FALCHANI LITHIUM PROJECT NI 43-101 TECHNICAL REPORT - PRELIMINARY ECONOMIC ASSESSMENT
Prepared for: PLATEAU ENERGY METALS INC.
Effective Date: 4 FEBRUARY 2020 Report Date: 19 MARCH 2020
Prepared By: DRA PACIFIC
L8, 256 Adelaide Terrace Perth, Western Australia, 6000
SIGNED BY QUALIFIED PERSONS John Joseph Riordan BSc, CEng, FAusIMM, MIChemE, RPEQ David Alan Thompson B-Tech, Pr Cert Eng, SACMA Valentine Eugene Coetzee BEng, MEng, PrEng Stewart Nupen BSc (Hons), FGSSA, Pr Sci Nat
Falchani Lithium Project Puno District of Peru Project No: GPEPPR3627 S128-000-REP-PM-001
// Falchani Lithium Project NI 43-101 Technical Report - Prepared for: Plateau Preliminary Economic Assessment Energy Metals Inc.
Important Notice This report was prepared as a National Instrument 43-101 Technical Report for Plateau Energy Metals Inc. (Plateau) by DRA Pacific (DRA). The quality of information, conclusions, and estimates contained herein is consistent with the level of effort involved in DRA’s services, based on: i) information available at the time of preparation, ii) data supplied by outside sources, and iii) the assumptions, conditions, and qualifications set forth in this report. This report is intended for use by Plateau subject to the terms and conditions of its contract with DRA and relevant securities legislation. The contract permits Plateau to file this report as a Technical Report with Canadian securities regulatory authorities pursuant to National Instrument 43-101, Standards of Disclosure for Mineral Projects. Except for the purposes legislated under provincial securities law, any other uses of this report by any third party is at that party’s sole risk. The responsibility for this disclosure remains with Plateau. The user of this document should ensure that this is the most recent Technical Report for the property as it is not valid if a new Technical Report has been issued.
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CERTIFICATE OF QUALIFIED PERSON
I, John Joseph Riordan, BSc, CEng, FAuslMM, MIChemE, RPEQ do hereby certify that:
1. I am Process Engineering Manager for DRA Pacific Limited of 256 Adelaide Terrace, Perth, Western Australia. 2. This certificate applies to the technical report titled "Falchani Lithium Project NI 43-101 Technical Report – Preliminary Economic Assessment," (the ''Technical Report"), prepared for Plateau Energy Metals Inc. 3. The Effective Date of the Technical Report is 4 February 2020. 4. I am a graduate of Cork Institute of Technology with a Bachelor of Science degree in Chemical Engineering (1986). I have worked as a metallurgist and process engineer continuously for a total of 33 years since my graduation and have been involved in the design, construction, commissioning, operation and optimisation of mineral processing and hydrometallurgical plants. 5. I am a Fellow of the Australasian Institute of Mining and Metallurgy (No. 229194), a Chartered Engineer (No. 461184), a Chartered Chemical Engineer (No. 256480), and a Registered Professional Engineer of Queensland (RPEQ No. 22426). 6. I have read the definition of "Qualified Person" set out in National lnstrument 43-101 (“NI 43-101”) and certify that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfil the requirements to be, a "Qualified Person" for the purposes of NI 43-101. 7. I am the co-ordinating author of the Technical Report and have carried out or supervised the work done by other DRA professionals for DRA’s contribution to the Technical Report. I take responsibility for sections 1.1, 1.6, 1.7, 1.8, 1.9, 1.11, 1.15, 1.16, 2, 3, 13, 17, 18, 19, 20, 21, 25 and 26, unless subsections are specifically identified by another Qualified Person. 8. I have not visited the property but have visited the facilities where the bulk of the metallurgical test work in 2018 and 2019 was completed. 9. I am independent of Plateau Energy Metals Inc. applying all the tests in section 1.5 of NI 43-101. 10. I have not had prior involvement with the property that is the subject of the Technical Report. 11. I have read NI 43-101 and Form 43-101F1; the sections of the Technical Report I am responsible for have been prepared in compliance with that instrument and form. 12. As of the aforementioned Effective Date, to the best of my knowledge, information and belief, the sections of the Technical Report I am responsible for contain all scientific and technical information that is required to be disclosed to make the Technical Report not misleading. Dated this 19th day of March 2020. Signed
