Mr. Dirk Harbecke reports
ROCK TECH LITHIUM COMPLETES PRE-FEASIBILITY STUDY FOR ITS GEORGIA LAKE PROJECT
Rock Tech Lithium Inc. has released the results of a prefeasibility study completed for its 100-per-cent-owned Georgia Lake spodumene project located in the Thunder Bay mining district of Ontario, Canada. (Dollar amounts are in U.S. dollars unless otherwise stated.) The PFS strengthens and further substantiates previous engineering studies, and supports an open-pit and underground mine operation and the construction of a one-million-tonne-per-year spodumene concentrator. The positive results indicate a pretax internal return rate of 47.8 per cent and a pretax net present value of $223-million for the Georgia Lake project. They also support Rock Tech's decision to
further deepen and shape the vertically integrated strategy connecting its mining, concentration and conversion operations. The company is also pleased to announce initial mineral reserve and updated mineral resource estimates for the Georgia Lake project.
Prefeasibility study highlights:
Estimated pretax net present value at an 8-per-cent discount rate (NPV) of $223-million at an average life-of-mine (LOM) price of $1,500 per tonne 6-per-cent spodumene concentrate (SC6);
Estimated pretax internal rate of return (IRR) of 47.8 per cent at an average LOM price of $1,500 per tonne SC6;
LOM of nine years, with low-cost open-pit mining for the first four years and underground mining for the last five years;
Pretax payback of 2.9 years;
Update to mineral resource estimate: total indicated mineral resources of 10.6 million tonnes grading 0.88 per cent Li2O and total inferred mineral resources of 4.2 mt grading of 1.00 per cent Li2O;
Declaration of mineral reserves: total probable mineral reserves of 7.33 mt grading of 0.82 per cent Li2O;
Preproduction costs estimated at $192.2-million and sustaining capital costs of $98.5-million (including closure costs);
Average annual spodumene concentrate production of approximately 100,000 t of SC6;
Total LOM average cash costs of $719 per tonne concentrate.
The objective of the PFS was to assess the technical and economic viability of achieving spodumene concentrate production at the Georgia Lake project. The PFS evaluated the construction and operation of a one-million-tonne-per-year concentrator with open-pit and underground mining operations over a nine-year LOM. The company is pleased that the positive results of the PFS support the viability of lithium mining activities and the concentration of spodumene at the Georgia Lake project.
The economics associated with the construction of a lithium hydroxide converter and refinery facility at the Georgia Lake project were not considered as part of the PFS. Accordingly, the results of the PFS may not be directly comparable with the results of the 2021 PEA (as defined below), which contemplated the construction and operation of an integrated 15,000-tonne-per-year converter for refining a portion of the production from the Georgia Lake project.
The company continues to evaluate refining opportunities for future production from the Georgia Lake project in light of industry and global socio-economic factors and competencies developed in connection with the continuing development of the company's proposed converter in Guben, Germany. Such refining opportunities include utilizing a vertically integrated strategy for the Georgia Lake project, whereby future production from the Georgia Lake project is refined at the proposed converter in Guben or a company-owned-and-operated converter in North America, or selling such production to existing third party refiners.
The metallurgical testwork completed on sample feedstock from the Georgia Lake project positively demonstrates the suitability of the spodumene concentrate for conversion into battery-grade lithium hydroxide.
Rock Tech's chief executive officer, Dirk Harbecke, commented on the encouraging developments: "These results support the integration of Georgia Lake with the downstream conversion industry, where we have been building strong partnerships and extensive know-how. The encouraging results also demonstrate that we are well positioned to explore potential fields of collaboration in the North American and European [electric vehicle] supply chain."
The PFS and mineral reserve and resource estimates have further increased the confidence level of bringing the Georgia Lake project toward feasibility level, which will provide the basis for a construction decision. The company intends to undertake a feasibility study for the Georgia Lake project as part of its efforts to optimize and advance the Georgia Lake project.
These efforts are expected to include upgrading the mineral resource and mineral reserve estimates through exploration drilling, optimizing mining operations with the opportunity to become owner operated, and enhancing infrastructure detail through support from the company's indigenous partners to reduce capital costs and increase operational efficiency.
Summary of PFS results
The PFS and mineral reserve and mineral resource estimates have been prepared in accordance with the National Instrument 43-101 (Standards of Disclosure for Mineral Projects) by AMC Consulting (Canada) Ltd. with specialist contributions from Wave International Pty., Knight Piesold Consulting (KP), Pinchin Ltd., Environmental Resources Management (ERM) and Environmental Applications Group (EAG).
The PFS evaluates the planned production of spodumene concentrate from an average of 2,800-tonne-per-day open-pit and underground operation, with a process plant that will include crushing, grinding, density media separation (DMS) and flotation, estimated to produce a combined 6-per-cent Li2O grade spodumene concentrate.
The PFS incorporates the recent results from the company's drilling program at the Georgia Lake project, as well as recent metallurgical testwork to determine key process criteria and operational recovery. Metallurgical testing programs were undertaken at commercial laboratories SGS Canada Inc. and Nagrom Mineral Processors, simulating and improving the process flow sheet to maximize ore grade and recovery.
