Lomiko Metals Inc. Delivers Positive PEA For La Loutre Graphite Project Pre-tax NPV of C$314M with 28.3% IRR at US$916/t Cg; after-tax NPV of 186M with 21.5% IRR
MONTREAL--(July 29, 2021) Lomiko Metals Inc. (Lomiko) ((TSX-V: LMR, OTC: LMRMF, FSE: DH8C)) ("Lomiko
Metals Inc or “Lomiko" or the "Corporation") is pleased to announce positive results from the Preliminary Economic
Assessment (“PEA”) on its 100 percent-owned La Loutre Project in south-eastern Quebec. The PEA was completed
by Ausenco Engineering Canada Inc. (“Ausenco”) in accordance with National Instrument 43-101 (“NI 43-101”).
Lomiko now aims to initiate a Preliminary Feasibility Study (PFS) to advance its La Loutre Project towards production
as part of a staged development strategy while continuing its aggressive drilling programs to maximize value creation.
Highlights of the PEA (all figures are stated in Canadian dollars unless otherwise stated):
- Long-term Weighted-Average1 Graphite Price US$916/t Cg conc. (graphitic carbon concentrate)
- Exchange rate: C$1.00 = US$0.75
- Pre-tax NPV (8%) of C$313.6M
- After-tax NPV (8%) of C$185.6M
- Pre-tax IRR of 28.3%
- After-tax IRR of 21.5%
- Pre-tax payback period of 3.3 years
•
After-tax payback period 4.2 years
- Initial capital of (“CAPEX”) of C$236.1M including mine pre-production, processing, infrastructure (roads,
power line construction, co-disposal tailings facility, ancillary buildings, and water management)
- Life of mine processing period (“LOM”) of 14.7 years
- Average LOM strip ratio (Waste:Mineralization) of 4.04:1
•
LOM plant production of 21,874 Kilotons (kt=1,000 metric tonnes) of mill feed yielding 1,436 kt of graphite
concentrate grading 95.0% Cg.
- Average annual graphite concentrate production of 108 kt for the first eight years; LOM average annual
production of 97.4 kt.
- Average graphite mill head grade of 7.44% Cg for the first eight years; LOM average graphite mill head grade
of 6.67% Cg.
- Average LOM recovery of 93.5% Cg.
- Measured + Indicated resource at the base case cut-off grade of 1.5% Cg of 23,165 kt at a 4.51% Cg grade for
1.04 Mt of graphite.
- Inferred resource at the base case cut-off grade of 1.5% Cg of 46,821 kt at a 4.01% Cg grade for 1.9Mt of
graphite.
- Cash Cost of US$386 per tonne of graphite concentrate
- All-in Sustaining Cost (“AISC”) of US$406 per tonne of graphite concentrate
The Lomiko team is pleased to present the results of a PEA on its La Loutre Project, clearly demonstrating its
potential for the Corporation to become a major North American graphite producer, with a positive after-tax Internal
Rate of Return (“IRR”) of 21.5% and after-tax Net Present Value (“NPV”) of C$186M. The PEA supports an open pit
project with production spanning 14.7 years with robust economics at a US$916/tonne Cg sale price, with very
attractive cash costs and AISC, low CAPEX and low capital intensity. The first eight years will target production
averaging 108 kt/a payable graphite concentrate peaking at 112 kt/a in year 4.
“La Loutre has shown it has the potential to become a highly profitable graphite mine in one of the most prolific
producing regions in Canada. The La Loutre PEA was produced by the Ausenco team, one of the most experienced
and reputable engineering firms working on mining projects in Canada. With further drill programs, we will continue to
add to and upgrade resources as we seek to move the project forward towards production,” said A Paul Gill,
President, CEO and director, Lomiko.
The La Loutre Project PEA indicates the property has the geological potential to extend the mine life beyond the initial
14.7 years presented in the PEA as well as the opportunity to expand the scale of production by increasing the
mineral resource through ongoing exploration and drilling. The Company’s goal is for La Loutre to be a cornerstone
mine for its future growth in a mining friendly jurisdiction. With a strong treasury to support their next steps, the
Company plans to commence a Preliminary Feasibility Study (PFS) and Environmental Impact Studies while
continuing to explore the geological potential of its La Loutre property.
