Critical Elements Lithium Corporation ’S Rose Lithium -T Antalum Project : Corporate Update
PRESS RELEASE
CRITICAL ELEMENTS LITHIUM CORPORATION ’S ROSE LITHIUM -T ANTALUM PROJECT :
CORPORATE UPDATE
OCTOBER 8TH , 2020 – MONTRÉAL , QUÉBEC – CRITICAL ELEMENTS LITHIUM CORPORATION (the
“Corporation ” or “ Critical Elements ”) (TSX.V: CRE) (US OTCQX: CRECF) (FSE: F12) wishes to
provide a corporate update and project update on th e Rose Lithium-Tantalum Project (“ Rose ” or
the “ Project ”).
Highlights
Leading equity research firm "calls the bottom" on lithium pricing
Lithium hydroxide demand is expected to outpace lit hium carbonate demand past
2022, exceeding 200,000 Mt LCE according to Canaccord Genuity Research
A sulphate-free lithium extraction process, similar to that recently announced by
Tesla, was successfully tested by Critical Elements in 2017 and 2018 with a recovery
rate of 93% from concentrate
The European Commission’s raw material strategy and recent U.S. Executive Order
urgently require critical raw materials supply from countries like Canada
Critical Elements provided requested information to Provincial regulatory
authorities as part of the environmental impact assessment process for Rose
Quebec's strong electric aspirations
Corporate & Project Update
Critical Elements’ vision is to be a global leading , responsible supplier of lithium hydroxide to the
emerging electric vehicle and energy storage industries. The Corporation is well-positioned to play
a significant role in the lithium market with one o f the highest purity spodumene deposits in the
world and over 530 km 2 of prospective lands in the tier one mining jurisd iction of Québec. Critical
Elements is focused on achieving this vision with minimal environmental impact by leveraging low
carbon electricity available through Québec’s established power grid and cooperating with the Cree
Nation of Eastmain and other local Cree Nations communities, with whom relationships have been
publicly formalized.
Critical Elements wishes to comment on the share pr ice appreciation experienced by the
Corporation along with many other lithium explorati on and development companies over recent
trading sessions. Critical Elements is of the view that much of the recent share price movements
can be attributed to a series of exogenous events that contribute toward a more positive long-term
lithium supply and demand outlook.
Over the last few months, Critical Elements has been in steady communication with provincial and
federal regulatory authorities concerning the permitting of Rose. Critical Elements recently provided
Québec’s Ministère de l'Environnement et de la Lutt e contre les changements climatiques with
requested information and expects to receive feedback within the next few weeks. Critical Elements
also expects to provide the Canadian Environmental Assessment Agency with requested
information within the next few weeks.
Dr. Steffen Haber, President of Critical Elements, is the former CEO of Rockwood Lithium, sold to
Albemarle for US$6.2 billion in January 2015. He co mmented that, "We are confident that our
responsibly sourced, high purity spodumene concentrate and battery quality lithium hydroxide will
be highly marketable in the North American and European markets over the decade or more before
recycling becomes a significant presence in the battery materials landscape."
European Critical Minerals Strategy
The European Commission (“ EC ”) published its security and sustainability strategy for critical raw
materials in September 2020 as part of the Green De al which seeks to achieve climate neutrality
by 2050. The EC believes the COVID-19 crisis has re vealed the fragility of global supply chains
emphasizing the need to increase supply chain resilience and European autonomy. The European
Union’s (“ EU ”) list of “critical materials” has been expanded t o include 30 materials in 2020,
compared to 27 in 2017, and now includes lithium. A ccording to the EC, to achieve its goals for
electric vehicle batteries and energy storage, the EU would need up to 18 times more lithium supply
by 2030 and up to 60 times more by 2050, relative to the current EU supply.
