Leading Edge Materials Announces Positive Preliminary Economic Assessment Results FOR Its Norra Karr REE Project with US$1,026M Pre-Tax NPV (10%) and 30.8% Pre-Tax IRR
NEWS RELEASE July 22, 2021
LEADING EDGE MATERIALS CORP.
1305 – 1090 West Georgia Street, Vancouver, BC, V6E 3V7
[email protected] | www.leadingedgematerials.com
TSX.V: LEM | Nasdaq First North: LEMSE | OTCQB: LEMIF
TSX.V: LEM | Nasdaq First North: LEMSE | OTCQB: LEMIF
LEADING EDGE MATERIALS ANNOUNCES POSITIVE PRELIMINARY ECONOMIC
ASSESSMENT RESULTS FOR ITS NORRA KARR REE PROJECT WITH US$1,026M
PRE-TAX NPV (10%) AND 30.8% PRE-TAX IRR
Vancouver, July 22, 2021 – Leading Edge Materials Corp. (“Leading Edge Materials” or
the “Company”) (TSXV: LEM) (Nasdaq First North: LEMSE) (OTCQB: LEMIF) is pleased to
announce the results of a Preliminary Economic Assessment study ("PEA" or the “Report”)
for the development of its 100%-owned Norra Karr REE project located in Sweden (“Norra
Karr” or the “Project”). The PEA was prepared by SRK (UK) Ltd. (“SRK”) and all figures in the
PEA are US dollars unless otherwise specified.
As previously announced, the Company commissioned SRK to re-evaluate the Project at
PEA level with the objective to improve resource utilization, project sustainability and
substantially minimize environmental footprint of the Project compared to the design in
the pre-feasibility study which was released in 20151 (the “2015 PFS”) and formed the
basis for the current mining lease permitting process.
Main PEA Highlights (In comparison to the 2015 PFS)
• Significant increase in resource utilization by proposing recovery of nepheline
syenite (NS) industrial mineral, zirconium oxide (Zr) and niobium oxide (Nb)
products in addition to the rare earth oxide (“REO”) products. In the PEA more than
50% of total mined material is planned to be sold as products compared with
previously less than 1% in the 2015 PFS. The PEA also identifies future
opportunities to valorize the residual mined material which could potentially result
in all mineralized material mined to be treated as potential commercial products.
• Introducing a revised Project flowsheet to minimize the environmental footprint at
the Norra Karr site:
o The Norra Karr site will only include mining and comminution methods
consisting of crushing, milling and magnetic separation, eliminating all
chemical processing from Norra Karr and associated waste vs the 2015 PFS
study. In the PEA following physical separation resulting material streams
either are shipped as products or as concentrates for further processing at
other locations and a single waste stream to be stored at the Norra Karr
site.
1 See National Instrument 43-101 report entitled "Amended & Restated Prefeasibility Study - NI-101 - Technical report for
the Norra Karr Rare Earth Element Deposit" prepared for Tasman Metals Ltd. with effective date January 13, 2015 and issue
date July 10, 2015. See Tasman Metals Ltd. SEDAR profile on www.sedar.ca for report and more information.
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o The rare earth, zirconium and niobium bearing concentrate will be
transported to a dedicated off-site location for chemical processing and
further recovery.
• The combination of the above, results in a single waste stream at the Norra Karr
site consisting of the mineral aegirine which can be dry stacked in a lined
impoundment together with waste rock from mining, eliminating the need for a
wet tailings storage facility. This new design substantially reduces land area usage
of the Project by approximately 80% (see Figure 1) and results in no chemical
process tailing dams being required at Norra Karr. These changes considerably
reduce the environment risk profile of the Project at Norra Karr.
• In addition, the removal of chemical processing and wet tailings at Norra Karr
delivers an overall predicted 51% reduction in water requirements over the life of
mine vs the 2015 PFS study. Use of mine dewatering for processing can reduce
additional water requirements by almost 100% and the elimination of discharge
requirements to local water bodies compared with the 2015 PFS design.
• The PEA introduces the design of an off-site chemical recovery plant located close
to reagent supplies within an existing brownfield development area where mixed
REO (MREO), Zr and Nb products are planned to be recovered. Residual process
waste at the off-site facility consists of neutralized leach residue and gypsum
disposed of in geomembrane lined dry stack impoundments. The Report identifies
the future potential to further process the gypsum waste into a gypsum product
for construction material markets.