/John Joseph Riordan/
John Joseph Riordan, FAuslMM (No. 229194)
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CERTIFICATE OF QUALIFIED PERSON
I, David Alan Thompson, B-Tech, Pr Cert Eng, SACMA do hereby certify that: 1. I am Principal Mining Engineer for DRA Projects Pty Ltd of 3 Inyanga Close, Sunninghill, Johannesburg, South Africa. 2. This certificate applies to the technical report titled "Falchani Lithium Project NI 43-101 Technical Report – Preliminary Economic Assessment," (the ''Technical Report"), prepared for Plateau Energy Metals Inc. 3. The Effective Date of the Technical Report is 4 February 2020. 4. I am a graduate of University of Johannesburg with a Bacclaureus Technologie Degree in Mining Engineering. I have worked as a mining engineer for a total of 32 years and 10 years since my B- Tech graduation. 5. I am a member of the Engineering Council of South Africa (No. 201190010), and a current member of the South African Colliery Managers Association (5066). 6. I have read the definition of "Qualified Person" set out in National instrument 43-101 (NI 43-101) and certify that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfil the requirements to be, a "Qualified Person" for the purposes of NI 43-101. 7. I am co-author of the Technical Report, and co-author responsible specifically for sections 1.6, 1.7, 1.8, 1.9, 1.10, 2.6, 15, 16, 21, 22, 25 and 26, unless subsections are specifically identified by another Qualified Person. 8. I have not visited the property but have reviewed all technical documentation available for the project to date. 9. I am independent of Plateau Energy Metals Inc. applying all the tests in section 1.5 of NI 43-101. 10. I have not had prior involvement with the property that is the subject of the Technical Report. 11. I have read NI 43-101 and Form 43-101F1; the sections of the Technical Report I am responsible for have been prepared in compliance with that instrument and form. 12. As of the aforementioned Effective Date, to the best of my knowledge, information and belief, the sections of the Technical Report I am responsible for contains all scientific and technical information that is required to be disclosed to make the Technical Report not misleading.
Dated this 19th day of March 2020. Signed
/David Alan Thompson/
David Alan Thompson (ECSA 201190010)
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CERTIFICATE OF QUALIFIED PERSON
I, Valentine Eugene Coetzee do hereby certify that:
1. I am Senior Vice President for DRA Projects Pty Ltd of 3 Inyanga Close, Sunninghill, Johannesburg, South Africa.
2. This certificate applies to the technical report titled "Falchani Lithium Project NI 43-101 Technical Report – Preliminary Economic Assessment," (the ''Technical Report"), prepared for Plateau Energy Metals Inc. 3. The Effective Date of the Technical Report is 4 February 2020. 4. I am a registered Professional Engineer with the Engineering Council of South Africa (No. 20070076) and graduated from the University of Stellenbosch, South Africa with a Bachelor of Engineering in Chemical Engineering (Mineral Process) and a Master of Engineering (Mining: Mineral Economics) from the University of the Witwatersrand, South Africa. I have practiced my profession continuously since 2001 and have gathered extensive operational and project experience. As a result of my qualifications and experience, I am a Qualified Person as defined in National Instrument 43-101.
5. I have read the definition of "Qualified Person" set out in National instrument 43-101 (NI 43-101) and certify that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfil the requirements to be, a "Qualified Person" for the purposes of NI 43-101.
6. I am co-author of the Technical Report, and co-author responsible specifically for section 22, unless subsections are specifically identified by another Qualified Person.
