Namibia Critical Metals Inc. Announces Positive Preliminary Economic Assessment for the significantly expanded Lofdal Heavy Rare Earth Project “2B-4” with $632.7 Million Pre-Tax NPV
Press Release
Namibia Critical Metals Inc. Announces Positive Preliminary
Economic Assessment for the significantly expanded Lofdal
Heavy Rare Earth Project “2B-4” with
$632.7 Million Pre-Tax NPV
Halifax, Nova Scotia October 3 , 2022 – Namibia Critical Metals Inc. (“Namibia Critical
Metals” or the “Company” or “NMI”) (TSXV: NMI OTCQ: NMREF) is pleased to announce the
results of its Preliminary Economic Assessment (“PEA”) for the Lofdal Heavy Rare Earth Project
“2B-4” (“Lofdal” or the “Project”) in Namibia. This PEA aims at a significantly larger annual
run-of-mine and plant throughput of 2 million tonnes per year and longer mine life than the
historical PEA of 2014 by mining from two sub-deposits namely “Pit 2B” and “Pit 4”. Further,
the processing flow sheet was simplified to a direct flotation of the run -of-mine material and
expanded to include a hydrometallurgical unit producing a >98% mixed rare earth oxide as
final product instead of xenotime concentrate.
The Lofdal deposit has the potential for significant production of dysprosium and terbium, two
of the most valuable heavy rare earth elements. The Project is being developed in joint
venture with Japan Oil, Gas and Metals National Corporation (“JOGMEC”) targeting a long
term, sustainable supply of heavy rare earths to Japan.
Highlights:
- Net Present Value – NPV (5) of $632.7 Million USD (pre-tax) and $391 Million
USD after-tax
- Internal Rate of Return (IRR) – 34% pre-tax and 28% after tax
- Life of mine nominal cash flow of $1.1 billion pre-tax, $698.7 million after-
tax
- Initial Capital Costs - $207 Million USD including a 30% contingency
- Capital Payback Period – 3.2 years after-tax
- Approximate Average Annual Production – 2,000 tonnes TREO including 117
tonnes Dysprosium and 17.5 tonnes Terbium
- PEA is based on mining of only 26 million tonnes resource or about 50% of
the 53 million tonnes in the Mineral Resource Estimate issued in June 2021
- Estimated 16-year mine life with 13 million tonnes of low-grade stockpile
likely expanding the life of mine
- The price for Rare Earth Oxides used: Dysprosium oxide USD$587/kg and
Terbium oxide USD$2,493/kg.
- Average basket price of USD$91/kg including third party separation costs
Cautionary Note: The preliminary economic assessment is preliminary in nature and includes inferred mineral
resources that are considered too speculative geologically to have the economic considerations applied to them to
enable them to be categorized as mineral reserves and there is no certainty that the preliminary economic
assessment will be realized. Mineral resources that are not mineral reserves do not have a demonstrated economic
viability
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Darrin Campbell, President of Namibia Critical Metals stated:
“This is a major step forward in establishing Lofdal as a world-class heavy rare project and a
globally significant potential supplier of Dysprosium and Terbium, the two most valuable rare
earth metals. This strong eco nomic analysis supports the continued rapid development of
Lofdal and we are moving forward with the next steps including Pre-Feasibility Study of this
extended mining operation over the next few months. This robust economic assessment is
only on 50% of our existing resource and we believe there is still considerable upside in
exploration. Currently, processing test work continues, and it is expected to further
significantly improve recoveries in all processing steps which will allow the Lofdal project to
become one of the major future sources of dysprosium and terbium globally.”
Lofdal deposit
The Lofdal Heavy Rare Earths deposit represents a district-scale (20 km x 10 km) heavy rare
earth element (HREE) mineralisation in subvolcanic hydrothermal alteration zones. While high
grade zones (>0.2% HREE) occur locally, the majority of the deposit resembles tens of meters
wide and kilometer -long zones of low grade HREE -mineralisation with an average grade of
about 0.1% HREE.
