Highlights:
- The combined resource for the Josette Northeast and Josette Southwest zones is 6.92 Mtat 2.72% TREO (Total Rare Earth Oxides) in the Measured and Indicated categories 2 and 1.33 Mt at 3.64% TREO in the Inferred category 2
- The PEA focuses exclusively on the Josette Northeast Zone with an underground mine and on-site concentrator and a hydrometallurgical processing facility located off-site 10-year life of mine (LOM) with an average annual ore production of 387,000 t at 3.29% TREO. Total LOM production is 3.55 Mt at 3.29% TREO
- The REE are concentrated in three minerals: apatite, britholite and allanite
- Average annual concentrate production of 174,000 t grading 7.0% TREO
- Further hydrometallurgical processing leading to an annual production of 9,500 t of TREO
- Pre-tax internal rate of return (“IRR”) of 21.4% (18.0% after tax) and pre-tax net present value (“NPV”) of CAD 572.9 million (CAD 380.7 million after tax) in the base case scenario using a Basket price of CAD 42.81 per kg of TREO
- Capex of CAD 723.6 million with a payback period of 3.4 years
- Overall TREO recovery of 75%
- The recovery of the REE, especially for Nd and the heavy rare earths (Gd, Dy, Tb, Ho, Er and Y), with a conventional solvent-extraction hydrometallurgical process is efficient not only in terms of extraction but also separation
- The Kwyjibo REE deposit remains open at depth with the potential to increase mine life through additional drilling and technical studies
1. The Preliminary Economic Assessment summarized in this news release is only intended to provide an initial, high-level review of the project. The PEA mine plan and economic model include the use of Mineral Resources which are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as Mineral Reserves. There is no certainty that the Preliminary Economic Assessment will be realized.
2. Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability. There is no certainty that all or any part of the Mineral Resources will be converted into Mineral Reserves. The rounding of tonnes as required by reporting guidelines may result in apparent differences between tonnes, TREO grade and contained REE.
On behalf of the joint venture partners, Focus Graphite President and CEO Gary Economo stated: “We are very pleased with the results of the PEA, which suggest that the Kwyjibo REE Project is unique in Québec in terms of geological setting, style of mineralization and economic potential. The results not only demonstrate that significant progress has been made in moving the project from the exploration phase to the mineral deposit appraisal phase, but also that the potential to expand REE resources at depth, together with refinements in the hydrometallurgical recovery process and other technical improvements, could result in significant benefits for the project’s economics. Clearly, additional work is warranted at Kwyjibo.”
Mr. Economo added: “Recent outlooks by Forbes3 have the global demand for electric vehicles climbing to 1.6 million in 2018 and further upwards to an estimated 2 million in 2019. With this trending growth, supply chains will be under extreme pressure to deliver on the necessary rare earth elements. The projects that will be best suited to fill this production gap will be those with high concentrations of the highly sought-after element – neodymium”.
Olivier Grondin, President and CEO of SOQUEM commented: “The development of the Kwyjibo Project can contribute to economic diversification efforts in the Côte-Nord region, while at the same time triggering the growth of a sustainable rare earth industry in Québec. The positive PEA results will also raise awareness about Kwyjibo and shine a new light on Québec as a favourable jurisdiction to host potentially economic rare earth deposits.”
4. The NSR is payable to the Iron Ore Company of Canada.
PEA Summary
The PEA by Met-Chem covers the mining and milling of REE-bearing magnetitite material from an underground mine, with a mine life of 10 years and a concentrator located on the Kwyjibo Property. Processing includes crushing, grinding, magnetic separation, thickening and filtering of run-of-mine. The TREO concentrate produced at the on-site mill will be shipped to a hydrometallurgical plant located outside the mine site.
The hydrometallurgical processing plant is designed to transform REE concentrate into three separate refined Rare Earth Oxide (“REO”) products for an annual production rate of 9,500 t of TREO. The hydrometallurgical process leaches the concentrate in three steps using solid conversion and is completed by a multi-stage solvent extraction process to produce three REO products: Nd-Pr oxides, Dy oxide and a mix of the remaining REO and Y oxide.
The magnetic separation at the concentrator is designed to produce a 7.00% TREO concentrate with a recovery of 96%. The recovery of TREO from concentrate processed at the hydrometallurgical plant is 78%. The overall TREO recovery is estimated at 75%. The PEA was prepared by Met-Chem of Montreal, Québec, a division of DRA Americas Inc., and will be filed on SEDAR at www.sedar.com under Focus Graphite Inc. within 45 days of this news release.