“The development of Canada-USA and Canada-EU critical minerals collaboration agreements gives access for
graphite products in these markets. There is a focus on projects with environmental, social and governance (ESG)
acceptability which Lomiko has also adopted. The strict criteria for the report should result in competitively-priced
graphite for customers in the North America and European markets. These recent agreements between Canada and
the USA and Canada and Europe have identified graphite as a critical element that will be part of a new supply chain.
Lomiko is ready to maximize La Loutre’s value by advancing the studies to further refine and de-risk the project,”
added Gill.
Lomiko looks forward to working with its partners in the MRC of Papineau region including the Lac-des-Plages and
the Duhamel municipalities, as well as the surrounding First Nations communities. We will also continue to work
closely with the Quebec and Federal governments to advance the La Loutre Project.
Overview
Ausenco was appointed as lead PEA consultant on February 22, 2021, in accordance with National Instrument 43-
101 – Standards of Disclosure for Mineral Projects ("NI 43-101"). Ausenco is the lead consultant responsible for the
overall development of the PEA, including the processing, major infrastructure, hydrogeology, hydrology,
environmental, co-disposal of mine waste rock and mill tailings, mining and economic assessment. Ausenco’s
specialist ESG group Hemmera Envirochem Inc., provided environmental support and Moose Mountain Technical
Services was responsible for the resource estimate and mine design. Metpro Management Inc. (Metpro) was
responsible for metallurgy.
The La Loutre Project is located in the Nominingue-Chénéville Deformation Zone in Quebec. The Property consists of
one large contiguous block of 42 mineral claims totaling 2,508.97 hectares (25.09 km2) and is located approximately
117 km northwest of Montréal in southern Québec, 230 km southwest of the Nouveau Monde Matawinie Project and
100 km southeast of the Imerys Graphite & Carbon Lac-des-îles mine.
Financial Analysis
The economic analysis was performed assuming an 8% discount rate. This analysis shows a projected pre-tax NPV
8% of $313.6M, internal rate of return IRR is 28.3% and payback period of 3.3 years. On an after-tax basis, an NPV
8% of $186M, IRR of 21.5% and payback period of 4.2 years is expected. A summary of the project economics is
listed in (Table 1).
The size distribution as noted in Table 1 was derived from the lock cycle testing (LCT) on the Master composite by
SGS Canada Inc. Benchmark Mineral Intelligence (Benchmark) provided pricing information based on Mesh Size
only. The prices were derived based on Benchmark forecasted graphite prices and is noted in Table 1.
Table 1: Graphite Price Forecast
| Mesh Size | Average 10-year Price ($US/tonne) | % Distribution | Weighted Average Price ($US/t) |
|---|---|---|---|
| +50 | 1,211 | 10.8 | 130.79 |
| +80 | 987 | 21.6 | 213.19 |
| +100 | 893 | 10.8 | 96.44 |
| -100 | 837 | 56.8 | 475.42 |
| Average: | 100 | 915.84 |
Description of Economic Valuation
Table 2: Summary of Project Economics
| General | LOM Total / Avg. |
|---|---|
| Graphite Price (US$/tonne) | $915.84 |
| Exchange Rate ($US:$C) | 0.75 |
| Mine Life (years) | 14.7 |
| Total Waste Tonnes Mined (kt) (including pre-stripping) | 88,396 |
| Total Mill Feed Tonnes (kt) | 21,874 |
| LOM Operating Strip Ratio (W:O) | 4.04 |
| Production | LOM Total / Avg. |
| Mill Head Grade (% Cg) | 6.67 |
| Mill Recovery Rate (%) | 93.5% |
| Concentrate Grade (% Cg) | 95.0% |
| Total Graphite Concentrate Recovered (kt) | 1,436 |
| Total LOM Average Annual Concentrate Production (kt) | 97.4 |
| Operating Costs | LOM Total / Avg. |
| Mining Cost (C$ /t Milled) | $16.20 |
| Processing Cost (CAD$/t Milled) | $11.85 |
| G&A Cost (C$/t Milled) | $2.37 |
| Total Operating Costs (C$/t Milled) | $30.43 |
| Transport Cost (C$/t Cg conc.) | $37.42 |
| Royalty NSR * | 1.0 % |
| Cash Costs (US$/t Cg conc.) ** | $386 |
| AISC (US$/t Cg conc.) *** | $406 |
| Capital Costs | LOM Total / Avg. |
| Initial Capital (C$M) | $236.1 |
| Sustaining Capital (C$M) | $37.7 |
| Closure Costs (C$M) | $5.6 |
| Salvage Costs (C$M) | $4.0 |
| Financials - Pre Tax | LOM Total / Avg. |
| NPV (8%) (C$M) | $313.6 |
| IRR (%) | 28.3% |
| Payback (years) | 3.3 |
| Financials - Post Tax | LOM Total / Avg. |
| NPV (8%) (C$M) | $185.6 |
| IRR (%) | 21.5% |
| Payback (years) | 4.2 |
- La Loutre property is subject to a 1.5% NSR of which the company is buying back at 0.5% NSR for $0.5M.