In order to develop the Lofdal project into a long -term producer of HREE, the Company
focussed recent processing test work on co st-efficient technologies to upgrade lower grade
material aiming at effects of economy of scale in a potential large-scale mining operation.
The Company mined a total of 34,500 tonnes of mineralised material from a starter pit in the
central Area 4 deposi t in October 2021 (Press release 29 November 2021). A 500 tonne
sample was taken from the mineralized zone at a depth between 12 and 15 metres in order
to minimize effects of surface related oxidation. The material was blended to provide
homogenized sample s which are representative of the wider deposit at a grade of about
0.187% TREO for bulk sample test work.
Summary of Mining Results
The proposed mining method is conventional open pit mining. Mineralised rock and waste
would be drilled, blasted, loaded b y hydraulic shovels and hydraulic excavators into off -
highway dump trucks, and hauled to the processing plant. The basis for the pit design work
was the mineral resource block model that was developed by MSA as part of Mineral Resource
Estimate (see NI-43-101 Technical Report and press release dated June 30,2021).
The proposed mining method is the development of a slot in front of the mineralised z one at
each level. The centralized slot will enable waste mining on one side while mining mineralised
material on the other side. This methodology will also facilitate separating mineralised
material from waste material. The target ROM feed to the proce ssing plant is 2 ,000,000
tonnes per annum. The plant feed is mineralised material with a TREO >= 0.1%. In th e
current schedule the production ramps up to this over 4 years. Mineralised material with TREO
>=0.05% and <0.1% is sent to a stockpile so it may be processed at a later stage if economics
allow.
The combined Life of M ine of the two pits is 16 years . Due to the nature of the deposit, the
resultant pits are narrow and deep. No backfilling is contemplated.
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An assumed maximum pit slope angle of 63 ° is applied to all slopes other than the low wall
side, which follows the orebody and is at approximately 50 °. With the inclusion of the ramp
system the overall highwall slope in Pit 4 is approximately 55°.
During the PFS stage, a switch to underground mining will be considered for more cost -
efficient mining of the lower levels in the current pit shell as well as to expand mining towards
deeper parts of the resource.
Summary of Processing Results
Flotation test program
The metallurgical bulk sample test program was amended to include flotation tests directly
on the fresh, low-grade sample, by-passing initially planned XRT and XRF sorting which would
result in additional losses. Iron removal by magnetic separation was moved to post flotation
on a smaller concentrate stream reducing CAPEX and OPEX with minimal losses.
Flotation test work was carried out at SGS Canada Inc. in Lakefield, Ontario, and at UVR-FIA
GmbH in Freiberg, Germany. Both institutions, cumulatively conducted over 1 20 individual
flotation tests using several types of collectors, depressants and considered thrifting of
physical flotation conditions.
The impact of high intensity conditioning ahead of flotation yielded clearly improved flotation
performance.
Best flotation results in regard to upgrade, recoveries and operating costs were achieved
using moderate dosages of the collector Florrea 3900 and Calgon as depressant. Cleaner
flotation concentrates from positive test runs produced at an overall mass pull of 2.7-3.9%
with a product grade of 4-6% TREO and a recovery of up to 70% TREO. More importa ntly,
the high value Heavy Rare E arth Elements, mainly hosted in xenotime, showed significantly
better recoveries (58-75% HREO) than the Light Rare Earth Elements (49-58% LREO) .
Flotation tests on finer grind material reached up to 75.2% recovery for the Heavy Rare Earths
Oxides which represents a significant upside potential currently tested.
After defining the optimal flotation conditions, bulk flotation tests were conducted in
quadruplicate to produce a flotation concentrate for downstream hydrometallurgical testing.
Four bulk flotation tests demonstrated repeatable flotation performances on the low-grade
feed material.
Significant upside potential also remains in further optimizing flotation conditions.