Geology and Mineral Resources
The Kwyjibo Rare Earth Element Project, totalling 116 claims and covering 6,273.48 hectares, is located 125 km northeast of the city of Sept-Iles, Québec. The project is also located 25 km east of the Québec North Shore and Labrador railway line (QNS&L) and is only accessible by air from Sept-Iles.
Kwyjibo is located in the Grenville Geological Province of northeastern Québec, and hosts Mesoproterozoic polymetallic iron (Fe), copper (Cu), rare earth elements (REE) and gold (Au) mineralization. The mineralization system comprises six (6) historical showings, distributed in a 4 km-long corridor, with the main Fe-REE mineralization being the Josette Horizon. The Josette Horizon is divided into two zones: Josette Northeast and Josette Southwest.
The Fe-REE mineralization system of the Josette Horizon has been drill tested over a strike length of 1.2 km and to a depth of 300 m. Its thickness varies from a few metres to more than 50 m. The mineralized system remains open at depth. The Josette Northeast Zone is delineated over a strike length of 600 m. The drilling grid consists of 50 m spaced sections on which drill holes are spaced by 50 to 100 m apart. Locally, on the Northeast Zone, 25 m spaced sections have drill holes spaced by 25 to 75 m.
The resource estimate is based on validated results from 109 surface drill holes for a total of 19,168 m of drilling that were completed on the Josette Horizon between 1994 and 2013. About 6,500 m of drill core (total of 4,962 samples) have been assayed for REE, base metals, and major and trace elements. Also, specific gravity was measured for 886 samples from selected 2012 and 2013 drill holes. The geology was interpreted on 2D sections followed by modelling of 3D envelopes of the mineralized zones. The mineral resource estimate was based on 1.5 m-long composites along the holes. Blocks of 10 m x 10 m x 5 m were used and guided by the selective mining unit concept and by the drill hole spacing.
5. Cautionary note and other relevant information:
- Mineral Resources are exclusive of Mineral Reserves.
- 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, taxation, sociopolitical, marketing, or other relevant issues.
- The Mineral Resources were estimated using the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Definition Standards on Mineral Resources and Reserves prepared by the CIM Standing Committee on Reserve Definitions and adopted by the CIM Council on May 10, 2014.
- The Inferred Mineral Resource in this estimate has a lower level of confidence than that applied to an Indicated Mineral Resources and cannot be converted to a Mineral Reserve. It is reasonably expected that the majority of the Inferred Mineral Resource could be upgraded to an Indicated Mineral Resource with continued exploration.
- TREO = La2O3 + Ce2O3 + Pr2O3 + Nd2O3 + Sm2O3 + Eu2O3 + Gd2O3 + Tb2O3 + Dy2O3 + Ho2O3 + Er2O3 + Tm2O3 + Yb2O3 + Lu2O3 + Y2O3.
- LREO = La2O3 + Ce2O3 + Pr2O3 + Nd2O3 + Sm2O3 (as used by Hazen Research Inc.).
- HREO = Eu2O3 + Gd2O3 + Tb2O3 + Dy2O3 + Ho2O3 + Er2O3 + Tm2O3 + Yb2O3 + Lu2O3 + Y2O3 (as used by Hazen Research Inc.).
- The effective date of the resource statement is November 17, 2017.
Modelling was performed using MineSight® v. 9.00 software and the inverse distance squared (ID2) method to estimate TREO (including individual elements), Fe2O3 and P2O5 grades for the Measured, Indicated and Inferred categories of mineral resources. No capping was applied as TREO contents do not reveal nugget effect behavior. The geometry of the primary search ellipse was determined from variography analyses with an anisotropy factor applied. Ellipsoid axes in the X, Y and Z domains were set at 150 m × 150 m × 20 m, respectively, using normal and unfolded coordinates for the first pass. Where blocks were not informed in the first pass, a second search was used, keeping the same parameters as the first pass except that the minimum number of composites used to inform a block was reduced to six (6) instead of the nine (9) used in the first pass. Where blocks were not informed after the first and second passes, ellipsoid axes in the X, Y and Z domains were set at 250 m × 250 m × 40 m with the number of composites set at three (3). Two solid models were developed corresponding to the Josette Northeast and Josette Southwest zones. A regressive model was developed to determine the density of each block as a function of interpolated iron content, as iron and TREO grades are strongly correlated. A cut-off of CAD 330 per tonne was applied.
