Clean Air Metals Announces a PEA of the Current and Escape PGE-Cu-Ni Deposits of the Thunder Bay North Project, with post-tax NPV5 of C$378m, IRR 29.8%
Thunder Bay, ON, December 1, 2021 – Clean Air Metals Inc. (“Clean Air Metals” or the “Company”) (TSXV: AIR; FRA: CKU; OTCQB: CLRMF) is pleased to announce results from an independent Preliminary Economic Assessment (PEA) that was completed for its Thunder Bay North Platinum Group Element (PGE) - Copper (Cu) – Nickel (Ni) Project (“Thunder Bay North” or the “Project”) near Thunder Bay, Ontario, Canada. The PEA was prepared by Nordmin Engineering Ltd. (“Nordmin”) of Thunder Bay, Ontario, and includes a new stand-alone milling complex and waste storage facility (WSF) with mill feed from both the Current deposit and the Escape deposit, part of the Thunder Bay North Project Mineral Resource Estimate as amended, that was completed by Nordmin (see press release dated January 20, 2021). All amounts are in CAD dollars, unless otherwise stated. Summary results of the PEA are shown below in Table 1.
The PEA was independently prepared by Mr. Glen Kuntz, P.Geo., Mr. Kurt Boyko, P.Eng. and Mr. Brian Wissent, P.Eng. of Nordmin, Mr. Lyn Jones, P.Eng. of Blue Coast Research, Mr. Wilson Muir, P.Eng. of Knight Piésold Ltd., Mr. Kris Tuuttila P.Geo. (Limited) of DST Consulting, and Dr. Geoff Heggie, Exploration Manager of Clean Air Metals, who are considered "Qualified Persons" under National Instrument 43-101 Standards of Disclosure for Mineral Projects. The technical disclosure in this news release is based upon the information in the PEA prepared by or under the supervision of Mr. Kuntz, Mr. Boyko, Mr. Wissent, Mr. Jones, Mr. Muir, Mr. Tuuttila, and Dr. Heggie.
Project Metrics (Table 1)
- The Project has a pre-tax net present value (NPV) of $425.0 million, and after-tax NPV of $378.4 million, at a 5% discount rate.
- The pre-tax internal rate of return (IRR) is 31.1%, and the after-tax IRR is 29.8%.
- The capital payback is 2.4 years from start of production.
- Revenue’s average $239.8 million per year from sale of PGE and Copper mineral concentrates.
- Total mined metal production over a 10-year mine life based on the present resource base is expected to be 629 k oz Platinum, 618 k oz Palladium, 111 M pounds Copper, 57 M pounds Nickel, 38 k oz Gold, 850 k oz Silver, or 2,886 k oz PtEq1.
- 65.2% of total mineral production occurs in the first 5 years.
- Operating margin of 59% in the first 5 years and Life-of-Mine Operating margin of 53%.
- The Project is located in close proximity to key infrastructure near the City of Thunder Bay, Canada.