Hydrometallurgical test work and results
The mineral concentrate produced by bulk flotation was used for downstream
hydrometallurgical testing. Four bulk flotation tests demonstrated repeatable flotation
performances on the low grade direct run -of-mine feed material. The cleaner flotation from
the bulk test runs produced a concentrate grade TREO ranging from 4.7 – 6%. This flotation
concentrate marks the third such concentrate tested at the laboratories of SGS in Lakefield,
Ontario, to determine the potential for producing a marketable rare earth pro duct with
minimal impurities. The previous hydrometallurgical test work at SGS had demonstrated the
acid bake route is preferred due to lower reagent costs and higher recovery of the heavy rare
earths compared to the caustic crack route.
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A total of three acid bake and water leach tests were completed throughout the current test
program to investigate the dissolution of rare earth elements (REE) and the behaviour of
gangue minerals through the addition of sulphuric acid at elevated temperatures (300°C) and
at a range of acid dosages (1 -1.5 t/t concentrate basis) . Under previously determined
optimum conditions (2021 test program at SGS Canada), these tests showed very good REE
recoveries with 96% for yttrium, 95% for dysprosium and 94% for terbium.
Results of the impurity removal and crude REE precipitation tests on the leached solutions
corroborated chemistries with the previous test programs on the two flotation concentrates
with low co-precipitation of RE’s in the impurity removal stage (between 1-9% as compared
to between 1-15% in previous) with similar precipitation of impurities . While the results are
positive, there remains room to optimise these processes regarding OPEX and CAPEX as well
as recoveries in continuous pilot plant testing during pre-feasibility study.
The addition of a hydrometallurgical plant at Lofdal would create further jobs in the southern
Kunene Region of Namibia and provide a marketable product for export. The rare earth
oxalate product with thorium and uranium levels below 3 ppm would be acceptable for import
into Japan without restrictions or penalties.
Table 6 - Total Capital Costs Summary (US$)
Direct Mining Costs1 -
Direct Mine Site Processing Costs 117,577,231
Direct Tailings Storage Facility Costs 13,628,361
SUB TOTAL INITIAL CAPITAL COSTS 131,205,593
Sustaining Capital Mining -
Sustaining Capital Processing 6,010,090
Sustaining Capital Tailings Storage Facility 5,432,266
Mine Closure Costs 5,000,000
Indirect Costs 18,560,082
Contingency 40,873,816
TOTAL CAPITAL COSTS 207,081,846
1Mining will be conducted via contractor, all contractor capital recovery is reflected in the
mining operating costs.
Market Analysis – Pricing
A price deck has been developed for the Lofdal project based on an internal review of pricing
as well as peer reports (Mkango Resources LTD DFS July , 2022, and Search Minerals PEA
June, 2022) which in turn were developed based on third party independent market forecast
analysis.
The projected REO distribution for Lofdal concentr ates is also presented in Table 7. The
projected basket price is US$103.64.
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Table 7 – Pricing US$/Kg
Pricing Forecast for REE
Pricing Used for
Analysis Distribution
La2O3 $ - 9.2%
Ce2O3 $ - 16.0%
Pr2O3 $ 201.00 1.7%
Nd2O3 $ 212.00 6.3%
Sm2O3 $ 5.00 2.2%
Eu2O3 $ 36.00 1.1%
Gd2O3 $ 109.00 4.3%
Tb2O3 $ 2,493.00 0.9%
Dy2O3 $ 587.00 6.2%
Ho2O3 $ 290.00 1.3%
Er2O3 $ 64.00 3.8%
Yb2O3 $ 20.00 3.5%
Lu2O3 $ 947.00 0.5%
Y2O3 $ 17.00 42.4%
Tm2O3 $ 500.00 0.6%
Average Basket Value1 $ 103.64
1Pricing used before refining charges of $12/kg TREO
Economic Analysis
The economic analysis assumes that the Project will be 100% equity financed and uses
parameters relevant as of September 2022, under conditions likely to be applicable to project
development and operation and analyzes the sensitivity of the Project to changes in the key
Project parameters. All costs have been presented in United States Dollars (US$) and
wherever applicable conversion from South African Rand (ZAR) has utilized an exchange ratio
(ZAR/US$) of 16.07.