The PFS estimated a pretax NPV of the Georgia Lake project of $223-million compared with the $289-million pretax NPV estimated in the company's technical report titled, "Preliminary Economic Assessment for an Integrated Lithium Hydroxide Operation from the Georgia Lake Lithium Project, Northwest Ontario, Canada," while the PFS estimates an after-tax NPV of $146-million compared with the $230-million estimated in the 2021 PEA. Additionally, the PFS estimates an IRR of 48 per cent and 36 per cent, pretax and after tax, respectively, compared with 22 per cent and 20 per cent estimated in the 2021 PEA.
Differences in key metrics between the 2022 PFS and the 2021 PEA are primarily attributable to the exclusion of an integrated converter in the PFS, an increased level of confidence in the engineering details, a change in the mineral resource categories and updated cost estimates based on 2022 market conditions. Additional differences include a more complex recovery flow sheet, which includes the process of DMS; the addition of an on-site camp and subsequent accommodation service; and a closure plan that is more closely aligned with similar operations.
Capital cost estimates
The mine site project covered in the PFS is based on the planned construction of a greenfield facility having an estimated nominal annual feed of one million tonnes per year for open-pit and underground mining.
COMPLETION OF CAPITAL AND OPERATING COST ESTIMATES
Company name Area of responsibility
AMC Consultants (Canada) Ltd. Mining
Wave International Pty. Processing and infrastructure
Knight Piesold Ltd. Tailings storage facility
Pinchin Ltd. Water management
The capital cost estimate for this project is considered to have an expected accuracy level of 25 per cent/minus 25 per cent, carrying a contingency of 20 per cent.
The capital costs for the LOM are estimated to be a total of $290.7-million, which consists of preproduction capital costs of $192.2-million and sustaining capital costs of $98.5-million, including closure costs of $10.6-million. The LOM capital cost summary and its distribution by area are shown herein.
Operating cost estimates
The average unit operating cost over the LOM are estimated at $73.16 per tonne processed. The unit operating costs include contractor-quoted costs for the open pit of $4.45 per tonne open-pit mined material and underground mining of $50.78 per tonne underground ore mined, which equate to an estimated weighted-average LOM mining cost of $40.04 per tonne processed. The mineral processing costs are $20.58 per tonne processed, and the general and administration (G&A) costs are $12.54 per tonne processed. Operating cost estimates for the project are summarized herein.
Key assumptions and sensitivity analysis
The discount rate for financial analysis is 8 per cent. The weighted-average price of spodumene concentrate is $1,500 per tonne over the life of mine, reducing from a peak price of $2,722 per tonne in 2024. The following exchange rates were considered: $1 (Canadian) equals 77 U.S. cents, $1 (Canadian) equals $1.10 (Australian) and $1 (Canadian) equals 0.73 euro.
As part of the PFS, a sensitivity analysis was conducted on the project's NPV and IRR for key variables, which include spodumene concentrate price, capital costs and operating costs. Using the base case as a reference, the key variables were changed between 20 per cent at 10-per-cent intervals while holding other variables constant. The project is most sensitive to spodumene concentrate prices, and capital and operating costs. Spodumene concentrate price, capital costs and operating cost sensitivities are presented herein.
Mineral resource and mineral reserve estimates
The updated mineral resource estimate of the Georgia Lake property outlined 10.60 million tonnes of indicated mineral resource at a grade of 0.88 per cent Li2O and 4.22 mt of inferred mineral resource at a grade of 1.0 per cent Li2O, and are effective as of July 31, 2022. The mineral resource estimate, prepared by AMC Consulting, is based on 312 core drill holes during the period of 1955 to 2022 and 858 metres of trenching over the same period.
Changes in the mineral resource estimate are attributable to, among other things:
23,490 metres of surface drilling;
1,164 metres pf additional sampling of mineralization;
New interpretation of mineralized domains;
Reduced cut-off grades calculated from preliminary economic assumptions.
The initial mineral reserve estimates, prepared by AMC, are effective as of July 31, 2022, and conform to CIM (Canadian Institute of Mining, Metallurgy and Petroleum) Definition Standards (2014). All design and scheduling have been completed using the block model generated during the updated mineral resource estimate.
The cut-off values supporting the estimation of underground mineral reserves were generated using a spodumene concentrate price of $1,100 per tonne. The cost assessment indicated that a cut-off grade of 0.3 per cent Li2O for open pit and 0.6 per cent Li2O for underground was appropriate.
Readers are cautioned that mineral resources are reported inclusive of mineral reserves and that mineral resources that are not mineral reserves do not have demonstrated economic viability. Areas of uncertainty that may materially impact the mineral reserve and/or mineral resource estimates or the development thereof include, among others, prices of spodumene concentrate, lithium chemicals, changes to resource modelling methods, geotechnical assumptions and metallurgical recovery assumptions.