7. I have visited the property in January 2019.
8. I am independent of Plateau Energy Metals Inc. applying all the tests in section 1.5 of NI 43-101.
9. I have not had prior involvement with the property that is the subject of the Technical Report.
10. I have read NI 43-101 and Form 43-101F1; the sections of the Technical Report I am responsible for have been prepared in compliance with that instrument and form.
11. As of the aforementioned Effective Date, to the best of my knowledge, information and belief, the sections of the Technical Report I am responsible for contain all scientific and technical information that is required to be disclosed to make the Technical Report not misleading.
Dated this 19th day of March 2020. Signed
/Valentine Coetzee/
Valentine Eugene Coetzee (ECSA 20070076)
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CERTIFICATE OF QUALIFIED PERSON
1. I, Stewart Robert Quentin Nupen, am a professional geologist, employed until 31 January 2020 by The Mineral Corporation, situated at Block B, Homestead Office Park, 65 Homestead Avenue, Bryanston, Johannesburg, South Africa. My residential address is 8 Devondale Place, Hurlingham Manor, Johannesburg, South Africa.
2. This Certificate applies to technical report titled "Falchani Lithium Project NI 43-101 Technical Report – Preliminary Economic Assessment," and dated 19 March 2020. (the “Technical Report”).
3. I have a Bachelor of Science Honours degree in geology from University of Cape Town (1999). I am a practising geologist registered with the South African Council for Natural Scientific Professions; Registration Number 400174/07 and a fellow of the Geological Society of South Africa. I have practiced geology continuously since 1999 and have experience in the estimation and reporting of Mineral Resources for various different deposit types. I am a qualified person as that term is defined in National Instrument 43-101 Standards of Disclosure of Mineral Projects of the Canadian Securities Administrators (the “Instrument”).
4. I have personally visited the Falchani Project in Puno, Peru. During this visit, outcrop and core samples were viewed, random independent samples were taken and analysed for lithium. The CERTIMIN Laboratory in Lima was also visited. These activities took place from 13 May to 16 May 2018.
5. I was responsible for Sections 4,5,6,7,8,9,10,11,12, 14 and 23 of the Technical Report and for the Mineral Resource estimates for the Falchani Project.
6. I, and The Mineral Corporation, are independent of Plateau Energy Metals Inc., and its subsidiaries, pursuant to Section 1.5 of the Instrument.
7. I, and The Mineral Corporation, have had prior involvement with the Falchani Project and have also had prior involvement with other Projects on behalf of Plateau Energy Metals Inc., and its subsidiaries, as described in the following reports:
Technical Report No C-MYI-COL-731-506 entitled "Mineral Resource Estimates of the Colibri Project held by Global Gold S.A.C. in the Puno District of Peru" and dated December 2008; Technical Report No C-MYI-COL-731-592 entitled “Update to Mineral Resource Estimates of the Colibri Project held by Global Gold S.A.C. in the Puno District of Peru” and dated April 2010; Technical Report No C-MYI-COL-731-637 entitled “Update to Mineral Resource Estimates of the Colibri Project held by Global Gold S.A.C. in the Puno District of Peru” and dated September 2010; Technical Report No C-MYI-CON-881-644 entitled "Mineral Resource Estimate of the Corachapi Project held by Global Gold S.A.C. in the Puno District of Peru" and dated October 2010; Technical Report No C-MYI-COL-731-686 entitled "Update of the Mineral Resources of the Colibri Project held by Global Gold S.A.C. in the Puno District of Peru " and dated March 2011; Technical Report No C-MYI-CHI-1170-802 entitled “Mineral Resource Estimates of the Chilcuno Chico deposit held by Global Gold S.A.C. in the Puno District of Peru” and dated August 2012; Technical Report C-MYI-COL-731-872 entitled “Mineral Resource Estimates for the Colibri 2 & 3 / Tupuramani, Kihitian and Triunfador Uranium Projects, held by Global Gold S.A.C. in the Puno District of Peru” and dated 20 September 2013; Technical Report C-MYI-MRU-1568-960 entitled “Consolidated Mineral Resource estimates for the Kihitian, Isivilla and Corani Uranium Complexes controlled by Plateau Uranium Inc., in the Puno District of Peru” and dated 22 June 2015; and Technical Report C-MYI-PUI-1646-990 entitled “Mineral Resource estimates for the Chilcuno Chico, Quebrada Blanca, Tantamaco and Isivilla deposits in the Puno District of Peru, updated to include lithium and potassium” and dated 6 May 2016 Technical Report No C-MYI-EXP-1727-1103 entitled “Mineral Resource Estimates for the Falchani Lithium Project held by Global Gold S.A.C. in the Puno District of Peru” and dated September 2018; C-MYI-EXP-1727-1134 entitled “Mineral Resource estimates for the Falchani Lithium Project in the Puno District of Peru” and dated effective 01 March 2019.
