NMG Issues Positive Results of its Preliminary Economic Assessment for the Uatnan Mining Project – One of the World’s Largest Graphite Projects in Development with Indicative NPV in Excess of C$2 Billion + Preliminary economic assessment of the Uatnan Mining Project demonstrates attractive
NMG Issues Positive Results of its Preliminary Economic Assessment for the
Uatnan Mining Project – One of the World’s Largest Graphite Projects in
Development with Indicative NPV in Excess of C$2 Billion
+ Preliminary economic assessment of the Uatnan Mining Project demonstrates attractive
economics for a targeted production of approximately 500,000 tonnes of graphite
concentrate per annum over a 24-year life of mine, making it one of the World’s largest
graphite projects in development.
+ The Uatnan Mining Project covers Mason Graphite’s Lac Guéret graphite deposit
located in Québec, Canada.
+ Results indicate an after-tax IRR of 25.9% and an 8% discount rate NPV of C$ 2,173
million based on current pricing projections for flake concentrate.
+ The Uatnan Mining Project supports NMG’s Phase-3 expansion plans with updated
operational parameters and production volumes in line with the Company’s commercial
discussions with OEMs and lithium-ion battery cell makers.
+ NMG has extended its vision of responsible mining to the Uatnan Mining Project,
including transition plans for all-electric operations, advanced environmental management
and proactive First Nation and community engagement, to provide battery and EV
manufacturers with responsibly extracted, environmentally transformed, and locally
sourced graphite-based solutions.
+ Shareholders and analysts are invited to attend an Investor Briefing today at 10:30 a.m.
ET hosted by NMG’s Management Team via webcast:
https://us06web.zoom.us/webinar/register/WN_PQUZCrddQuWmw0UUMersow
MONTRÉAL--(BUSINESS WIRE)--January 10, 2023--Nouveau Monde Graphite Inc. (“NMG“
or the “Company”) (NYSE: NMG, TSX.V: NOU) in collaboration with Mason Graphite Inc.
(“Mason Graphite”) (TSX.V: LLG, OTCQX: MGPHF) releases the results of a preliminary
economic assessment (“PEA”), according to National Instrument 43-101 Standards of Disclosure
for Mineral Projects (“NI 43-101”), for a new project covering Mason Graphite’s Lac Guéret
graphite deposit, the Uatnan mining project (the “Uatnan Mining Project”) located in Québec,
Canada.
The PEA, conducted by engineering firms BBA Inc. (“BBA”) and GoldMinds Geoservices Inc.
(“GMG”), shows strong economics for NMG’s updated operational parameters and production
volumes targeting the production of approximately 500,000 tonnes of graphite concentrate per
annum over a 24-year life of mine (“LOM”). The proposed Uatnan Mining Project is currently
one of the largest projected natural graphite productions in the world as battery and electric
vehicle (“EV”) manufacturers seek local alternatives for sourcing their graphite-based solutions
amidst growing demand and a projected structural deficit of production as of this year as
supported by Benchmark Mineral Intelligence (December 2022).
Arne H Frandsen, Chair of NMG, declared: “NMG’s vision is to become North America’s most
important producer of battery grade graphite. The Uatnan Mining Project aligns with our vision
of progressive, integrated growth that caters to the market’s requirements for high-quality
graphite materials, local supplies, ESG-driven development, and large volumes to meet EV
production levels. Building on our Matawinie graphite operation’s successes, I am confident that
our extended technical team’s expertise will enable us to develop what is projected to become
one of the world’s largest graphite mines.”
Eric Desaulniers, Founder, President and CEO of NMG, added: “While the core of NMG’s
technical team is extremely focused on developing and advancing our Phase-2 Matawinie Mine
and Bécancour Battery Material projects, it has become increasingly important for our
customers and strategic for our shareholders to accelerate the deployment of our Phase 3. It is
our intention to capture as much market share as possible during this historical period of growth
of lithium-ion battery manufacturing in North America and Europe. I am eager to work with the
Innu First Nation of Pessamit and stakeholders from the Manicouagan region to revive the
mining development of this world-class deposit. The PEA confirms the tremendous potential of
the Uatnan Mining Project as a lever of decarbonization for cleantech markets and
socioeconomic growth for local communities. We will leverage our existing Phase-1 facilities,
the environmental stewardship measures being developed for our Phase-2 operations, our
proprietary technologies, and our demonstrated ESG credentials to advance the Uatnan Mining
Project toward development.”