The PEA is preliminary in nature, it includes inferred mineral resources that are
considered too speculative geologically to have the economic considerations applied to
them that would enable them to be categorized as mineral reserves, and there is no
certainty that the PEA will be realized.
Filip Kozlowski, CEO of Leading Edge Materials states “I am very excited to share these
important PEA results, having more than met the strategic goals we set out to achieve. Norra
Karr is a globally recognized significant rare earth project, and the re-evaluated design
strengthens the sustainability, economics and resiliency of the project. By moving chemical
processing off-site, and significantly improving resource utilization we have shown the
opportunity to eliminate the need for a wet tailings storage. Adding further revenue streams
improves the resiliency and cost competitiveness of the project relative to current dominant
supply of rare earths from China. Norra Karr offers a rare opportunity for the European
Commission’s ambitions to develop a sustainable and secure EU based value chain for rare
earths and permanent magnets and we now have a much better path ahead of us.”
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Figure 1 – Graphical illustration of Norra Karr On-site open pit, waste rock facility and physical
beneficiation plant in comparison to 2015 PFS infrastructure and tailings dam (in red)
Project Financial Highlights
• Pre- and post-tax Net Present Value (NPV) of $1,026M and $762M using a 10%
discount rate
• Pre- and Post-tax Internal Rate of Return (IRR) of 30.8% and 26.3%
• Accumulated LoM project revenues of $9,962M
• Average annual EBITDA of $206M
• Initial Capital Expenditures (CAPEX) of $487M
• Pre-tax Payback Period from first production of 5.1 years
• Life of mine average gross basket price per kg of separated mixed REO product at
$53
• Operating cost per kg of separated mixed REO product at $33 including toll
separation charges
• By-product revenue per kg of separated mixed REO product $19
Operational Highlights
• Life of Mine (LOM) is 26 years
• LOM average annual
o Mining rate of 1,150,000 tonnes
o strip ratio of 0.32
o TREO 5,341 tonnes
o Main magnet rare earth oxides (“MagREO”) (Nd, Pr, Dy, Tb) 1,005 tonnes
▪ Dy2O3: 248 tonnes
▪ Tb2O3: 36 tonnes
▪ Nd2O3: 578 tonnes
▪ Pr2O3: 143 tonnes
o Nepheline Syenite co-product 732,885 tonnes
o Zirconium dioxide co-product 10,200 tonnes
o Niobium oxide co-product 525 tonnes
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Location and Infrastructure
On-site – Mining and comminution
The Norra Karr mine site is in the south central of the Kingdom of Sweden approximately
1.5 km from the eastern shore of Lake Vattern with the lake and the deposit separated by
the E4 highway. Advantageously situated close to both Swedish coasts, approximately
240km south-west of Stockholm and 160km east of Gothenburg. The nearest urban
settlement is Granna, 11km south by sealed road.
Regional road access from all major cities and ports to the project site is via the sealed
dual carriageway E4 highway and further local access is by all-weather sealed and
unsealed roads. Access to the national railway is approximately 30km east from the site
with a number of freight terminals in the regional area.
Currently the site is undeveloped within the perimeter and the area still maintains natural
vegetation, forestry plantations, cultivated farmlands and farmhouses. The PEA outlines
the buildings and installations required to support mining, physical comminution, waste
storage, materials handling and product logistics.
Off-site – Chemical leaching and recovery
The ultimate location for the off-site process facility is subject to detailed localization
studies between greenfield and brownfield options. For the purpose of the PEA an
existing brownfield location has been conceptually chosen to demonstrate the new
process flow design of the project. The chosen site is an existing brownfield industrial
area within easy reach of rail and port facilities located in the city of Lulea, Norrbotten
County in the north of Sweden, approximately 1200 km north of the Norra Karr site along
the E4 highway. Lulea has the seventh largest all-year round harbour in Sweden for
shipping goods from several mining districts, major chemical producers and a well-
established steel industry. The PEA outlines the buildings and installations required to
support chemical processing, waste storage, materials handling and product logistics.
Geology and Mineral Resource Estimate
Geologically, Norra Karr is a zoned agpaitic, peralkaline, nepheline syenite complex. The
alkaline intrusive REE-enriched body underwent compressive deformation and folding
during the Sveconorwegian shearing episodes.