8. I have read the Instrument, and the Technical Report and confirm that the Technical Report has been prepared in compliance with the Instrument.
9. To the best of my knowledge, information and belief, as of the effective date, the Technical Report contains all the scientific and technical information that is required to make it not misleading.
Dated at Johannesburg, South Africa, on 19 March 2020.
Signed “Stewart Nupen”
BSc (Hons), FGSSA, Pr Sci Nat Qualified Person
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TABLE OF CONTENTS
1 SUMMARY ...... 1
1.1 Introduction ...... 1
1.2 Geology & Mineralization ...... 1
1.3 Mineral Resource Estimation ...... 2
1.4 Mineral Reserve Estimates ...... 4
1.5 Mining Methods ...... 5
1.6 Mineral Processing & Metallurgical Testing ...... 7
1.7 Market Studies and Contracts ...... 8
1.8 Permitting, Environmental and Social Considerations ...... 8
1.9 Project Infrastructure ...... 9
1.10 Capital Cost Estimate ...... 10
1.11 Operating Cost Estimate ...... 11
1.12 Economic Outcomes – Base Case ...... 12
1.13 Economic Outcomes – Alternative Case ...... 14
1.14 Adjacent Properties ...... 15
1.15 Interpretations and Conclusions ...... 15
1.16 Recommendations...... 15
2 INTRODUCTION ...... 17
2.1 Background ...... 17
2.2 Project Scope and Terms of Reference ...... 17
2.3 Study Participants...... 17
2.4 Primary Information Sources ...... 18
2.5 Qualified Persons ...... 18
2.6 Qualified Person Site Visit ...... 19
2.7 Financial Interest Disclaimer ...... 19
2.8 Frequently Used Abbreviations, Acronyms and Units of Measure ...... 19
3 RELIANCE ON OTHER EXPERTS ...... 23
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4 PROPERTY DESCRIPTION AND LOCATION ...... 24
4.1 Introduction ...... 24
4.2 Mineral Tenure ...... 24
5 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY ...... 30
5.1 Access to Site ...... 30
5.2 Access to Land ...... 30
5.3 Climate ...... 30
5.4 Local Resources ...... 31
5.5 Infrastructure ...... 31
5.6 Physiography ...... 31
6 HISTORY ...... 32
6.1 Introduction ...... 32
6.2 Previous Regional Exploration ...... 32
6.3 Previous Ownership ...... 33
6.4 Previous Exploration...... 34
7 GEOLOGICAL SETTING AND MINERALIZATION...... 36
7.1 Regional Geology ...... 36
7.2 Local Geology ...... 36
7.3 Property Geology...... 40
8 DEPOSIT TYPES ...... 44
9 EXPLORATION ...... 45
10 DRILLING ...... 46
10.1 Drilling programme ...... 46
10.2 Drilling methodology ...... 46
10.3 Sample Recovery and Core ...... 47
11 SAMPLE PREPARATION, ANALYSES AND SECURITY ...... 48
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11.1 Introduction ...... 48
11.2 Sampling Methods ...... 48
11.3 Sampling Recovery ...... 48
11.4 Sample Quality ...... 48
11.5 Sample Preparation, Assaying and Analytical Procedures ...... 48
11.6 Analytical Quality Assurance and Control (QAQC) Procedures ...... 50
11.7 Sample Database ...... 53
11.8 Overall Adequacy Statement ...... 53
12 DATA VERIFICATION ...... 54
12.1 Site Visit ...... 54
12.2 Drillhole Locations ...... 54
12.3 Geological Observations ...... 54
12.4 Re-sample Campaign Analyses ...... 54
12.5 Limitations or failure to Conduct Verification ...... 55