1 Equivalency formula can be viewed in the following Link (Click Here)
- Base case economics were calculated using a 2-yr trailing average price deck (Table 2)
PEA Key Metrics
Table 1: Key Financial and Project Metrics
| Project Metric | Units | Value | |||
|---|---|---|---|---|---|
| Pre-tax NPV @ 5% | $M | $425.04 | |||
| After-tax NPV @ 5% | $M | $378.38 | |||
| Pre-tax IRR @ 5% | % (real) | 31.1 | |||
| After-tax IRR @ 5% | % (real) | 29.8 | |||
| Payback Period from start of production | Years | 2.4 | |||
| Initial Capital Expenditure (“Capex”) | $M | $367.17 | |||
| Initial EPCM / Indirects (incl. in Capex) | $M | $41.16 | |||
| Initial Contingency (incl. in Capex) | $M | $60.20 | |||
| Maximum Production Rate | Mtpa | 1.3 | |||
| Mine Life | Years | 10 | |||
| Ramp-up Years | Years | 1 | |||
| Long-hole Open Stoping Mill Feed | kt | 10,338 | |||
| Drift and Fill Mill Feed | kt | 1,946 | |||
| Total Mill Feed | kt | 12,284 | |||
| Life of Mine Mill Feed Grade | EqPt (g/t) | 7.3 | |||
| Total Revenue | $M | $2,245 | |||
| Total Operating Costs | $M | $1,057 | |||
| Pre-tax Operating Cashflow | $M | $1,188 | |||
| Total Capital | $M | $536 | |||
| Net Smelter Return (NSR) | $/tonne mill feed | $178.02 | |||
| Operating Margin | % | 53% | |||
| Operating Costs | |||||
| Underground Mine Operating Costs | $/t mill feed | $47.37 | |||
| Processing Plant / WSF | $/t mill feed | $25.03 | |||
| General and Administration (G&A) | $/t mill feed | $6.87 | |||
| Costs | |||||
| Royalties | $/t mill feed | $2.63 | |||
| Transportation to Smelter | $/t mill feed | $4.71 | |||
| Total Unit Operating Costs | $/t mill feed | $86.61 | |||
| Notes: PtEq Grade = Total Metal Value in 1 Tonne ÷ Pt Price per Oz × 31.10348 g per oz and includes total 6 metals (Platinum, Palladium, Gold, Silver, Copper and Nickel) |
The Company has not made a production decision at the Thunder Bay North Project and there is no guarantee that a production decision will be made or that the production rates at the Thunder Bay North Project will be achieved. There are no Mineral Reserves for the Thunder Bay North Project currently. The information reported in the PEA for the Project is preliminary in nature and includes Inferred Mineral Resources that are considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as Mineral Reserves. Inferred Mineral Resources are based on limited geological evidence and sampling. The tonnage and grade of Inferred Mineral Resources have significant uncertainty as to their existence and as to whether they can be mined economically. There is no certainty that results for the PEA for the Project will be finally realized.
Executive Remarks
Executive Chair Jim Gallagher, P.Eng. stated: “The initial PEA for the Thunder Bay North Project brings together two previously independent deposits into one mining plan which is relatively low risk, low capital, quick to production and generates robust financial metrics. Given the significant potential upside with continued exploration drilling along the known conduits and with the already identified massive sulphide targets we believe that this PEA is a minimum base case that Clean Air Metals will continue to attempt to de-risk towards prefeasibility.”
CEO Abraham Drost, P.Geo., stated that “the PEA sets a mine plan that allows the Company to move forward with several de-risking objectives. These include:
i) converting mine plan-impacted unpatented mining claims to mining leases;
ii) engaging with regulators toward early commencement of the mine permitting process;
iii) continuation of the environmental impact studies (EIS) led by Englobe/DST Engineering;
iv) commencement of prefeasibility technical studies including optimization and tradeoffs around mining, metallurgy and mill design; and
v) negotiation of Impact and Benefit agreements with affected First Nations and Métis.”
Significant Production Potential
- The study considers a 1.3 Mtpa (million tonnes per year) 3,600 tpd mill throughput ramp-access underground mining operation with over a 10 year mine (project) life plus 2 years of construction. Early revenue is generated by mining near surface production areas and prioritizing high grade near surface material from the high head grades from the Lower Current and Bridge Zones grading 9.4 g/t PtEq insitu for first 4 years of production.
- Operating costs average $86.61 per tonne mined with an NSR of $178.02 per tonne over a 10-year life of mine (LOM).
Development Capital
- Initial capital expenditures (CAPEX) are $367.17 million (includes EPCM of $41 million and contingency of $60 million) and ongoing capex for the life of the project is $169 million.