The EC report highlights the fact that countries such as China, the United States and Japan have
already begun to secure future supplies of raw mate rials, diversify sources of supply through
strategic partnerships with resource-rich countries and develop resilient internal raw material-based
value chains. Due to geological limitations, the EU recognizes that its regional supply chain will
largely rely on imports in the medium to long term. In this competitive market, the EU action plan
includes diversifying supply with sustainable and r esponsible sourcing from third countries,
specifically mentioning highly developed mining cou ntries such as Canada. The European
Investment Bank has also adopted a new energy lending policy, which will support projects in the
EU and third countries relating to the supply of cr itical raw materials needed for low carbon
technologies in the EU.
Leading Equity Research Firm "Calls the Bottom" on Lithium Pricing
Canaccord Genuity Corp. (“CG ”) is one of the leading brokerage firms covering the lithium sector.
In a report published in September 2020, CG analysts stated lithium prices are bottoming, a view
supported by production cuts, capacity constraints and China chemical pricing falling below the
global LCE cost curve. Although prices for battery quality lithium carbonate and lithium hydroxide
sold to tier one battery manufacturers have held up well, CG considers the current broader pricing
environment unsustainable.
Key report highlights:
Strong 2020 YTD European EV sales volumes offsetti ng weaker Chinese sales, with
growth expected to accelerate with the introduction of tighter EU fleet CO 2 emissions
standards and new government subsidies
o CG is forecasting a 22% CAGR for lithium demand ou t to 2030
CG estimates that a total of ~440,000 t/a lithium carbonate equivalent (“ LCE ”) in existing
or planned capacity has been shut, cancelled or def erred in the last twelve months in
response to the lithium pricing pullback
o Higher pricing will be required to incentivize a r eturn to prior rates of supply growth
and investment in new capacity
It is expected that supply surpluses will mostly r everse by 2023, twelve months ahead of
the previous forecast
Lithium hydroxide demand is expected to catch up t o lithium carbonate demand in 2022,
two years ahead of the previous forecast, as EV sal es accelerate in Europe (typically
characterized by larger vehicles utilizing higher c ontent nickel battery formulations
requiring lithium hydroxide)
o This has significant growth implications for hard rock spodumene sources of supply
as compared to brine sources, especially for high p urity spodumene deposits like
Rose
o Delays in lithium hydroxide conversion capacity ex pansion support the CG thesis
that large market deficits are expected to emerge beginning in 2025
Tesla’s Battery Day
On its highly anticipated annual Battery Day in September 2020, Tesla, Inc. (“ Tesla ”) underscored
its technological lead in electric vehicle technology and process engineering. Management outlined
its own goals and set the pace for its competitors. Tesla intends to achieve a complete global
transition to sustainable energy requiring the deli very of affordable electric vehicles and energy
storage. This requires terawatt-scale battery produ ction and more affordable cells. Tesla is
targeting 3 TWh/a battery manufacturing capacity by 2030 from 100 MWh/a today. Concurrently,
Tesla intends to increase range by 54%, reduce capi tal investment ($/GWh) by 69% and reduce
production cost by 56%. Tesla has re-envisaged the entire process from cell design to cell
processing/factory design, anode materials, cathode materials and cell vehicle integration.
On the raw materials side for cathode production, T esla is focused on reducing the distance
travelled for each kilogram of material, targeting an 80% reduction from current levels. This
reduction implies a powerful shift toward regional supply chains around Tesla battery manufacturing
hubs located in Shanghai, Berlin and Texas. Tesla a ppears to have embarked on a two-pronged
approach, sourcing spodumene concentrate regionally for conversion to lithium hydroxide and
sourcing lithium from its operation in Nevada.
Tesla intends to build a conversion facility adjoin ing its cathode and cell manufacturing facility in
Texas, which will be initially fed by spodumene con centrate sourced from North Carolina and,
based on the map in its event presentation, Québec and Ontario. The conversion facility will
incorporate “a new hydrometallurgical sulphate-free process [Tesla] will pioneer.”
In October 2018, Critical Elements announced the su ccessful conversion of spodumene
concentrate from Rose into battery-grade lithium hy droxide in a pilot plant program completed by
Metso Outotec, a frontrunner in sustainable mineral s processing technologies. The sulphate-free
Metso Outotec hydrometallurgical process generated strong results with lithium extraction rates of
93%, versus the market benchmark of 70-75%.