12.6 Overall Adequacy Statement ...... 55
13 METALLURGY AND METALLURGICAL TESTING ...... 56
13.1 Background ...... 56
13.2 Completed Testwork Summary ...... 59
13.3 Metallurgical Testwork Review – Chloride Roast and Sulfate Bake ...... 61
13.4 Metallurgical Testwork Review – Acid Leach to Lithium Carbonate Precipitation ...... 63
14 MINERAL RESOURCE ESTIMATES ...... 82
14.1 Drillhole Database ...... 82
14.2 Geological Modelling Methodology ...... 82
14.3 Grade Estimation Methodology ...... 90
14.4 Mineral Resource Statement ...... 95
14.5 Reconciliation ...... 97
15 MINERAL RESERVE ESTIMATES ...... 101
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16 BASE CASE MINING METHODS ...... 102
16.1 Introduction ...... 102
16.2 Units of Measurement ...... 102
16.3 Sources of Information ...... 103
16.4 Geotechnical ...... 103
16.5 Current Surveys ...... 105
16.6 Base Case Open Pit Optimisation ...... 105
16.7 Base Case Mine Planning ...... 108
16.8 Open Pit Mine Operations ...... 115
16.9 Waste Dumps ...... 116
16.10 Mining Shift Cycles and Equipment ...... 116
16.11 Alternative Case Mining Method ...... 121
16.12 Alternative Case Pit Optimisation Parameters ...... 122
16.13 Alternative Case Pit Optimisation Results ...... 123
16.14 Alternative Case Mine Sequencing/Scheduling ...... 124
16.15 Alternative Case Production Fleet and Personnel ...... 128
17 RECOVERY METHODS ...... 130
17.1 Introduction ...... 130
17.2 Design Criteria ...... 130
17.3 Power and Water Consumption ...... 131
17.4 Process Block Flow Sheet & Process Plant Layout ...... 132
17.5 Process Description...... 134
18 PROJECT INFRASTRUCTURE ...... 138
18.1 Access Road ...... 138
18.2 Raw Water Supply ...... 140
18.3 Power Supply ...... 140
18.4 Site Services ...... 141
18.5 Buildings ...... 141
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18.6 Tailings Transportation and Storage ...... 141
19 MARKET STUDIES AND CONTRACTS ...... 144
19.1 Market Studies ...... 144
19.2 Lithium and Battery Demand Outlook ...... 144
19.3 Lithium Quality ...... 147
19.4 Lithium Supply Outlook ...... 148
19.5 Lithium Supply Demand Balance Forecast ...... 150
19.6 Lithium Chemical and Battery Cathode Demand And Capacity Outlook ...... 152
19.7 Long-term Supply Cost Curves for Lithium to 2035 ...... 154
19.8 Lithium Price Forecast ...... 157
19.9 BMI Research Findings ...... 159
20 ENVIRONMENTAL STUDIES, PERMITTING & SOCIAL OR COMMUNITY IMPACT ... 161
20.1 Introduction ...... 161
20.2 Project Permitting Requirements ...... 161
20.3 Environmental Baseline ...... 162
20.4 Social, Community and Environmental Impacts ...... 163
20.5 Rehabilitation and Closure ...... 164
20.6 Green Project Initiatives ...... 164
21 CAPITAL AND OPERATING COSTS ...... 166
21.1 Capital Costs ...... 166
21.2 Capital Cost Phasing – Base Case ...... 173
21.3 Capital Cost Phasing – Alternative Case ...... 174
21.4 Operating Costs ...... 174
22 ECONOMIC ANALYSIS ...... 184
22.1 Introduction ...... 184
22.2 Mine Production Profile ...... 185
22.3 Process Production Profile ...... 185
22.4 Capital Expenditure ...... 186
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22.5 Operating Costs ...... 187