Table 2: 2-Year Trailing Price Deck
| Metal | Unit | 2 Year Trailing (Aug'19 - Jul'21) | |||
|---|---|---|---|---|---|
| 2 Year Trailing | |||||
| (Aug'19 - Jul'21) | |||||
| Platinum | US$/oz | 969 | |||
| Palladium | US$/oz | 2,214 | |||
| Gold | US$/oz | 1,723 | |||
| Silver | US$/oz | 22 | |||
| Copper | US$/lb | 3.09 | |||
| Nickel | US$/lb | 6.86 |
Note: 2yr price deck provided by CRU as of Aug, 2021.
Clean Air Metals will be hosting a webcast on Thursday, December 2, 2021, at 11:00 am (Eastern Time). Abraham Drost, Chief Executive Officer, and Jim Gallagher, Executive Chair will provide an in-depth review of the Company’s PEA and will be available to answer shareholder questions. Copies of the news release and management’s presentation will be available on the Company’s website at www.cleanairmetals.ca.
Pre-registration will be open Wednesday, December 1, 2021 and the webcast can be accessed by clicking HERE or at the following URL:
https://onlinexperiences.com/Launch/QReg/ShowUUID=6A93091E-B89F-465F-AB82- AFB9FCBF4B19&LangLocaleID=1033&GroupID=Onyx
A Chrome or Firefox browser is recommended. Please test your connection prior to joining the webcast at https://onlinexperiences.com/Launch/StudioTest.htm
Mine Operations
The proposed Thunder Bay North operation involves underground mining at an average rate of 4450 tonnes per day (tpd) (3600 tpd in ore and 850 tpd in waste) with an accompanying process plant with a matching 3,600 tpd capacity. Shown in Figure 1 is the proposed site plan with the mineable Current and Escape deposits.
Figure 1: Proposed Site Plan with Mineable Current and Escape Deposits
The Current deposit is accessed via a portal from surface and has a 12-month preproduction development period, which allows for the Current deposit main decline system to connect to the Current main fresh air raise and provide secondary egress for the mine. Contractor decline development is assumed for the 12-month pre-production period as well as the following 2 years.
The Escape deposit is accessed via a separate portal from surface. The main decline development begins 12 months after the Current deposit decline begins and continues for 3 years, until the decline connects with the Escape main fresh air raise. Contractor decline development is assumed for the Escape deposit.
The Current deposit pre-production development period is followed by a production rampup period and achieves full production (3,600 tpd) in the first quarter of year 1. The Current deposit production commences in the Current and Bridge mining zones and continues in these areas for the first 3 years. In year 4, the Escape deposit begins production in the High Grade Zone (HGZ) at 1,800 tpd and the Current deposit production rate is reduced to 1,800 tpd. Figures 2 and 3 show long sections of the proposed Current deposit and Escape deposit.
Figure 2: Current Deposit Long Section (Facing South-West)
Figure 3: Escape Deposit Long Section (Facing South-West)
The underground production was scheduled based on 3,600 tpd mill feed and 850 tpd waste, excavated using a fleet of 10-tonne load-haul-dump loaders (LHD), and hauled with 40-tonne trucks, using the Current and Escape declines to haul material to surface.
The underground mining inventory was determined using Deswik’s Mineable Shape Optimizer (MSO) software tool. The MSO uses the geological block model to generate shapes (e.g., stopes) based on economic and geometric parameters as listed in Table 3. The mining underground inventory is a combination of the four mining areas (Current, Bridge, Beaver-Cloud, and 437) within the Current deposit and the two mining areas (HGZ and Boundary) within the Escape deposit. The underground inventory spans along a strike length of 3.3 km and to a depth of 700 m within the Current deposit and spans along a strike length of 1 km and to a depth of 500 m within the Escape deposit. The underground stope inventory is constrained by a crown pillar, extending 30 m below the unconsolidated sediments below Current Lake.
The Current and Escape deposits will be mined via a combination of conventional underground long-hole open stope and drift & fill mining methods, backfilled with a combination of cemented paste back fill (CPB), cemented rock fill (CRF) and unconsolidated rock fill (URF). Stopes are designed to be accessed and excavated via overcut and undercut development cross-cut drifts, which connect to the main declines. The main declines provide ventilation, haulage to surface, and mine access. Table 3 shows the underground design parameters and Table 4 shows the underground MSO cutoff.
