Critical Elements Corporation (TSX
VENTURE:CRE)(OTCQX:CRECF)(FRANKFURT:F12) has received the results
of a Preliminary Economic Assessment ("PEA") for its 100%-owned
Rose Tantalum-Lithium 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 Tantalum-Lithium 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 Ta2O5 contained 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
------------------------------------------------------------
DISCOUNT FACTOR NPV NPV
(before taxes) (after taxes)
------------------------------------------------------------
0% CA$1,078,611,885 CA$665,122,755
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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.
Property
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 Quebec. 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
Tantalum-Lithium deposit is as follows:
MINERAL RESOURCES ESTIMATE - July 20th, 2011
Critical Elements Corporation - Rose Project
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Li2O
Mineral Tonnes equivalent Li2O Ta2O5 Rb Cs Be Ga
Resource (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
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PEA
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).
Mining
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
degrees , triple benching arrangement, and an overall slope angle
of 50 degrees . The proposed open-pit design did not include
geotechnical test results.
The following figure
(http://media3.marketwire.com/docs/roseeng1121.pdf) 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.
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-Quebec concerning the
relocation of electrical towers that currently bisect the Rose
property.
Mineral Processing
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 Minerales (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 Costs
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$268.6 million and include
all the infrastructures listed under the Mining and Mineral
Processing sections of this press release.
Total quantity of payable commodities is estimated at 1.6 Mkg
Ta2O5 (1.3 Mkg Tantalum) and 452 Mkg Li2CO3 (85 Mkg Lithium). The
following table presents a summary of the major criteria applicable
to the Rose Project.
ROSE PROJECT CRITERIA
----------------------------------------------------------------------------
Item Unit Quantity
----------------------------------------------------------------------------
Production including dilution
Ta-Li bearing ore (pit only) tonnes 24,260,534
Diluted metal grades
Tantalum ppm 108
Lithium ppm 4,131
Ta2O5 ppm 132
Li2O % 0.89
----------------------------------------------------------------------------
Plant overall recoveries
Tantalum % 50
Lithium % 84.8
----------------------------------------------------------------------------
Total payable commodities produced
Ta2O5 '000 kg 1,597
Li2CO3 '000 kg 452,306
Tantalum '000 kg 1,308
Lithium '000 kg 84,981
Preproduction capital costs (contingency
included)
Site preparation '000 CA$ 22,102
Mine equipment & Development '000 CA$ 55,312
Energy & Indirect cost '000 CA$ 62,590
Surface infrastructures '000 CA$ 128,581
----------------------------------------------------------------------------
Total preproduction capital '000 CA$ 268,584
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Ongoing investment over 17 years '000 CA$ 36,818
----------------------------------------------------------------------------
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
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&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-Sebastien Lavallee, Critical Elements'
President.
Critical Elements wishes to avoid dilution of its equity in the
Rose Tantalum-Lithium 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 NI 43-101 compliant Indicated Mineral Resource of
26.5 million tonnes at 1.30% Li2O Eq. or 0.98% Li2O and 163 ppm
Ta2O5 and an Inferred Mineral Resource of 10.7 million tonnes at
1.14% Li2O Eq. or 0.86% Li2O and 145 ppm Ta2O5.
Critical Elements' portfolio also includes rare-earth and
tantalum-niobium projects in the Rocky Mountains of British
Columbia and in Quebec, as well as a 50% interest in the Croinor
project, which is located in Quebec and hosts a current NI 43-101
compliant Measured and Indicated Mineral Resource of 814,228 tonnes
at 9.11 g/t Au, for 238,414 ounces of gold at a 5 g/t cut-off.
Jean-Sebastien Lavallee (OGQ #773), geologist, shareholder and
president and chief executive officer of the Company and a
Qualified Person under NI 43-101, has reviewed and approved the
technical content of this release.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Contacts: Critical Elements Corporation Jean-Sebastien Lavallee,
P. Geo., President & CEO
819-354-5146president@cecorp.cawww.cecorp.ca Paradox Public
Relations Jean-Francois Meilleur 514-341-0408
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