The mineralization is relatively simple with nearly all the REE mineralization is hosted in
the zircono-silicate mineral eudialyte, which in itself is a complex mineral. The eudialyte
has been found to be relatively rich in REE’s, containing a high proportion of heavy rare
earth elements (HREE’s). The mineralized intrusive is an elongated body orientated in an
NNE-SSW direction, shallow dipping angles of 35°- 40° with an approximate strike length
of 1,300 m and 450 m in width. The Norra Karr deposit has the advantage that average
concentrations of uranium and thorium based on 9987 samples, U 11.4 ppm and Th 10.9
ppm, are extremely low compared with other REE deposits.
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Norra Karr was discovered as early as 1906 by SGU (Geological Survey of Sweden),
followed by trench bulk sampling work conducted by Boliden throughout the 1940’s and
1970’s. The first drilling campaigns took place under Tasman Metals between 2009-2012,
completing a total of 119 diamond drillholes for a total length of 20,420 m.
All of the mineral resource estimates are disclosed in accordance with the NI43-101
Standards of Disclosure for Mineral Projects and the classification of levels of confidence
are considered appropriate on the basis of drillhole spacing, sample interval, geological
interpretation, and all currently available assay data. Data obtained from the drilling
undertaken over the exploration permit was verified by WAI for the 2015 PFS and
reviewed by SRK for purpose of the mineral resource estimate in the PEA.
The Mineral Resource classification for the Norra Karr REE deposit is in accordance with
the guidelines of the CIM Definition Standards for Mineral Resources & Mineral Reserves
(CIM, 2014).
For the purpose of reporting the REE grades in the Mineral Resource block model were
converted to rare earth oxides using the conversion factors in Table 1.
Table 1 - Rare Earth (+zirconium and niobium) oxide conversion factors
Element Conversion Oxide Element Conversion Oxide
Ce 1.171 Ce2O3 Nd 1.166 Nd2O3
Dy 1.147 Dy2O3 Pr 1.17 Pr2O3
Er 1.143 Er2O3 Sm 1.159 Sm2O3
Eu 1.157 Eu2O3 Tb 1.151 Tb2O3
Gd 1.152 Gd2O3 Tm 1.142 Tm2O3
Ho 1.145 Ho2O3 Y 1.269 Y2O3
La 1.172 La2O3 Yb 1.138 Yb2O3
Lu 1.137 Lu2O3 Nb 1.431 Nb2O5
Zr 1.35 ZrO2
Table 2 - Norra Karr Mineral Resource Statement (SRK, 2021)*
Mineral Resource
Classification
Tonnes
(Mt)
TREO
(%)
HREO
(%)
ZrO2
(%)
Nb2O5
(%)
Nepheline Syenite
(%)
Inferred 110 0.5 0.27 1.7 0.05 65
*Notes:
1. Effective date 20 July 2021.
2. Qualified Person Mr Martin Pittuck
3. Mineral resources that are not mineral reserves do not have demonstrated economic viability. Mineral Resources are not Mineral
Reserves until they have Indicated or Measured confidence and they have modifying factors applied and they have demonstrated
economic viability based on a Feasibility Study or Prefeasibility Study.
4. The Mineral Resources reported have been constrained using an open pit shell assuming the deposit will be mined using open
pit bulk mining methods, above a cut -off grade of USD150/t ., including a 30% premium on projected commodity prices and
unconstrained by commodity production rates and the 260m highway buffer zone.
5. The Mineral Resources reported represent estimated contained metal in the ground and has not been adjusted for metallurgical
recovery.
6. Total Rare Earth Oxides (TREO) includes: La 2O3, Ce2O3, Pr2O3, Nd 2O3, Sm2O3, Eu 2O3, Gd 2O3, Tb 2O3, Dy 2O3, Ho 2O3, Er 2O3, Tm2O3,
Yb2O3, Lu2O3, Y2O3.
7. Heavy Rare Earth Oxides (HREO) include: Eu2O3, Gd2O3, Tb2O3, Dy2O3, Ho2O3, Er2O3, Tm2O3, Yb2O3, Lu2O3, Y2O3.
8. HREO is 54% of TREO
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The PEA is preliminary in nature, it includes inferred mineral resources that are considered too
speculative geologically to have the economic considerations applied to them that would enable them
to be categorized as mineral reserves, and there is no certainty that the PEA will be realized. The
rationale for re-evaluation of the Project at the PEA level is justified for the following reasons;
Recognition of potentially economic commodities in the mineralization not evaluated in the 2015 PFS,
namely nepheline syenite, niobium and zircon, recognition of the need to reduce the project footprint
and assess alternatives to a large tailing's facility at the mine site, and the need to minimize waste on
the project and have greater utilization of the extracted materials. The Company does not expect the
mineral resource estimates contained in the PEA to be materially affected by metallurgical,
environmental, permitting, legal, taxation, socio-economic, political, and marketing or other relevant
issues.