22.6 Revenue and Lithium Carbonate Pricing...... 187
22.7 Sustaining Capital...... 187
22.8 Salvage Value ...... 187
22.9 Reclamation and Closure ...... 188
22.10 Taxation ...... 188
22.11 Economic Outcomes – Base Case ...... 189
22.12 Alternative Case Assessment ...... 192
22.13 Sensitivity Analysis ...... 197
23 ADJACENT PROPERTIES ...... 198
24 OTHER RELEVANT DATA AND INFORMATION ...... 199
24.1 Introduction ...... 199
24.2 Basis for determination of the target for further exploration at Tres Hermanas ...... 199
24.3 Potential quantity and grade of the target for further exploration ...... 200
25 INTERPRETATION AND CONCLUSIONS ...... 202
25.1 Geology and Resources ...... 202
25.2 Mining ...... 202
25.3 Metallurgy and Processing ...... 203
25.4 Cost Estimates ...... 204
25.5 Economic Outcomes – Base Case ...... 205
25.6 Economic Outcomes – Alternative Case ...... 205
26 RECOMMENDATIONS ...... 206
26.1 Geology and Resources ...... 207
26.2 Mining ...... 207
26.3 Environmental ...... 208
26.4 Metallurgy & Processing ...... 208
26.5 Infrastructure ...... 209
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27 REFERENCES ...... 210
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LIST OF TABLES
Table 1-1 Milling Rate and Expansion Phases – Base Case ...... 1 Table 1-2 Falchani Project Mineral Resources (Base Case) effective 1 March, 2019 ...... 4 Table 1-3 Base Case Mineral Resource Summary ...... 5 Table 1-4 Production Ramp Up Base Case ...... 6 Table 1-5 Project Capital Cost Overview – Base Case ...... 11 Table 1-6 Operating Costs – Base Case ...... 12 Table 1-7 Discounted Cashflow Summary – Base Case ...... 13 Table 1-8 Discounted Cashflow Summary – Alternative Case ...... 15 Table 2-1 Report Sections and Qualified Persons ...... 18 Table 2-2 Abbreviations, Acronyms and Units of Measure ...... 19 Table 4-1 Mining concessions ...... 26 Table 10-1 Drilling programme summary ...... 46 Table 11-1 Summary of QAQC samples ...... 50 Table 12-1 Independent analysis from the Falchani Project ...... 54 Table 13-1 Head Analysis of Lithium-rich Tuff Trench Sample ...... 56 Table 13-2 Trade-off Study Key Design Parameters ...... 58 Table 13-3 Trade-off Study Capital Cost Estimate ...... 58 Table 13-4 Trade-off Study Process Plant Operating Cost Estimate Summary (No Acid Plant) ...... 58 Table 13-5 Trade-off Study Process Plant Operating Cost Estimate Summary (Acid Plant) ...... 59 Table 13-6 Trade-off Study Financial Model Results ...... 59 Table 13-7 Completed Testwork Summary ...... 60 Table 13-8 Summary of Sulfation Bake & Volatilisation Results (Source: ANSTO) ...... 62 Table 13-9 Summary of Chloride Roast Results ...... 62 Table 13-10 Diagnostic Leach Parameters and Results (Source: ANSTO) ...... 64 Table 13-11 Batch Leach Parameters and Results (Source: ANSTO) ...... 67 Table 13-12 Autoclave Leach Test with H2SO4 (150 g/L) (Source: ANSTO) ...... 69 Table 13-13 PLS Composition Before and After Alum Crystallisation ...... 70 Table 13-14 Summary of Acid Leach Tests (Source: ANSTO) ...... 71 Table 13-15 Summary of Alum Precipitation Tests (Source: ANSTO) ...... 72 Table 13-16 Summary of Pre-neutralisation Tests (Source: ANSTO) ...... 