Table 3: Underground Design Parameters
| Parameter | Value |
|---|---|
| Long-hole Open Stoping Size | |
| Length (Maximum) | 20 m |
| Height (Maximum) | 25 m |
| Width (Range) | 5 m to 15 m |
| Drift and Fill Stoping Dimensions | |
| Height | 5 m |
| Width | 5 m |
| Development Drift Dimensions | |
| Ramp | 5 m (height) x 5 m (width) |
| Cross-cut | 4.5 m (height) x 5 m (width) |
| Mining Dilution & Recovery | |
| Underground (UG) Mining Dilution | 9.6% |
| UG Mining Recovery | 95% |
| Resources Used for MSO and UG Design | Measured + Indicated + Inferred |
Table 4: Underground MSO Cutoff
| Parameter | Unit | Current | Bridge | Beaver - Cloud | Boundary | HGZ |
|---|---|---|---|---|---|---|
| Direct Mining Cost (LHOS) | $/t mill feed | $34.7 | $28.5 | $30.8 | $32.0 | $34.5 |
| Direct Mining Cost (DAF) | $/t mill feed | $44.0 | $43.8 | $46.5 | $47.7 | $52.9 |
| Milling / WSF Cost | $/t mill feed | $23.0 | $23.0 | $23.0 | $23.0 | $23.0 |
| Indirect / G&A Cost | $/t mill feed | $10.0 | $10.0 | $10.0 | $10.0 | $10.0 |
| NSR Cutoff (LHOS) | $/t mill feed | $67.7 | $61.5 | $63.8 | $65.0 | $67.5 |
| NSR Cutoff (DAF) | $/t mill feed | $77.0 | $76.8 | $79.5 | $80.7 | $85.9 |
Note: NSR calculation includes mining dilution and recovery, milling recoveries, smelter payables and deductions, royalties and transportation. LHOS – Long Hole Open Stoping DAF – Drift and Fill
Mineralogy
Copper is contained primarily as chalcopyrite and approximately two-thirds of the nickel is in sulphide form, primarily as pentlandite. The remaining nickel is mostly hosted by magnesium-silicate minerals, chiefly serpentine and olivine. The platinum, palladium, and gold mineralization is very fine grained, however they are closely associated with all sulphide minerals, including pyrite and pyrrhotite, and recovery of the sulphides will therefore bring along the majority of the precious metal values. Gangue silicates consist of serpentine, amphibole, chlorite, mica and feldspar. Copper and nickel sulphide material liberation indicate a moderately fine grind is required for good recovery of the sulphides.
Metallurgical Test Work
A flotation development program was completed on one master composite and ten variability composites from the Current deposit and three variability composites from the Escape deposit. Flowsheet options considered include separate copper and nickel concentrates, separate copper and bulk concentrates, and a single bulk concentrate. A flowsheet was developed, consisting of primary grinding to a P80 (80% passing) of 65 microns, sequential flotation of copper bearing minerals, followed by nickel or bulk flotation. Regrinding of the copper rougher concentrate to a P80 of ~25 microns followed by two stages of cleaning achieved concentrate grades of ~25% copper. Nickel concentrate grades up to 11% nickel were achieved with fine regrinding to a P80 < 20 microns, but resulted in low nickel and PGE recoveries to a selective nickel concentrate. Replacing the nickel concentrate with a bulk concentrate eliminates the Ni regrind and improves overall metal recovery. Platinum, palladium and gold recovery is closely linked with sulphur recovery. High recoveries of the precious metals are possible if all the sulphides are floated, however the rejection of any of the sulphide minerals leads to an attendant drop in PGE and gold recovery. Table 5 shows the consolidated concentrate average milling recovery for each payable metal.