PEA Results: Uncovering the Potential of the Uatnan Mining Project
NMG and its consultants revisited all components of Mason Graphite’s original mining project
to align the development of the Lac Guéret graphite deposit with today’s market opportunity and
potential customers’ requirements. The most recent technical report from Mason Graphite
(SEDAR, Feasibility study update of the Lac Guéret Graphite Project issued on December 11,
2018) planned for a production of 51,900 tonnes of graphite concentrate per annum, with the
concentrator and tailings storage facility located offsite in the town of Baie-Comeau,
approximately 285 km to the south by road from the mining operations.
The PEA optimizes the Mineral Resources and aims to expand the original mining project
tenfold by targeting the production of approximately 500,000 tonnes of graphite concentrate per
annum, entirely destined for the anode material manufacturing market. The concentrator has
been relocated to be near the deposit with electrical needs that could be sourced from the Manic-
5 hydroelectric power station, located 70 km away.
In line with NMG’s responsible mining approach, plans include progressive site closure with
backfilling of the pit with waste rock as much as possible. Additional characterization of waste
rock and tailings will be included in the next engineering phase to select proper tailings and
waste rock management technologies. Existing baseline studies will be updated based on the
study area to identify any environmental issues, evaluate potential impacts and develop
alternatives for the Uatnan Mining Project.
Commercial parameters were set using current projections of pricing prepared by a third-party
expert for flake concentrate. Design of the Uatnan Mining Project has been tailored to the needs
of the battery and EV market, orienting production volumes for beneficiation in order to produce
active anode material. Natural flake graphite is expected to enter a structural deficit as of 2023
due to the continued growth of lithium-ion battery manufacturing, outpacing supply capacity
from graphite producers (Benchmark Mineral Intelligence, December 2022). Hence, market
perspectives and NMG’s active commercial discussions indicate favorable conditions for
commercializing the Uatnan Mining Project production.
The following lists the economic highlights and operational parameters developed in the PEA.
Graphite is expressed in graphitic carbon (“Cg”):
Table 1: Operational Parameters of the Uatnan Mining Project
OPERATIONAL PARAMETERS
LOM 24 years
Nominal annual processing rate 3.4 M tonnes
Stripping ratio (LOM) 1.3:1
Average grade (LOM) 17.5% Cg
Average graphite recovery 85%
Average annual graphite concentrate production (LOM) 500,000 tonnes
Finished product purity 94% Cg
Cautionary Note: The PEA is preliminary in nature and includes Inferred Mineral Resources,
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. Mineral resources that are not mineral reserves have not demonstrated economic
viability. Additional trenching and/or drilling will be required to convert inferred mineral
resources to indicated or measured mineral resources. There is no certainty that the resources
development, production, and economic forecasts on which this PEA is based will be realized.
Table 2: Economic Highlights of the Uatnan Mining Project
ECONOMIC HIGHLIGHTS Uatnan Mining Project
Pre-tax NPV (8% discount rate) C$ 3,613 M
After-tax NPV (8 % discount rate) C$ 2,173 M
Pre-tax IRR 32.6%
After-tax IRR 25.9%
Pre-tax payback 2.8 years
After-tax payback 3.2 years
Initial CAPEX C$ 1,417 M
Sustaining CAPEX C$ 147 M
LOM OPEX C$ 3,236 M
Annual OPEX C$ 135 M
OPEX per tonne of graphite concentrate C$ 268/tonne
Concentrate selling price US$ 1,100/tonne
All costs are in Canadian dollars with the exception of the graphite sale price which is provided
in US dollars.
