to surface. The ore body is
relatively flat, close to surface and comprised of north oriented stacked lenses. Mineralization recognized
to date on the Rose prop erty includes rare element of Lithium - Cesium - Tantalum or LCT - type pegmatites
and molybdenum occurrences.
A conventional truck and shovel open - pit approach was considered to mine the Rose Lithium - Tantalum
Project’s Probable Mineral Reserves. The dimensio ns of the engineered pit design are approximately
1 , 620 m long x 900 m wide x 200 m deep.
The life of mine plan (LOM) proposes to mine 26.8 Mt of ore, 182. 4 Mt of waste, and 11.0 Mt of
overburden for a total of 220. 2 Mt of material . The average stripping r atio is 7.2 tonnes of stripping per
tonne of ore . The nominal production rate is estimated at 4,600 tonnes per day and 350 operating days
per year .
T he mining operation production rate is set to approximately 15 Mt of material per year . An open pit
minin g schedule was planned and resulted in a mine life of 17 years.
Contract mining will be used for the removal of the overburden while C ritical Elements will undertake the
mining of all hard rock material with its own equipment fleet and operators,
The ma in production fleet will consist of one (1) backhoe excavator, one (1) electric front shovel, one (1)
wheel loader, seven (7) haul trucks (65t), seven (7) haul trucks (135t), two (2) rotary drills, one (1) DTH
drill, two (2) bulldozers, one (1) wheel dozer , two (2) graders, and two (2) water trucks.
The Rose project pit was designed with a 10m single bench ing arrangement . A 57° inter - ramp angle and
an ov erall pit slope angle of 55° were utilized for the ultimate pit design. A berm width of 7.0m
correspond ing to the recommended overall slope angle was used. The pit slopes in overburden have a
face ratio of 2.5:1 with a 10m berm width.
The main in - pit haulage ramp is designed at 30.9m wide to allow a double - lane traffic, except for the last
benches at the pit bottom that are designed at 20.4m wide for single lane traffic. A 2 m drainage ditch is
included to allow for water drainage and pipe installation. The maximum gradient of the inner curvature of
all ramp segments is 10%.
6
Figure 2 – Rose Pit Plan View
Figure 3 – Rose Pit Side View Looking West
Mineral Processing
A standard froth flotation process will be utilized to produce technical grade and chemical grade lithium
concentrates and a tantalum concentrate. The mineral process plant will consist of crushing,
beneficiation, and dewatering areas. The technical grade lithium concentrate will grade 6.0% Li 2 O while
the chemical grade lithium concentrate will grade 5.0% Li 2 O. The tantalum concentrate will grade 20%
Ta 2 O 5 .
The beneficiation process includ es crushing, grinding, magnetic separation and flotation. The crushing
circuit will consist of a jaw crusher and two (secondary and tertiary) cone crushers, and screens. The
crushed ore will have a P 80 of 13mm and will be stockpiled in a 9,200 tonnes capac ity dome; this is
sufficient for approximately two days of mill operation. The grinding circuit will consist of a ball mill
operating in a closed circuit and a two - stage cyclone cluster. The tantalum will first be recovered at a
grade of 2.0% Ta 2 O 5 by high intensity magnetic separation then upgraded further to 20.0% Ta 2 O 5 by
gravity separation . The tantalum concentrate will then be thickened, vacuum filtered, dried to 1% moisture
and bagged , ready for shipping. The lithium flotation circuit will remove slim es, separate mica, and purify
the lithium to the required grade. The spodumene concentrate will then be thickened, vacuum filtered,
dried to 1% moisture, and stored in 1500 tonne silo from where it can be bulk loaded into trucks. The
tailings will be thick ened, vacuum filtered to 15% moisture, and trucked to the waste rock / tailings piles
where it will be dry stacked.
7
The spodumene plant will operate 24 hours per day, seven (7) days per week, and 52 weeks per year.
The process plant was designed with an operating availability of 90%. The crushing circuit was designed
using an operating availability of 50%. The concentrator capacity has been established at a nominal
throughput rate of 4 900 dry tonnes per day. The plant has a capacity of 1,610,000 per yea r.
The process plant flowsheet developed by Bumigeme Inc . is presented in Figure 4.
Figure 4: Rose Process Flowsheet
Metallurgy
Bench scale metallurgical testing was performed at ACME Metallurgical Limited in Vancouver in 2011.
The results from th ese tests were used for the PEA study. Three composites; the Rose (main structure),
the Rose Sud - Est (Southeast structure) and Tantalum (secondary structure with higher tantalum and
lower lithium content) were subjected to various metallurgical tests.
SGS Canada Inc. in Lakefield conducted tests from 2013 to 2015 to improve lithium and tantalum
recoveries. In 2015 SGS Canada Inc. developed a conceptual flowsheet based on a series of bench
scale tests on various samples from the Rose deposit. The proposed f lowsheet is comprised of
conventional three - stage crushing and single stage grinding followed by magnetic separation for the
recovery of tantalum, mica flotation, and spodumene flotation. This flowsheet was the basis of the
process plant design.
SGS Cana da also conducted a pilot plant program in early 2017 on two samples from the Rose project
(Rose and Rose South). The main objective of the pilot plant program was to generate spodumene
concentrate for testing in a lithium carbonate pilot plant which was c onducted by Outotec in Germany and
Finland. Secondary objectives were to prove metallurgical performance on a continuous pilot scale and to
generate metallurgical and operating data for further studies. The spodumene pilot plant demonstrated
the robustness of the design process.
The feasibility study assumes 87.3% and 90% recove ry for technical and chemical grade lithium
concentrates respectively and 40 % recovery for the tantalum concentrate.
8
Process water will be recycled releasing minimal amounts to t he equalization pond and final effluent
treatment plant.
Bulk sampling for pilot plant work
Environmental and Social Impact Assessment
Baseline environmental studies were initiated in the spring 2011. In 2016, various studies were
undertaken in order to update the 2011 data and to obtain the baseline information that is required to
assess the project’s impacts within the Environmental and Social Impact Assessment (“ESIA”) of the
Rose mine Project. In total, eleven different sectorial studies were compl eted documenting the following
components:
- Hydrology
- Surface Water and Sediments
- Terrestrial fauna
- Aquatic fauna
- Artificial light at night
- Landscape
- Environmental Site Assessment – Phase I
- Vegetation
- Greenhouse gas
- Noise (including modelling)
- Archeology
- A ir quality (including modelling)
O ne study is currently ongoing for the hydrogeological environmental component.
The baseline study was completed and the ESIA was submitted to the Canadian Environmental
Assessment Agency (CEAA) and the Ministère du Dével oppement durable, de l’Environnement, et de la
Lutte contre les changements climatiques (MDDELCC) of the Québec Province on July 28 th , 2017. The
ESIA included preliminary information regarding Hydrogeology and will be updated when modelling is
completed.