Tesla appears confident that it can advance through technical studies and the permitting process
for mining and water use to mine sediment (clay) ho sted lithium ore from its new +10,000-acre
project in Nevada, while also pioneering a suitable process to extract lithium from the ore using
water and table salt. Critical Elements is confiden t that its responsibly sourced, high purity
spodumene concentrate amenable to producing battery -grade lithium hydroxide will be highly
marketable in the North American and European markets going forward.
Québec’s Electric Aspirations
In an interview with Québec’s Minister of the Economy, Pierre Fitzgibbon by Le Journal (September
23, 2020), the Minister outlined the Province’s aspiration to build an electrification industry focused
on the lithium-ion battery. Québec has the natural resources, inexpensive and low-carbon electricity
and intellectual capital to transform raw materials into cathodes, anodes and electrolytes, to be
assembled into lithium-ion batteries. The Minister sees potential cumulative investment of up to
$7.0 billion within 10 years and, to facilitate thi s, Québec is ready to contribute up to $1.4 billion .
The Province’s vision of a battery hub based in Qué bec and supplying the North American and
European automotive industries is both realistic and well-aligned with Critical Elements’ vision.
U.S. Presidential Executive Order
In September 2020, the United States President, Donald J. Trump, signed Executive Order 13817
determining that there is an “undue reliance on critical minerals, in processed or unprocessed form,
from foreign adversaries” and that this “constitute s an unusual and extraordinary threat… to the
national security, foreign policy, and economy of the United States”. President Trump consequently
declared a national emergency to deal with this threat. According to the Executive Order, the list of
35 critical minerals includes lithium. In addition to “expanding and strengthening domestic mining
and processing capacity”, the order seeks to “reduc e the vulnerability of the United States to the
disruption of critical mineral supply chains through cooperation and coordination with partners and
allies”.
In addition to further investigation and formalized reporting, further executive action may include
the imposition of tariffs or quotas, funding opportunities including grants, loan guarantees and other
incentive awards and loans, and “use all available authorities to accelerate the issue of permits and
the completion of projects in connection with expanding and protecting the domestic supply chain
for minerals.” The importance of a responsible Nort h American-centric supply chain for critical
minerals is clear.
Strategic Partner & Project Financing Discussions
The Corporation continues to work closely with its financial advisor, Canaccord Genuity Corp., to
evaluate ongoing interest from potential capital providers and global strategic partners that seek to
accelerate development of the Rose project.
As part of the process, Critical Elements and their advisor have been in contact with a number of
logical potential strategic parties, including OEMs , cathode manufacturers and battery cell
manufacturers.
Concurrently, the Corporation continues to work wit h various financial institutions and lenders to
explore project debt financing opportunities for the construction of Rose.
Critical Elements' CEO, Jean-Sébastien Lavallée, notes, "We own 100% of the Nisk-1 Ni-Cu-PGE
deposit. Given recent high interest for sulfide nickel projects, we have started a review of different
options to recognize the project’s value on behalf of shareholders."
Nisk-1 Ni-Cu-PGE Deposit
Critical Elements is assessing various alternatives for its 100%-owned Nisk property (“ Nisk ”). Nisk
is composed of one block totaling 100 claims coveri ng an area of 51 km 2 and a length of over 20
km. The Route du Nord from Chibougamau runs inside the south border of the property. Nisk is
also traversed in a NE direction by a Hydro-Québec power line and a road that heads north to the
Eastmain River and beyond to the La Grande River area.
Nisk is currently known for its magmatic nickel-copper sulphide deposits associated with ultramafic
intrusion potential. It notably hosts the Nisk-1 Ni-Cu-PGE deposit (“ Nisk-1 ”).
Nisk-1 is hosted in an elongated body of serpentini zed ultramafic rocks that intrude the Lac des
Montagnes paragneiss and amphibolite sequence. The ultramafic rock intrusion is a sill bordered
by paragneisses and amphibolites. Quite similar on either side of the ultramafic sill, they still can
be subdivided into a lower paragneiss sequence to t he NW of the sill (stratigraphically older) and
an upper paragneiss sequence to the SE of the sill (stratigraphically younger).