Mining and treatment data, capital cost estimates and operating cost estimates have been
put into a base case financial model to calculate the IRR and NPV based on calculated Project
after tax cash flows. The scope of the financial model has been restricted to the Project level
and as such, the effects of interest charges and financing have been excluded.
For the purposes of the PEA, the evaluation is based on 100% of the Project cash flows before
distribution of profits to the equity owners. Both pre-tax and after-tax cash flows have taken
5% royalty payments into account.
At a discount rate of 5% the Project is anticipated to yield a pre -tax IRR of 34% with a NPV
of US$632,739,693, and an after tax IRR of 28% with a NPV of US$390,982,730. Cumulative
cash flows are US$ 1,110,393,637 pre-tax and US$ 698,691,741 after tax over the sixteen
year LOM (Table 1).
The Project is expected to pay back initial capital within the first 3.2 years.
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Sensitivity Analysis
Pre Tax NPV at Range of Operating Costs
Discount 60% 70% 80% 90% 100% 110% 120% 130% 140%
5% $1004.5M $911.6M $818.6M $725.7M $632.7M $539.8M $446.8M $353.9M $261.0M
7% $822.6M $744.0M $665.4M $586.8M $508.3M $429.7M $351.1M $272.5M $193.9M
8% $745.8M $673.3M $600.8M $528.3M $455.8M $383.3M $310.8M $238.4M $165.9M
9% $676.9M $609.9M $542.9M $475.9M $408.9M $341.9M $274.9M $207.9M $140.9M
10% $615.0M $552.9M $490.9M $428.8M $366.8M $304.8M $242.7M $180.7M $118.6M
Pre-Tax NPV At Range of Capital Costs
$ 124.2 $ 145.0 $ 165.7 $ 186.4 $207.1M $ 227.8 $ 248.5 $ 269.2 $ 289.9
Discount 60% 70% 80% 90% 100% 110% 120% 130% 140%
5% $708.0M $689.2M $670.4M $651.5M $632.7M $613.9M $595.1M $576.3M $557.5M
7% $580.9M $562.8M $544.6M $526.4M $508.3M $490.1M $471.9M $453.7M $435.6M
8% $527.3M $509.4M $491.6M $473.7M $455.8M $437.9M $420.1M $402.2M $384.3M
9% $479.2M $461.6M $444.1M $426.5M $408.9M $391.3M $373.7M $356.1M $338.5M
10% $436.0M $418.7M $401.4M $384.1M $366.8M $349.5M $332.2M $314.9M $297.6M
Pre-Tax NPV at Basket Price Levels
Discount $70 $75 $80 $85 $92 $95 $100 $105 $110
5% $240.1M $330.8M $421.5M $512.3M $632.7M $693.7M $784.4M $883.2M $965.9M
7% $177.2M $253.7M $330.2M $406.7M $508.3M $559.7M $636.2M $719.4M $789.2M
8% $150.9M $221.3M $291.8M $362.3M $455.8M $503.2M $573.6M $650.3M $714.6M
9% $127.4M $192.5M $257.5M $322.5M $408.9M $452.6M $517.6M $588.4M $647.7M
10% $106.5M $166.6M $226.8M $286.9M $366.8M $407.2M $467.4M $532.8M $587.6M
Pre-Tax NPV at Varying Recovery Ranges
Discount 43% 48% 53% 57% 59% 61% 64% 69% 74%
5% $178.0M $320.1M $462.2M $575.9M $632.7M $689.6M $774.9M $917.0M $1059.1M
7% $124.8M $244.6M $364.5M $460.3M $508.3M $556.2M $628.1M $747.9M $867.7M
8% $102.6M $213.0M $323.4M $411.7M $455.8M $500.0M $566.2M $676.6M $787.0M
9% $82.9M $184.8M $286.6M $368.1M $408.9M $449.6M $510.8M $612.6M $714.5M
10% $65.3M $159.5M $253.7M $329.1M $366.8M $404.5M $461.0M $555.2M $649.4M
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Recommendations
This PEA was based on the Mineral Resource Estimate produced by The MSA Group in 2021.