** Cash costs consist of mining costs, processing costs, mine-level G&A, transportation costs and royalties.
*** AISC includes cash costs plus sustaining capital, closure cost and salvage value.
Sensitivity
A sensitivity analysis was conducted on the base case pre-tax and after-tax NPV and IRR of the project, using the
following variables: metal price, total capex (initial + sustaining), total operating costs and exchange rate. The tables
below provide a summary of the sensitivity analysis.
Table 3: Post-Tax NPV (8%) Sensitivity
| Graphite Price (US$/t) | Post-Tax NPV (8%) (CDN$) | Initial CAPEX | OPEX | FX | |||||
|---|---|---|---|---|---|---|---|---|---|
| Base Case | (-20%) | (+20%) | (-20%) | (+20%) | (-20%) | (+20%) | |||
| $750 | $76 | $115 | $37 | $123 | $28 | ($32) | $176 | ||
| $850 | $143 | $180 | $104 | $188 | $96 | $28 | $251 | ||
| $916 | $186 | $222 | $148 | $230 | $140 | $65 | $301 | ||
| $1,150 | $332 | $364 | $297 | $371 | $289 | $188 | $461 | ||
| $1,300 | $419 | $445 | $388 | $449 | $382 | $264 | $547 |
Table 4: Post-Tax IRR Sensitivity
| Graphite Price (US$/t) | IRR | Initial CAPEX | OPEX | FX | |||||
|---|---|---|---|---|---|---|---|---|---|
| Base Case | (-20%) | (+20%) | (-20%) | (+20%) | (-20%) | (+20%) | |||
| $750 | 13.8% | 18.6% | 10.4% | 17.1% | 10.2% | 5.4% | 20.8% | ||
| $850 | 18.6% | 24.1% | 14.6% | 21.6% | 15.3% | 10.2% | 25.8% | ||
| $916 | 21.5% | 27.5% | 17.2% | 24.4% | 18.4% | 13.0% | 29.0% | ||
| $1,150 | 31.0% | 38.8% | 25.6% | 33.5% | 28.3% | 21.6% | 39.5% | ||
| $1,300 | 36.7% | 45.4% | 30.5% | 38.8% | 34.2% | 26.6% | 45.2% |
Mineral Resource
The mineral resource is estimated from a drill hole database containing 117 drill holes consisting of 15,160 metres of
drilling and 8,850 assay intervals.
The total Mineral Resource Estimate (MRE) is summarized in Table 5, with the base case cut-off of 1.5% Graphite
highlighted. A Lerchs-Grossman resource pit has been constructed using the 150% pit case based on the prices,
offsite costs, metallurgical recovery and graphite prices used for the economic analysis thus confining the resource to
a “reasonable prospects of eventual economic extraction” pit shape. The cut-off grade is based on a processing cost
of CDN$11.85/tonne, and General and Administrative Costs of CDN$2.37/tonne and a C$1.00 = US$0.75 as
summarized in the notes below. A cut-off grade of 1.5% Cg has been used for the base case of the resource
estimate, which more than covers the Process and G&A costs.
These mineral resource estimates include 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.
Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.