Table 5: Consolidated Average Milling Recovery
| Payable Metal | Consolidated Average Milling Recovery | ||
|---|---|---|---|
| Platinum | 82% | ||
| Palladium | 86% | ||
| Gold | 80% | ||
| Silver | 68% | ||
| Copper | 95% | ||
| Nickel | 51% |
Mineral Processing
The conceptional process plant has been designed as a conventional milling operation with a capacity of 3,600 tpd.
Run of mine (ROM) mineralized material will be reduced to P80 of 300 mm by a single jaw crusher. Crusher discharge would be transferred to a surface stockpile, from which material would be reclaimed by two active apron feeders. A front-end loader would be utilized on occasion to minimize size segregation and to motivate the pile during the winter period.
A conventional semi-autogenous grinding (SAG) and ball mill grinding circuit is proposed. The conceptual design targets a grind size P80 of 65μm, utilizing a SAG size of 6.7 m diameter by 2.8 m (EGL) long and a ball mill size of 4.5 m by 7m (EGL) long. The SAG mill is closed-in with a pebble circuit where pebbles are crushed prior to being recycled to the SAG feed. The ball mill will be closed-in with hydrocyclones, with cyclone overflow reporting to the copper rougher circuit. Figure 4 shows the conceptual process plant flow diagram.
Figure 4: Conceptual Process Plant Flow Diagram
The flotation circuit will produce two separate marketable concentrates. A copper-PGE concentrate will be the primary float, utilizing a regrind stage of the rougher float product prior to two subsequent stages of cleaning. Cu-PGE concentrate will be thickened and dewatered via a filter press prior to being stored in a covered stockpile prior to shipment.
Copper rougher tails will be pumped to a bulk concentrate flotation circuit which consists of rougher stage, and four subsequent cleaning stages. The bulk concentrate product will be thickened and dewatered via a filter press prior to being stored in a covered stockpile prior to shipment.
Copper-PGE concentrate is anticipated to amount to approximately 53 Tpd (Dmt), with an assumed target moisture content of 8% which amounts to an annual concentrate production of 20,650 Wmt. The remaining bulk concentrate production will be approximately 119 Tpd (Dmt), with an assumed target moisture content of 8% which translates to an annual concentrate production of 46,500 Wmt.
It is anticipated that the two separate concentrate products will be shipped by truck to separate regional smelters suited to handle the separate marketable concentrate products.
Clean Air Metals’ management have received indicative terms from selected smelters and refiners. The source of smelting terms is specifically excluded, as smelting terms are confidential in nature. The net payable for a metal is calculated as the payable content of the contained metal, less a minimum deduction (in g/t for palladium, gold, platinum and silver and a % for copper), if applicable. Table 6 shows the net payable rates and deductions for the copper concentrate and sulphide concentrate.
Table 6: Smelter Payable % and Deductions
| Payable | Payable % | Deductions | Payable % | Deductions | ||||
|---|---|---|---|---|---|---|---|---|
| Metal | ||||||||
| (Copper Concentrate) | (Bulk Concentrate) | |||||||
| Platinum | 90% | 1.5 g/t | 90% | 1.5 g/t | ||||
| Palladium | 90% | 2.0 g/t | 90% | 2.0 g/t | ||||
| Gold | 98% | 1.0 g/t | 98% | 1.0 g/t | ||||
| Silver | 98% | 30 g/t | 92% | 30 g/t | ||||
| Copper | 96.65% | 1% | 40% | 1% | ||||
| Nickel | 65% |
The treatment charges (TC) and refining charges (RC) are charges deducted from the payable value of the concentrates to account for the costs of smelting and refining. The TC and RC are influenced by global supply and demand and governed by mine and smelter economics based on copper prices and operating costs. The TC and RC applicable to each concentrate may be based on variable annual negotiations, fixed rates and/or market benchmarks. Table 7 shows the TC and RC charges for the copper concentrate and bulk concentrate. The TC and RC shown in Table 7 was calculated from a 2-year trailing benchmark from CRU (Aug'19 - Jul'21).
