NOVEMBER 21, 2011 – MONTRÉAL, QUÉBEC – CRITICAL ELEMENTS CORPORATION (TSX.V: CRE) (US OTCQX: CRECF) (FSE: F12) has received the results of a Preliminary Economic Assessment (“PEA”) for its 100% owned Rose Lithium-Tantalum deposit (“Rose Project”) located in the James Bay Area of northern Quebec. The PEA study was completed by GENIVAR with the collaboration of BUMIGEME and InnovExplo.
The Rose Lithium-Tantalum Project is located in the Quebec Plan Nord designated area where the government is fast-tracKing the construction of new infrastructures, accelerating permitting and assisting project financing on a case by case basis.
HIGHLIGHTS OF THE PRELIMINARY ECONOMIC ASSESSMENT STUDY INCLUDE
The financial analysis of the Rose Project was based of price forecasts of US$260/kg ($118/lb) for Ta2O5contained in a tantalite concentrate and US$6,000/t for lithium carbonate (Li2CO3).
The after tax Internal Rate of Return (IRR) of the Rose Project is estimated at 25% , with a Net Present Value (NPV) of CA$279 million at an 8% discount rate. The payback period is estimated at 4.1 years.
The pre-tax IRR is estimated at 33% and the NPV at $488 million at a discount rate of 8%.
NPV AS A FUNCTION OF VARIOUS DISCOUNT FACTORS
Critical Elements Corporation – Rose Project
|0%||CA$ 1,078,611,885||CA$ 665,122,755|
|5.0%||CA$ 651,789,479||CA$ 387,145,131|
|8.0 %||CA$ 488,360,406||CA$ 279,358,227|
|10.0 %||CA$ 403,744,658||CA$ 223,097,949|
|12.0 %||CA$ 333,626,451||CA$ 176,175,210|
The economic analysis is based on a mine life of 17 years, estimated capital costs of CA$268.6 million and operating costs of CA$67.65/tonne of ore milled. Ongoing capital investment was estimated at CA$36.8 million. Calculations include contingencies of 10% and assumed parity between the Canadian and the American dollars.
A sensitivity analysis was completed on the Rose Project cash flow using a ± 15% variance on commodities prices, capital expenditures, operating costs and US$/CA$ exchange rate. It demonstrates that the Rose Project is highly sensitive to changes in lithium carbonate price and has a low sensitivity to fluctuations in the tantalite concentrate price, operating costs and capital expenditures.
The Rose property comprises 636 active mining titles covering a total of 33,307 ha. The southeast boundary of the Rose property is approximately 30 km north of the community of Nemiscau in the James Bay area of the province of Québec. Geologically, the property is located in the northeast part of the Archean Superior Province of the Canadian Shield craton, within the southern portion of the Middle and Lower Eastmain Greenstone Belt (“MLEGB”). Although the MLEGB displays a wide variety of lithologies, most of the claims of the Rose property are underlain by intrusives.
MINERAL RESOURCE ESTIMATE
Based on an extensive drilling campaign (181 holes) completed in 2010-2011 on the Rose property, InnovExplo completed a Mineral Resources estimate using a cut-off grade of 66$/t. The Mineral Resources valuation took into consideration Li and Ta recovery as well as current market conditions. A summary of the National Instrument 43 101 compliant Mineral Resources for the Rose Lithium-Tantalum deposit is as follows:
MINERAL RESOURCES ESTIMATE – July 20th, 2011
Critical Elements Corporation – Rose Project
|Mineral Resource||Tonnes||LI2O équivalent||LI2O||Ta2O5||Rb||Cs||Be||Ga|
|(x 1 000)||(%)||(%)||(ppm)||(ppm)||(ppm)||(ppm)||(ppm)|
|Indicated Mineral Resource||26 500||1.30%||0.98%||163||2 343||92||128||66|
|Inferred Mineral Resource||10 700||1.14%||0.86%||145||1 418||74||121||61|
The parameters used for the PEA include:
- A 1,500,000 tpy open-pit mine using diesel hydraulic equipment.
- A concentrator at the mine site (crushing, grinding, flotation circuits) with a nominal capacity of 4,600 tpd of ore at 90% availability.
- A lithium bicarbonatation plant at the mine site to convert the lithium oxide ore (LI2O) to lithium carbonate (Li2CO3).
The Rose deposit is a flat lying and thick multi structure located near the surface. The ore will be mined using a conventional open-pit approach to a depth of 200 M. The Whittle software, a numerical 3D mine optimization tool, was used to assess numerous scenarios. Parameters used to optimize the pit geometry and maximize profitability included a bench face angle of 50°, triple benching arrangement, and an overall slope angle of 50°. The proposed open-pit design did not include geotechnical test results.
The following figure shows an isometric view of the open-pit outline retained for the PEA. The total amount of material to be mined is estimated at 193 Mt consisting of 24 Mt of ore and 169 Mt of waste for a stripping ratio of 7:1. Mining equipment will include down-the-hole (“DTH”) drill rigs well suited to large-scale production work and capable of drilling holes ranging between 110 to 203 mm in diameter. 33 tonne hydraulic shovels and 27 tonne backhoes will be used to load ore and waste into 150 tonne trucks. The proposed pit will be approximately 1.8 km long by 0.8 km wide.
OPEN-PIT OUTLINE FOR THE ROSE LITHIUM-TANTALUM PROJECT
Infrastructures that will be erected on the Rose property include ore, waste and overburden stockpiles, tailings management facility, an explosives mixing plant, administrative offices, telecommunications and ancillary facilities, mechanical shops, haulage and access roads and a water management systeM.