Table 5: Mineral Resource Estimate (effective date May 14, 2021)
| Class | Cut-off Grade Cg (%) | EV Deposit | Battery Deposit | Total | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ROM | In Situ Grade | ROM | In Situ Grade | ROM | In Situ Grade | Graphite (kt) | ||||||||||
| Tonnage (kt) | Graphite (%) | Tonnage (kt) | Graphite (%) | Tonnage (kt) | Graphite (%) | |||||||||||
| Indicated | 1 | 8,321 | 6.38 | 15,889 | 3.32 | 24,210 | 4.37 | 1,057.9 | ||||||||
| 1.5 | 8,158 | 6.48 | 15,007 | 3.44 | 23,165 | 4.51 | 1,044.3 | |||||||||
| 2 | 7,792 | 6.70 | 12,622 | 3.75 | 20,414 | 4.88 | 995.5 | |||||||||
| 3 | 6,768 | 7.33 | 4,529 | 6.16 | 11,297 | 6.86 | 774.6 | |||||||||
| 5 | 4,443 | 9.17 | 2,394 | 8.27 | 6,837 | 8.85 | 605.4 | |||||||||
| Inferred | 1 | 13,114 | 5.71 | 38,273 | 3.10 | 51,387 | 3.77 | 1,936.4 | ||||||||
| 1.5 | 12,829 | 5.81 | 33,992 | 3.33 | 46,821 | 4.01 | 1,877.9 | |||||||||
| 2 | 12,273 | 5.99 | 27,775 | 3.69 | 40,048 | 4.39 | 1,759.5 | |||||||||
| 3 | 9,645 | 6.92 | 10,311 | 5.92 | 19,956 | 6.40 | 1,277.6 | |||||||||
| 5 | 5,833 | 8.99 | 5,687 | 7.58 | 11,520 | 8.29 | 955.2 |
Notes to Table 5:
1. Resources are reported using the 2014 CIM Definition Standards and were estimated using the 2019 CIM Best Practices Guidelines.
2. Mineral Resources are reported inclusive of Mineral Reserves.
3. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.
4. The Mineral Resource has been confined by a “reasonable prospects of eventual economic extraction” pit using the following assumptions: Exchange Rate C$1.00 = US$0.75; Weighted average price of graphite of US$ 916/tonne; 100% payable; Offsite costs including transportation and insurance of CDN$37.42/tonne; a 1.5% NSR royalty; Metallurgical recoveries of 95%.
5. Pit slope angles are 45º below overburden, 20o in overburden.
6. The specific gravity of the deposit is 2.86 in unmineralized and low-grade zones and 2.78 in high-grade zones (within solids above a 4% Graphite grade).
7. Numbers may not add due to rounding.
The following factors, among others, could affect the Mineral Resource estimate: commodity price and exchange rate
assumptions; pit slope angles; assumptions used in generating the Lerchs–Grossmann (LG) pit shell, including metal
recoveries, and mining and process cost assumptions. The QP is not aware of any environmental, permitting, legal,
title, taxation, socioeconomic, marketing, political, or other relevant factors that could materially affect the Mineral
Resource Estimate.
Mining
The mine plan includes 21.9 Mt of mill feed and 88.4 Mt of waste over the 14.7-year project life. Mine planning is
based on conventional open pit methods suited for the project location and local site requirements. Owner-operated
and managed open pit operations are anticipated to begin prior to mill start up, running for 14.7 years to pit
exhaustion, with feed from the low-grade stockpile supplementing plant feed over the last two years.
The subset of Mineral Resources contained within the designed open pits, summarized in Table 6 with a 2.5% Cg
cut-off, forms the basis of the mine plan and production schedule.
Table 6: PEA Mine Plan Production Summary
| Mine Plan Production Description | Mine Plan Production Summary Values |
|---|---|
| PEA Mill Feed | 21,874 kt |
| Average Graphite Mill Head Grade | 6.67% Cg |
| Waste Overburden and Rock | 88,396 kt |
| LOM Strip Ratio (W:O) | 4.04 |
| Mill Feed Graphite Grade (Years 1-8) | 7.44 % Cg |
| Strip Ratio (Year 1-8) | 4.4 |
Notes: The PEA Mine Plan and Mill Feed estimates are a subset of the May 14, 2021, Mineral Resource estimates
and are based on open pit mine engineering and technical information developed at a Scoping level for the La Loutre
deposits.
1. The Mineral Resources provided in this table were estimated using current Canadian Institute of Mining, Metallurgy
and Petroleum (“CIM”) Standards on Mineral Resources and Reserves, Definitions and Guidelines
2. Mineral resources that are not mineral reserves have not demonstrated economic viability. Additional trenching
and/or drilling will be required to convert Inferred and Indicated Mineral Resources to Measured Mineral Resources.
There is no certainty that any part of a mineral resource will ever be converted into reserves
Waste:mineralization contact edge dilution of 0.5m at contact block grades is applied to the in situ Mineral Resources. 3.
Partial blocks are diluted to whole blocks grades prior to applying cut-off grade. Mining Recovery of 100% of diluted
tonnages is assumed.
4. Mineral Resources are stated at a cut-off grade of 2.5 % C(g). Estimates have been rounded and may result in
summation differences.