Capital expenditure (“CAPEX”) and operational expenditure (“OPEX”) were established from
test work results, supplier quotations and consultant in-house databases. Estimates currently
being at the market's peak as influenced by inflationary trends, NMG, Mason Graphite and their
consulting firms have refined design, engineering, and construction parameters to enable cost
optimization and competitive pricing. Québec’s affordable clean hydropower underpins the
Uatnan Mining Project’s economic structure and supports NMG’s undeterred carbon-neutrality
commitment.
Considering the significant modifications to Mason Graphite’s original project, NMG initiated a
name change with the collaboration of the Innu First Nation of Pessamit. The deposit is located
on the Nitassinan, the Innu of Pessamit’s ancestral territory, in a sector referred to as Ka
uatshinakanishkat meaning “where there is Tamarack”. Hence, the name Uatnan meaning
Tamarack, a conifer prominent in the area, was chosen to identify the property and project. The
graphite deposit identified on the property is still referred to as the Lac Guéret deposit.
Initial modelling indicates that the Uatnan Mining Project would create approximately 300 direct
jobs.
The Property
The Uatnan property presently consists of 74 map-designated claims totalling 3,999.52 hectares
(“ha”), wholly owned (100%) by Mason Graphite. The Uatnan Mining Project lies within
Nitassinan, the Innu of Pessamit’s ancestral territory and the Rivière-aux-Outardes municipality
located in the Côte-Nord administrative region, Québec, Canada, approximately 220 km as the
crow flies, north northwest of the closest community, the town of Baie-Comeau. The Uatnan
Mining Project is accessible by road 389 and then by following Class 1 forestry roads.
Exploration work on the Uatnan property targeted graphite mineralization and consists to date of
airborne geophysics, prospecting, ground geophysics, trenching/channel sampling and core
drilling. Bulk surface samples and core samples were also collected for metallurgical and
geomechanical tests. Exploration work uncovered significant crystalline flake graphite
mineralization, ultimately leading to the identification of Mineral Resources and Mineral
Reserves (see Mason Graphite’s press release dated November 9, 2015). Due to significant
changes to the project scope, as mentioned above, it was decided that the Uatnan Mining Project
would revert to a Preliminary Economic Assessment level.
On May 15, 2022, NMG concluded an investment to explore the potential development of the
Lac Guéret graphite property (now the Uatnan Property). This agreement aligns with NMG’s
growth strategy with a view to establishing a large, scalable, and fully vertically integrated
natural graphite production, from ore to battery materials, at the western markets’ doorstep.
Mineral Resources
Current Mineral Resources (Table 3) have been estimated for the Uatnan property based on
25,956 assay intervals collected from 43,343.1 m of core drilling and 4 surface trenches
providing 207 channel samples totalling 721.7 m. Proper quality control measures, including the
insertion of duplicate, blank and standard samples, were used throughout the exploration
programs and returned within acceptable limits. Although parameters to determine reasonable
prospects for eventual economic extraction (RPEE) were updated (Table 4), there are no
significant changes between the current Mineral Resources and the Mineral Resources last
published on November 9, 2015.
Table 3: Current Pit-Constrained Mineral Resource Estimate
IN-PIT CONSTRAINED MINERAL
RESOURCES Tonnes (Mt) Grade (% Cg) Cg (Mt)
Measured 5.75% < Cg < 25% 15.65 15.2 2.38
Measured Cg > 25% 3.35 30.6 1.02
Total Measured 19.02 17.9 3.40
Indicated 5.75% < Cg < 25% 40.29 14.6 5.89
Indicated Cg > 25% 6.33 31.6 2.00
Total Indicated 46.62 16.9 7.89
Indicated + Measured 5.75% < Cg < 25% 55.94 14.8 8.27
Indicated + Measured Cg > 25% 9.70 31.2 3.03
Total Measured + Indicated 65.64 17.2 11.30
Inferred 5.75% < Cg < 25% 15.35 14.9 2.28
Inferred Cg > 25% 2.47 31.8 0.79
Total Inferred 17.82 17.2 3.07
Notes :
1. The Mineral Resources provided in this table were estimated by M. Rachidi P.Geo., and
C. Duplessis, Eng., (QPs) of GoldMinds Geoservices Inc., using current Canadian
Institute of Mining, Metallurgy and Petroleum (CIM) Standards on Mineral Resources
and Reserves, Definitions and Guidelines.