Significant upside potential exists down dip of Area 4 and Area 2B as well as along the several
kilometer long strike extensions of the mineralization in Areas 2 and 5. Therefore, with further
exploration the run -of-mine and/or life time of the Lofdal mine could be significantly
increased.
Sorting of the run -of-mine material was excluded from this PEA. However, historical and
recent test work at TOMRA showed several approaches for an optimization of the Lofdal mine.
Further studies will focus on three run -of-mine streams which will entail (1) higher grade
material directly supplied to the flotation circuit while (2) lower grade material will run through
a low filter XRT so rting with an upgrade factor expected in the range 2.0 -2.5, and (3) very
low grade (stockpile) material which will be XRT sorted with a high filter aiming at upgrades
factors in the range 3.5 -4 with relatively low recoveries around 50%. The latter will also
source about 13 Mt of stockpile material which is not included in the current PEA.
While completing this PEA, further flotation tests are continuing at SGS aiming at furthe r
optimization of flotation. Specifically, grind size and collector dosage optimization bears
significant upside for better recoveries and lower OPEX.
Figure 1: Lofdal Area 4 deposit Grade-tonnage curve demonstrating the large upside for the life of mine or increasing
production by tapping the low grade resources potentially upgrading the run-of-mine by XRT sorting
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QUALIFIED PERSONS AND 43-101 TECHNICAL REPORT
A NI 43-101 compliant report entitled Preliminary Economic Assessment on the Lofdal Heavy
Rare Earths 2B-4 Project, Namibia (“the Report”) will be filed on SEDAR within 45 days. SGS
Canada Inc. is the principal author under the supervision of Michael Archer who is a Qualified
Person in accordance with NI 43-101 – Standards of Disclosure for Mineral Projects.
Sections of the Report dealing with property description and location, accessibility, climate,
local resources, infrastructure and physiography, hist ory, geological setting and
mineralisation, deposit types, exploration, drilling, sample preparation, analyses and security
and data verification were completed by The MSA Group under the supervision of Jeremy
Witley, (BSc Hons, MSc (Eng.)) and Swinden Geoscience Consultants under the supervision
of Scott Swinden, (Ph.D P.Geo), who are Qualified Persons in accordance with NI 43 -101 –
standards of disclosure for mineral projects.
The section of the Report dealing with mineral resource estimates was completed by The MSA
Group under the supervision of Jeremy Witley, (BSc Hons, MSc (Eng.))
Sections of the Report, dealing with mining methods and mine capital and operating costs
were completed by SGS Canada under the supervision of Bill van Breugel (BaSc Hons, P.Eng.)
who is a Qualified Person in accordance with NI 43-101 – Standards of Disclosure for Mineral
Projects.
Sections of the Report, dealing with mining design and schedules were completed by BBMC
RSA under the supervision of Johann Hager (BEng Hons, MEng Mining, P.Eng.) who is a
Qualified Person in accordance with NI 43-101 – Standards of Disclosure for Mineral Projects.
Each of Michael Archer, Jeremy Witley, Scott Swinden, Johann Hager and Bill van Breugel
have reviewed and approved the technical disclosure in this press release.
Rainer Ellmies, PhD, MScGeol, EurGeol, AusIMM and Vice President of Namibia Critical Metals
Inc., is the Company’s Qualified Person and has reviewed and approved the geological data
in this press release.
About Namibia Critical Metals Inc.
Namibia Critical Metals Inc. holds a diversified portfolio of exploration and advanced stage
projects in Namibia focused on the development of sustainable and ethical sources of metals
for the battery, electric vehicle and associated industries. The two advanced stage projects in
the portfolio are Lofdal and Epembe. The Company also holds significant land positions in
areas favourable for gold mineralization.
Heavy Rare Earths: The Lofdal Dysprosium -Terbium Project is the Company’s most
advanced project being fully permitted with a Mining Licence (ML 200) issued in 2021. The
project is being developed in joint venture with Japan Oil, Gas and Metals National Corporation
(“JOGMEC”).