The economic pit limits are determined using Minesight™ Pseudoflow algorithm. La Loutre deposit comprises the
Battery (B) zone and the Electric Vehicle (EV) zone. The B zone is planned as two pits, and the EV zone is split into
two pits EV North (EVN) and EV South (EVS) with the EVN pit split into two phases. Pit designs are based on 45
degree overall configured on 6 metre bench heights, with 7.8-metre-wide berms placed every two benches with 70
degree face angles. The pit delineated resource for mine scheduling are listed in Table 7 below:
Table 7: PEA Mine Plan Pit Sequencing
| Pit | ROM Tonnage (kt) | Insitu Grade (%) | Diluted Grade (%) | Waste (Mt) |
|---|---|---|---|---|
| EVN1 | 6,267 | 7.90 | 7.65 | 20.5 |
| EVN2 | 4,596 | 7.41 | 7.22 | 20.3 |
| EVS | 3,058 | 5.81 | 5.77 | 5.6 |
| GRN | 3,598 | 6.93 | 6.36 | 27.3 |
| GRS | 4,355 | 5.74 | 5.56 | 15.4 |
| Total | 21,874 | 6.90 | 6.67 | 89.1 |
Mine development is within the EVN pit for the first four years with development of the BN and BS zones beginning in
Year 5. The EVN pit is mined out in Year 8 with backfill from the EVS, BN and BS pits beginning in Year 9 and final
reclamation of the waste and co-disposal site.
The mill will be fed with material from the pits at an average rate of 1.5 Mtpa (4.1ktpd). Cut-off grade optimization is
employed during the first 8 years, in a low-grade stockpile adjacent to the EVS pit entrances and is planned for
reclamation to the mill in the last two years of the mine life. Overburden will be placed in a stockpile directly north of
the EVS pit. A single waste rock and co-disposal site is located adjacent to the EV pits and will be reclaimed during
the LOM. The majority of the Battery pit waste will be backfilled into the EVN pit as a co-disposal site.
Mining operations will be based on 365 operating days per year with two 12-hour shifts per day.
The mining fleet is based on diesel-powered drills with 140mm bit size for production drilling and grade control
drilling, 4.5 m3 bucket size diesel hydraulic excavators and 7 m3 bucket sized wheel loaders for production loading,
and 60 t payload rigid-frame haul trucks production hauling, plus ancillary and service equipment to support the
mining operations. In-pit dewatering systems will be established for each pit. All surface water and precipitation in the
pits will be handled by submersible pumps.
Maintenance on mine equipment will be performed in the field with major repairs to mobile equipment in the shops
located near the plant facilities.
Milling and Processing
The La Loutre Process Plant employs standard flotation technology to produce a graphite concentrate. The plant
includes crushing, grinding, classification, flotation, tailings thickening and filtration, graphite concentrate filtration,
drying and screening and separation into the product sizes. Graphite concentrate is loaded into 1 tonne bags for
shipment and sale.
The plant is expected to treat 1.5 Mt of feed per year at an average throughput of 4,100 t/d. The mill design
availability is 8,147 hours per year or 93%, with an operating throughput of 184 t/h.
The plant has been designed to realize an average recovery of 93.5% of the graphite at a concentrate grade of 95%
Cg over the life of the project based on metallurgical test work completed by SGS Lakefield in 2021. Graphite product
split is estimated to be 32% plus 80 mesh (177 microns) and 68% less than 80 mesh (177 microns).
Mill tailings storage capacity has been identified to safely accommodate the life of mine production as described in
this PEA. Mill tailings produced will be comingled or co-disposed with 50% of the mine waste rock in the central and
southern portion and the balance of the waste rock will be stored predominantly in the northern section until after
Year 9 of the operation in a co-disposal facility constructed northwest of the process plant.
The Co-Disposal Storage Facility perimeter containment berms will be constructed with waste rock from open pit
mine development and will utilize downstream construction method to ensure safe tailings storage over the long-term.
Run-off water and seepage from the Co-Disposal Storage Facility will be collected in an adjacent Water Management
Ponds. Tailings production after Year 9 will be placed in the mined out EVN pit.
Figure 1: Site Plan
Capital and Operating Costs
The total pre-production capital cost for the La Loutre Project is estimated to be $236.1M including allowances for
indirect costs and contingency of $41.4M and $36.1M respectively. Sustaining capital costs are estimated at $37.7M
as shown in Table 8. Operating costs are estimated at $30.43 per tonne milled as per Table 9.