2. Mineral Resources which are not Mineral Reserves do not have demonstrated economic
viability. The estimate of Mineral Resources may be materially affected by
environmental, permitting, legal, title, market or other relevant issues. The quantity and
grade of reported Inferred Mineral Resources are uncertain in nature and there has not
been sufficient work to define these Inferred Mineral Resources as indicated or Measured
Mineral Resources. There is no certainty that any part of a Mineral Resource will ever be
converted into Mineral Reserves.
3. The Mineral Resources presented here were estimated with a block size of 3mE x 3mN x
3mZ. The blocks were interpolated from equal-length composites (3 m) calculated from
the mineralized intervals.
4. The Mineral Resource estimate was completed using the inverse distance to the square
methodology utilizing three runs. For run 1, the number of composites was limited to ten
with a maximum of two composites from the same drillhole. For runs two and three the
number of composites was limited to ten with a maximum of one composite from the
same drillhole.
5. The Measured Mineral Resources classified using a minimum of four drillholes.
Indicated resources classified using a minimum of two drillholes. The Inferred Mineral
Resources were classified by a minimum of one drillholes.
6. Tonnage estimates are based on a fixed density of 2.9 t/m3.
7. A pit shell to constrain the Mineral Resources was developed using the parameters
presented in Table 4 . The effective date of the current Mineral Resources is January 10,
2023.
8. Mineral Resources are stated at a cut-off grade of 5.75% C(g).
Table 4: Parameters used to develop the pit shell to constrain the Mineral Resources
PARAMETERS Value
Mining cost C$ 4.00/t mined
Processing cost C$ 36.00/t milled
Tailings management cost C$ 2.00/t milled
G&A cost C$ 5.00/t milled
Mill recovery 85%
Concentrate grade 94%
Concentrate price C$ 1,500 /t
Production rate 3.4 Mtpa
Overall pit slope 50%
Mining
The mining method selected for the Uatnan Mining Project is a conventional open pit, truck and
shovel, drill, and blast operation. Topsoil and overburden would be stripped and stockpiled for
future reclamation use. The mineralization and waste rock would be mined with 9-m high
benches, drilled, blasted, and loaded into 60-tonne rigid-frame haul trucks with backhoe
excavators.
To minimize the environmental footprint of the Uatnan Mining Project, waste rock would be
hauled to the tailings storage facility where it would be disposed of with the tailings. As of year 5
of operations, waste rock would be backfilled into the mined-out open pit when possible. The
following table presents the subset of Mineral Resources within the pit design for the PEA.
Table 5: Subset of Mineral Resources within the Pit Design for the PEA
DESCRIPTION Tonnes
(Mt)
Cg Grade
(%)
In-Situ Graphite
(Mt)
Measured resources 18.7 17.9 3.3
Indicated resources 43.5 17.1 7.4
Total M&I resources 62.2 17.3 10.8
Inferred resources 14.2 18.0 2.6
Overburden & waste rock 102.6
The mine would be operated by an owner fleet, seven days per week, 24 hours per day and be
comprised of a four-crew system working on a two-week in, two-week out rotation. NMG
intends to deploy a zero-emission operating strategy with a battery-powered fleet of haul trucks
and electric equipment as the technology becomes available. In the meantime, the PEA used a
base case with a diesel-operated fleet.
Processing & Recovery
The process flow sheet was developed using the same metallurgical basis used for Mason
Graphite’s updated Feasibility Study issued on December 11, 2018. The main difference between
the two flowsheets, apart from the increased plant capacity, is the intended end-use of the
material. Given that 100% of the graphite concentrate produced from the Uatnan Mining Project
is destined for the battery market, preserving flake sizes is no longer considered in the processing
route. Given this consideration, the flowsheet was simplified by reducing the number of both
polishing and cleaner flotation stages from four to two. This change minimizes the number of
grinding mills and flotation cells required, reducing both the capital and operating costs for the
Uatnan Mining Project.