The ultramafic sill is not a single intrusion. At l east two distinct lithological units can be identif ied.
The first, a grey serpentinized peridotite with mag netite veinlets, does not contain any sulphide
minerals. The second is a black serpentinized peridotite with chrysotile veinlets. The Ni-Cu-Co-Fe
sulphide mineralization is invariably associated with this black serpentinite.
Nisk-1 is the only mineralized zone with estimated resources on the property. An NI 43-101
resource estimate was delivered in 2009 (Resource Estimate for the NISK-1 Deposit, Lac Levac Property,
Nemiscau, Quebec, NI 43-101 Technical Report prepared by Pierre Trude l Ph.D., P.Eng. Geological
Engineer) :
Measured resource: 1,255,000 tonnes at 1.09% Ni; 0 .56% Cu; 0.07% Co; 1.11 g/t Pd and
0.20 g/t Pt
Indicated resource: 783,000 tonnes at 1.00% Ni; 0.53% Cu; 0.06% Co; 0.91 g/t Pd and 0.29
g/t Pt
Inferred resource: 1,053,000 tonnes at 0.81% Ni; 0.32% Cu; 0.06% Co; 1.06 g/t Pd and 0.50
g/t Pt
Due to increasing interest in nickel sulphide projects, the Corporation has commenced a systematic
process to explore, review and evaluate potential options to monetize Nisk-1.
Qualified persons
Paul Bonneville, Mining Eng., Project Manager of the Corporation, is the qualified person that has
reviewed and approved the technical contents of this news release on behalf of the Corporation.
ABOUT CRITICAL ELEMENTS LITHIUM CORPORATION
Primero Group recently completed the first phase of its Early Contractor Involvement agreement
with the Corporation and provided a Guaranteed Maximum Price for the engineering, procurement
and construction of the wholly-owned Rose Lithium-Tantalum project on a lump sum turnkey basis
that is in line with the Project’s feasibility study published November 29, 2017. The project feasibility
study is based on price forecasts of US $750/tonne for chemical-grade lithium concentrate (5%
Li2O), US $1,500/tonne for technical-grade lithium concentrate (6% Li2O) and US $130/kg for
Ta2O5 in tantalite concentrate, and an exchange rate of US $0.75/CA $. The internal rate of return
(“IRR”) for the Rose Lithium-Tantalum project is estimated at 34.9% after tax, and net present value
(“NPV”) is estimated at CA $726 million at an 8% di scount rate. The estimated payback period is
2.8 years. The pre-tax IRR for the Rose Lithium-Tan talum Project is estimated at 48.2% and the
pre-tax NPV at CA $1,257 million at an 8% discount rate (see press release dated September 6,
2017). The financial analysis is based on the Indic ated mineral resource. An Indicated mineral
resource is that part of a mineral resource for which quantity, grade or quality, densities, shape and
physical characteristics can be estimated with a le vel of confidence sufficient to allow the
appropriate application of technical and economic p arameters, to support mine planning and
evaluation of the economic viability of the deposit . The life-of-mine (LOM) plan provides for the
extraction of 26.8 million tonnes of ore, 182.4 mil lion tonnes of waste, and 11.0 million tonnes of
overburden for a total of 220.2 million tonnes of material. The average stripping ratio is 7.2 tonnes
per tonne of ore. The nominal production rate is es timated at 4,600 tonnes per day, with 350
operating days per year. The open pit mining schedule allows for a 17-year mine life. The mine will
produce a total of 26.8 million tonnes of ore grading an average of 0.85% Li2O and 133 ppm Ta2O5,
including dilution. The mill will process 1.61 mill ion tonnes of ore per year to produce an annual
average of 236,532 tonnes of technical and chemical grade spodumene concentrate and 429
tonnes of tantalite concentrate.
FOR MORE INFORMATION:
Jean-Sébastien Lavallée, P. Géo.
Chief Executive Officer
819-354-5146
www.cecorp.ca
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