Preliminary Metallurgical Testwork
Following a first round of experimental testwork in 20166, Hazen Research Inc. of Golden, Colorado (USA), conducted a second round of experimental metallurgical testwork in 2017 on a representative REE-bearing 40 kg composite sample of magnetitite ore from the Josette Northeast Zone (refer to Focus news release dated November 24, 2016, available at www.focusgraphite.com). The goal of the testwork was to determine the parameters of the extraction pH and the separation factors of the different REE. The testwork included:
- Magnetic separation of the REE-bearing and magnetite-rich sample
- Acid selection studies
- Hydrochloric acid (HCl) leaching of the nonmagnetic concentrate to generate a REE liquor
- Leached liquor neutralization and recovery of the REE as phosphates
- Hydroxide metathesis of the REE phosphates to remove the phosphate and fluoride
- Leaching of the metathesis product to produce a purified REE chloride liquor
- Finally, solvent extraction experiments to determine extraction pH and separation factors for the different REE from the bulk purified chloride liquor.
Test programs comparing the three most commonly used acids were conducted on the non-magnetic concentrate. The results provided the basis for choosing HCl for the leaches.
6. Hydrometallurgical Work for Kwyjibo Project, Purification of Leach Liquor for Recovery of Rare Earth Elements, Revision 1. Hazen Research Inc., January 23, 2018, 162 pages.
SX = solvent extraction
* Represents the cumulative recovery of TREE + Y in the nonmagnetic concentrate
** Expert assumption and calculated based on initial test work at HAZEN Research. This represents an optimized releach extraction. Further testing is needed to confirm the releach optimum extraction.
Also, the initial reagent consumptions have been preliminarily assessed during the test programs.
The test program was successful in proving and confirming the simple nature of the flowsheet required to extract and separate rare earth elements from the Kwyjibo REE-bearing minerals. The next program will establish the basis for optimization of process areas such as the releach, the metathesis leach and the interaction of calcium.
The Kwyjibo flowsheet was developed to emphasize the production of three REO products: a purified Nd-Pr oxide product, a purified separate Dy oxide product, and a Y-enriched mixed oxide product from the remaining rare earth elements.
About REE and REE Markets
Rare Earth Elements (REE) are a group of specialty metals with distinctive physical, chemical and optical properties that are seeing increases in demand across a wide range of industries, owing to their unique technological applications. Traditional applications range from permanent magnets, metal alloys, phosphors and catalysts, to polishing compounds, glass and ceramics. With the global drive to reduce greenhouse gas emissions, REE have become critical materials to emerging technologies in the renewable energy sector. Modern applications range from high-performance electric motors, rechargeable batteries in hybrid and electrical vehicles, and energy efficient LED lighting and photovoltaic cells in solar panels, to high-power magnets in air conditioning systems and wind turbines.
The balance of demand and supply in the world market for REE has historically been relatively stable but has become sensitive to factors such as technological innovations and restrictive trade policies. Global consumption of REE has been increasing steadily since the mid 2000s, while supply has tightened dramatically. The global REE production is dominated by China, leaving other countries vulnerable to the availability and uninterrupted supply of Chinese exports to meet their industrial needs. Furthermore, China is increasingly prioritizing its domestic markets by reducing export quotas on REE and raising export taxes.
In their report entitled “Rare Earth Market Study for Kwyjibo Preliminary Economic Assessment”, Adamas Intelligence7, an independent market research and advisory services group, states: “Within the next ten years Adamas Intelligence believes that the evolving supply-demand fundamentals of the rare earth market will open a window of opportunity for multiple new rare earth mines to be developed outside of China, so long as these new mines are economically viable, and their output is comprised predominantly of the rare earth elements the market will necessitate most.” Adamas Intelligence report further states:
- “The Kwyjibo Project offers strong economic exposure to the permanent magnet sector, which is the fastest-growing end-use category and most in need of additional rare earth supply.”
- Neodymium and praseodymium are the principal REE used in high-powered magnets while dysprosium and terbium are also used in small amounts to allow magnets to retain their properties at higher temperatures.
- 7Rare Earth Market Study for Kwyjibo Preliminary Economic Assessment, Adamas Intelligence, February 23, 2018, 23 pages.
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