Please see the section titled "Risk factors" in the company's 2021 annual information form available on SEDAR for further details regarding such risks. Additional information, including key assumptions and methods used to estimate the mineral reserves and mineral resources, will be provided in the new technical report on the Georgia Lake project to be published within 45 days of this press release.
About the plant design
The Georgia Lake concentrator is proposed to be constructed within the Nama Creek property approximately 160 kilometres northeast of Thunder Bay, Ont. and 16 kilometres south of Beardmore and through the historic Nama Creek Road. It is designed to convert spodumene pegmatite ore into spodumene concentrate through crushing, DMS and flotation. The basic process flow sheet was developed and subsequently optimized using data derived from a number of metallurgical testwork campaigns completed on drill core samples. The drill core samples were taken from five spodumene-bearing pegmatite veins from the resource called Main Zone North (MZN), Conway (CON), Main Zone Southwest (MZSW), Harricana (HAR) and Line60 (L60).
It is expected that the Georgia Lake concentrator will consist of a three-stage crushing circuit to reduce feed to below 9.5 millimetres. The first DMS stage is used to reduce the feed mass with a high rejection of low-grade coarse material improving the overall plant feed grade. The second DMS stage is used to produce a coarse and fine DMS concentrate product through recrushing. The floats and fine material are milled and prepared for the flotation circuits.
A standard rougher/cleaner spodumene flotation circuit follows the mica flotation stage and will produce a spodumene concentrate, ready for dewatering.
The process flow sheet for the Georgia Lake concentrator has been designed to incorporate process unit operations typical to spodumene concentrators using DMS and flotation, taking advantage of specific properties of the Georgia Lake deposit. Proven technology within the lithium industry was used to minimize technical risk and time to market.
It is expected that the Georgia Lake concentrator will be designed for a feed capacity of 150 tonnes per hour or one million tonnes per year. Key aspects of the Georgia Lake concentrator are expected to include:
Li2O content in feed of approximately 0.82 per cent Li2O;
Li2O content in concentrate approximately 6.0 per cent Li2O;
Li2O overall recovery of 80 per cent.
The test assumptions for the PFS were based upon and designed to provide continuity and compatibility with earlier results. Nagrom was engaged to carry out a three-phase metallurgical test program. Approximately 66 kilograms of ore composite from the MZN deposit was selected for head assay sampling.
Both heavy liquid separation (HLS) and flotation were tested to produce a spodumene concentrate of a target grade of 6.0 per cent Li2O. Variability testwork was also undertaken on samples from the satellite orebodies (MZSW, HAR, L60 and CON). For the PFS, a constant metal recovery of 80 per cent is assumed with a concentrate grade of 6 per cent.
Permitting and outlook
Rock Tech will continue to advance the Georgia Lake project toward feasibility level. Based on the positive results of the PFS, the company intends to undertake a definitive feasibility study in respect of the Georgia Lake project, with a production decision expected to be made in 2023. Permitting activities for the Georgia Lake project are progressing and expected to be concluded in a timely manner supporting the next phase of development of the Georgia Lake project.
Qualified persons and National Instrument 43-101 technical report
The PFS for the Georgia Lake project summarized in this press release will be incorporated in an NI 43-101 technical report that will be filed on the company's SEDAR profile within 45 days of this press release. The affiliation and areas of responsibility for each of the independent qualified persons (as defined in NI 43-101) involved in preparing the PFS, upon which the technical report will be based, are set out herein.
Each of the qualified persons has reviewed and approved the contents of this press release. In addition, the scientific and technical disclosure included in this press release, including the information on the 2021 PEA, has also been reviewed and approved by Robert MacDonald, PEng, general manager of the Georgia Lake project, a qualified person under NI 43-101.
The qualified persons responsible for the preparation of the PFS and the technical report in respect thereof have verified the data disclosed in this press release, including sampling, analytical and test data underlying the information contained herein. Geological, mine engineering and metallurgical reviews included, among other things, reviewing drill data and core logs, review of geotechnical and hydrological studies, environmental and community factors, the development of the life-of-mine plan, capital and operating costs, transportation, taxation and royalties, and review of existing metallurgical testwork. In the opinion of the qualified persons, the data and assumptions used to estimate mineral resources and mineral reserves, the metallurgical model, the economic analysis, and the PFS are sufficiently reliable for those purposes.
About Rock Tech Lithium Inc.
Rock Tech is a cleantech company on a mission to produce lithium hydroxide for EV batteries. The company plans to build lithium converters at the doorstep of its customers to guarantee supply chain transparency and just-in-time delivery. To close the most pressing gap in the clean mobility story, Rock Tech has gathered one of the strongest teams in the industry. The company has adopted strict environmental, social and governance standards, and is developing a proprietary refining process aimed at further increasing efficiency and sustainability. Rock Tech plans to source raw material from its own mineral project in Canada, as well as procuring it from other responsibly producing mines. In the years to come, the company expects to also source raw material from discarded batteries. Rock Tech's goal is to create a closed-loop lithium production system.
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