The flowsheet consists of a mineral sizer to reduce the size of the run of mine (“ROM”) mineral
before it is fed to a SAG mill for primary grinding. The ground mineral then undergoes rougher
flotation, after which the reground and scavenged concentrate is combined with the rougher
concentrate for further processing. The concentrate then undergoes two additional stages of
regrinding, first in a ball mill ahead of the first cleaning step, then a second regrind in a tower
mill ahead of secondary cleaning. The resulting concentrate undergoes a final deliming stage to
remove low-grade minus 20-micron particles to maximize the final concentrate grade. The
concentrator tailings are filtered and delivered to the tailings storage facility. The concentrate is
filtered and dried before being trucked 285 km to Baie-Comeau for transport to market.
Economic Evaluation
The CAPEX, summarized below, covers the development of the mine, processing facilities, and
infrastructure required for the Uatnan Mining Project. It is based on the application of standard
costing methods of achieving a PEA which provides the accuracy of -30% to +50%. The
operating cost covers mining, processing, concentrate haulage, tailings and water management,
general and administration fees, as well as infrastructure and services.
Table 6: Summary of Uatnan Mining Project CAPEX Costs
SECTOR LOM CAPEX ($M)
Mining 61
Site infrastructure 55
Offsite infrastructure 184
Water treatment and tailings 118
Ore crushing and process plant 548
Indirect 319
Contingency 279
TOTAL CAPEX 1,564
Initial CAPEX 1,417
Sustaining CAPEX 147
Table 7: Summary of Main Uatnan Mining Project OPEX Costs
SECTOR LOM OPEX Cost ($M) C$/t Conc.
Mining and tailings 917 76
Processing 1,620 134
Water management 134 11
G&A 565 47
TOTAL 3,236 268
Next Steps and Quality Assurance
The PEA shows that the Uatnan Mining Project is technically feasible as well as economically
viable. It further strengthens NMG’s active commercial discussions and the Company’s plans for
growth through a Phase-3 expansion.
On the basis of these positive results, NMG intends to launch an updated feasibility study in
compliance with the option and joint venture agreement signed with Mason Graphite. The
Uatnan Mining Project will have to go through the process of the Government of Québec’s
Environment Quality Act with the objective of obtaining a ministerial decree.
NMG is committed to extending its approach of open and proactive engagement with Indigenous
Peoples and local stakeholders to the Uatnan Mining Project. The Company plans to maintain a
transparent dialogue with the Innu First Nation of Pessamit as it advances the project
development to ensure the respect of their rights, the protection of the environment, their culture,
way of life and spirituality, as well as the inclusion of their perspective, and traditional
knowledge. NMG also pledges to expand its relationships with stakeholders from all horizons to
foster mechanisms for collaboration and shape a project generating shared value.
Shareholders and analysts are invited to attend a webcast Investor Briefing this morning,
Tuesday, January 10, 2023, at 10:30 a.m. ET. Hosted by President and CEO Eric Desaulniers
with the participation of NMG’s Management Team, the briefing will entail a technical
presentation followed by a question-and-answer session. Registration should be completed prior
to the start of the briefing at:
https://us06web.zoom.us/webinar/register/WN_PQUZCrddQuWmw0UUMersow.
There is no certainty that the economic forecasts on which this PEA is based will be realized.
The PEA is preliminary in nature and 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. Mineral Resources that are not Mineral Reserves have not demonstrated economic
viability. Additional trenching and/or drilling will be required to convert Inferred Mineral
Resources to Indicated or Measured Mineral Resources. There is no certainty that the resources
development, production, and economic forecasts on which this PEA is based will be realized.
There are a number of risks and uncertainties identifiable to any new project and usually cover
the mineralization, mineral processing, financial, environmental and permitting aspects. NMG’s
Phase-3 is no different, and an evaluation of the possible risks was undertaken as part of the
PEA.