Mining
The mine planning work for the PEA was carried out using a mining model, which was
generated from the mineral resource model. An optimal pit shell was chosen based on
the highest average discounted cashflow assuming a production rate of 1.15 Mtpa of
plant feed and a discount rate of 10%. The generated extraction schedule and pit design
also sought to maximize the potential for waste backfill quantities which results in a four
staged approach which provides a 25 year LOM, a total of 29.3 Mt of run-of-mine (ROM)
and a total of 9.4 Mt of waste for an average strip ratio of 0.32. The staged approach
commences with the planned 1.15mtpa crusher feed target, which is expected to be met
starting in Year 1 due to the limited waste stripping requirements. The mine schedule
sequence starts in Stage 1, with Stage 2 commencing in Year 2. Stage 3 begins in Year 3,
while Stage 4 is delayed until Year 16 to maximize backfill options. The total production
averages 1,625 ktpa from Year 3 to 9, after which the total material movement decreases
as the strip ratio in Stage 3 decreases. Waste stripping requirements increase starting in
Year 16 as Stage 4 begins, averaging 1.8 Mtpa until Year 20. The delay of Stage 4 allows
for 1.9 Mt or 21% of total waste to be backfilled in the pit void.
Figure 2 – Open pit and waste rock facility through the different stages
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Mining equipment includes two 5.5 m3 excavators with up to six 46.8 t payload haul trucks
and in addition a stockpile loader and two 110 mm drills. Although there was no readily
available electric mining equipment to consider for the purpose of the PEA this option
was noted as a future opportunity to further increase the sustainability merits of the
Project.
The waste rock storage plan is designed to minimise the waste footprint by pit backfill in
the northern part of the pit once that area has been mined as well as an external waste
dump. The external waste dump design has a capacity of 8.8M loose cubic meters. The
backfill waste dump design has a capacity of 1.35 m loose cubic meters. It is also expected
that some of the waste mined in the earlier years of the operation will be used for
construction purposes as required.
Processing Overview
In the 2015 PFS, chemical processing for leaching and recovery of REO was envisioned to
occur on site. This required a large tailings storage facility and comprehensive water
treatment to ensure environmental protection. Even with this, considerable risk was
perceived to the processing operation and waste storage in local proximity to a number
of designated natural protection areas.
In order to reduce any risk of potentially hazardous substances away from the
environmentally sensitive areas the PEA re-evaluation proposes to move the chemical
processing to a more suitable off-site location. The on-site mine site will only include
physical comminution and magnetic separation, eliminating chemically leached waste
streams and the need for toxic reagents at site.
The PEA demonstrates the potential to produce a eudialyte concentrate at site through
crushing, milling and a two-stage magnetic separation. This concentrate is shipped to an
off-site chemical processing facility elsewhere in Sweden, close to a well-established
chemical industry allowing reagents to be readily supplied, reducing the carbon footprint
of the reagents and any transport risks and costs associated. Availability of cost
competitive and low carbon footprint hydropower electricity in the region for the off-site
facility offers a reduction in operating costs and climate impact for the energy intensive
process. The proposed conceptual flowsheet is provided in Figure 3.
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Figure 3 – On-site and Off-site high-level flow sheets as used in the PEA
For the PEA, SRK has relied on past testwork, both prior and subsequent to the 2015 PFS
and industry accepted practices as a basis for the redesigned flowsheet. The process
design criteria in Table 3 and Table 4 formed the operational basis for the process
flowsheet design.
Table 3 - Process design criteria
Description Magnitude Unit
On site process plant throughput 1150 000 t/a
ROM TREO grade 0.56 %
ROM Zr grade 1.86 %
ROM Nb grade 0.06 %
Contained TREO 6,946 t/a
Contained Zr 21,394 t/a
Contained Nb 657 t/a
Process plant operation 24/7/365 -
Crushing mechanical availability 80 %
Griding and beneficiation availability 91 %
Hydrometallurgy plant availability 91 %
On-site
Off-site