Based on a preliminary rock mass assessment, which indicates that the ground is competent, and on preliminary overburden test results, a positive approach was adopted in the design of the various stockpiles, the tailings management facility and the mine closure plan.
The proposed mining plan includes drainage of two small lakes and the construction of a retaining dyke across a third lake.
Talks have been initiated with Hydro-Québec concerning the relocation of electrical towers that currently bisect the Rose property.
A standard flotation process will be used to concentrate the lithium and Tantalum minerals into a high grade mixed concentrate. The tantalite is separated from this concentrate by high gradient magnetic separation. The non-magnetic fraction containing the lithium mineral (spodumene) will be treated to produce pure lithium carbonate ( 99.5% Li2CO3) using the same industrial process employed at the Quebec Lithium mine, while it was part of the Sullivan Mining Group in the 1960’s, and later refined by the Centre de Recherches Minérales (CRM) of the Ministry of Natural Resources and Wildlife.
ENVIRONMENTAL IMPACT STUDY
Initial campaigns for the characterization of the Rose Project site have already been completed. Several meetings with the local communities have already taken place and further discussions are being planned.
Exceptionally, preliminary results from the environmental impact study were available during the completion of the PEA. This information was used to limit the ecological footprint of the infrastructures.
Capital and operating costs were estimated in 2011 Canadian dollars.An economic analysis was carried out by means of an undiscounted cash flow analysis expressed in constant dollar terms on a pre tax and pre finance basis. Pre-production capital costs for the Rose Project were estimated at CA$268.6 million and include all the infrastructures listed under the Mining and Mineral Processing sections of this press release.
Total quantity of payable commodities is estimated at 1.6 Mkg Ta2O5 (1.3 Mkg Tantalum) and 452 Mkg Li2CO3 (85 Mkg Lithium). The following table presents a summary of the major criteria applicable to the Rose Project.
ROSE PROJECT CRITERIA
Revenues generated by the recovery of rubidium (Rb), cesium (Cs), beryllium (Be), and Gallium (Ga) were not factored into the estimated revenues stream of the Rose Project considered in the PEA.
Operating costs are estimated at CA$67.65 per tonne of ore milled and comprised of:
- CA$24.25 per tonne of ore milled for mining cost;
- CA$7.17 per tonne of ore milled for G and A;
- CA$36.23 per tonne of ore milled for mineral processing (concentrator and bicarbonatation plant).
“We are extremely pleased with the results of this study which represents a major milestone in the progress toward the development of the Rose deposit. Results of the PEA prepared by GENIVAR, Bumigeme and InnovExplo which are reported today further confirm that Critical Elements is in the process of building a very important long-term source of conflict free and ethical Tantalum as well as high quality lithium carbonate suitable for battery manufacturing, in one of the best mining jurisdictions in the world”, said Jean-Sébastien Lavallée, Critical Elements’ President.
Critical Elements wishes to avoid dilution of its equity in the Rose Lithium-Tantalum Project. Off-take arrangements are being discussed with potential Lithium Carbonate and Tantalite Concentrate buyers. The intent is to fund most of the capital requirements through an arrangement of pre-paid production and/or debt financing.
WORK IN PROGRESS
GENIVAR has started worKing on the Prefeasibility Study (PFS) of the Rose Project. The PFS focuses on refining the mining parameters while considering the option of implementing an underground approach to mine part of the Rose deposit. Results from the PFS are expected during the first quarter of 2012.
Metallurgical testing is on-going at the AcmeMet laboratory in Vancouver.
A geotechnical study was initiated to assess the RQD and joint structure. Once this information becomes available, laboratory tests will be done to characterize the rock mass including Unconfined Compressive Tests, Compressive Resistance Tests, and Brazilian Tests. Test results will be used to improve pit design, determine ground support requirements and ramp dimensions at the next stage of the studies.
Final results from the Environmental Impact Study are expected in September 2012.
NATIONAL INSTRUMENT 43-101 DISCLOSURE
The Technical Report for the PEA was prepared for Critical Elements Corporation, by or under the supervision of Qualified Persons (QPs) as defined in National Instrument 43-101 and in compliance with Form 43-101F1. The qualified persons (QP) who collaborated to this PEA include GENIVAR employees: Charles Gagnon, Eng., M.Sc, France Gauthier, Eng., Simon Latulippe, Eng.; from BUMIGENE: Florent Baril, Eng., and from InnovExplo, Carl Pelletier, B.Sc., Geo., and Pierre Luc Richard, B.Sc., Geo. The Qualified Persons have read and approved the contents of this news release.
A Technical Report compliant with National Instrument 43-101 summarizing the Preliminary Economic Assessment findings and recommendations will be filed on SEDAR (www.sedar.com) within 45 days.
The economic analysis contained in the PEA is based on Indicated Mineral Resources and is preliminary in nature. Inferred Mineral Resources were not considered in the PEA as they are considered too speculative to have mining and economic considerations applied to them that would enable them to be categorized as Mineral Reserves.Mineral resources that are not mineral reserves do not have demonstrated economic viability.
ABOUT CRITICAL ELEMENTS CORPORATION
Critical Elements is actively developing its 100%-owned Rose Lithium-Tantalum flagship project located in Quebec. The project hosts a current new NI 43-101 compliant Indicated resource of 26.5 million tonnes of 1.30% LI2O Eq. or 0.98% LI2O and 163 ppm Ta2O5 and Inferred resource of 10.7 million tonnes of 1.14% LI2O Eq. or 0.86% LI2O and 145 ppm Ta2O5.
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