Table 7: Smelter TC/RC
| Payable | TC | RC | TC | RC | ||||
| Metal | ||||||||
| (Copper Concentrate) | (Bulk Concentrate) | |||||||
| Platinum | US$15/oz | US$15/oz | ||||||
| Palladium | US$15/oz | US$15/oz | ||||||
| Gold | US$4.5/oz | US$4.5/oz | ||||||
| Silver | US$0.45/oz | US$0.45/oz | ||||||
| Copper | US$67.33/wmt | US$0.067/lb | ||||||
| Nickel | US$150/wmt |
CRU Consulting (a division of CRU International Ltd), provided the two-year trailing average metal prices used in the revenue projections for the PEA. Nordmin applied these 2-year trailing averages to the minable mineral resource and economic model within the PEA (Table 2). Currently there are no metal streaming or hedging agreements in place.
Onsite Project Infrastructure
Waste Storage Facility
The conceptional WSF will be located to the north of the Plant Site with sufficient offsets from local waterbodies and contain a maximum of 6.0 million tonnes of potentially acid generating (PAG) filtered tailings and 1.3 million tonnes of PAG waste rock. The WSF will be constructed in two stages, with the initial WSF designed to contain 1.3 million tonnes of filtered tailings and 0.4 million tonnes of waste rock to support the first two years of mining. The WSF footprint will be expanded during Year 2 of operations and then the entire WSF footprint will be used to place the waste and raise the facility using the upstream construction method to establish a paddock.
The foundation materials in the area typically consist of a veneer of silty sand with varying gravel content overlying competent bedrock. The overburden will be removed from the WSF footprint to expose the bedrock and drains will be strategically installed to route any collected seepage to perimeter water collection ponds. A starter perimeter berm consisting of non-PAG waste rock from underground mine development, locally quarried rockfill, and locally processed filter zone material will be placed to allow for initial waste placement. The filtered tailings will be transported to the WSF using conveyors and the material will be placed and compacted with a dozer and compactor. The PAG waste rock will be hauled to the WSF and strategically co-disposed with the tailings. Waste and the perimeter berm materials will be placed in generally level lifts across the entire WSF footprint to raise the facility. This approach will prevent ponding of water on the WSF surface and allow any runoff to shed from the WSF. During the winter months, snow will be removed from the interim surfaces as the material is placed.
The WSF will be progressively reclaimed during operations by placing the overburden removed from the foundation excavation on the perimeter embankment slopes and establishing vegetation. A soil cover will be placed on the final WSF surface and vegetation will be established on the cover at closure.
Water Management
Water management for the WSF will include a series of water collection ditches and ponds along the toe of the WSF. The collected water will be pumped to a central water management pond (WMP), which will also be used to collect contact water from the plant site and other site infrastructure. The WMP will provide temporary storage of contact water during normal operations. A floating pump and pipeline will be installed at the WMP to convey the contact water to the mill for re-use in the process or to a water treatment facility. It is expected that the site will operate under a hydrological surplus and contact water will need to be treated, as required, and discharged over a portion of each year. The WMP will also temporarily store runoff from the environmental design flood (EDF) and safely pass runoff resulting from the inflow design flood (IDF) via a spillway.
Offsite Project Infrastructure
Power
Power is assumed to be supplied via a new 230 kV E-W tie line running to the south-east of the project site (expected completion date of 2022) that is accessed by construction of approximately 6 km of new 230 kV power lines. The estimated cost of an electrical substation and power to site is at an estimate costed of $9.36 million.
Access
Access to the mine site is in discussion with a major forestry company via a combination of upgrades to existing logging roads and construction of new roads, totaling 10.5 km, connecting to Highway 527 to the West, at an estimated cost of $1.82 million.
Capital Costs Summary
The initial project capital cost is estimated at $367.2 million, including a contingency allowance of 20% to 25% for major items. The duration of the detailed design and construction phase of the project is estimated at 24 months. The capital cost estimates are detailed in Table 8.