73 Table 13-17 Summary of Impurity Removal 1 (IR1) Test Results (Source: ANSTO) ...... 74 Table 13-18 Summary of Impurity Removal 3 (IR3) Test Results (Source: ANSTO) ...... 75 Table 13-19 Summary of Flouride Ion-Exchange Test Results (Source: ANSTO) ...... 76 Table 13-20 Lithium Carbonate Precipitation Results ...... 77 Table 13-21 Lithium Carbonate Precipitation – Comparison of 2018 Acid Leach LC, Acid ...... 78 Table 13-22 Summary of Multi-Step Validation Overall Li Recovery (Source: ANSTO) ...... 80
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Table 14-1 Lithological units and Mineralized zones used in geological model and Mineral Resources 82 Table 14-2 Variogram Modelling Results ...... 93 Table 14-3 Search criteria (applied to all mineralized zones) ...... 93 Table 14-4 Base Case Falchani Lithium Project Resources ...... 95 Table 14-5 Alternative Case Falchani Lithium Project Resources (effective 1 March, 2019) ...... 96 Table 14-6 Mineral Resource estimates for the Falchani Project (September 2018) ...... 97 Table 16-1 Conversion Factors for Lithium Compounds and Minerals ...... 103 Table 16-2 Summary Geotechnical Testwork ...... 105 Table 16-3 Block Model Origin and Dimensions ...... 105 Table 16-4 Summary of Key Fields in Block Model ...... 106 Table 16-5 Summary Mineral Resources 12 December 2019 (Base Case In-situ Optimised Shell Content) 106 Table 16-6 Pit Optimisation Parameters Base Case ...... 107 Table 16-7 Base Case Summary In-situ Optimised Shell Content ...... 108 Table 16-8 Base Case Mineral Resource Summary ...... 108 Table 16-9 Production Ramp Phases ...... 109 Table 16-10 Base Case Conceptual LoM Production Schedule Summary ...... 110 Table 16-11 Typical Shift Roster ...... 116 Table 16-12 Contractor Operated Mining Hour Summary ...... 117 Table 16-13 Preliminary Production Equipment...... 119 Table 16-14 Open Pit Summary Personnel Table (Base Case) ...... 120 Table 16-15 Alternative Case Mineral Resource Summary ...... 121 Table 16-16 Production Ramp Up Alternative Case ...... 121 Table 16-17 Summary Mineral Resources 12 December 2019 (Alternative Case In-situ Optimised Shell Content) 121 Table 16-18 Pit Optimisation Parameters Alternative Case ...... 122 Table 16-19 Alternative Case Conceptual LoM Production Schedule Summary ...... 125 Table 16-20 Alternative Case Major Open Pit Equipment Estimate ...... 128 Table 16-21 Open Pit Summary Personnel Table (Alternative Case) ...... 129 Table 17-1 Milling Rate and Expansion Phases – Base Case ...... 130 Table 17-2 Falchani Lithium Design Criteria ...... 130 Table 18-1 Access Roads Analysis – Outcomes ...... 139 Table 21-1 Currency Exchange Rates ...... 166 Table 21-2 Mining Costs ...... 169 Table 21-3 Process Plant Direct Costs ...... 169 Table 21-4 Process Plant Infrastructure Costs ...... 170 Table 21-5 Indirect Costs ...... 171 Table 21-6 Project Initial Capital Cost – Base Case and Alternative Case ...... 172
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Table 21-7 Initial Capital Cost Summary – By Commodity (Base Case and Alternative Case) ...... 173 Table 21-8 Capital Cost Phasing – Base Case ...... 174 Table 21-9 Capital Cost Phasing – Alternative Case ...... 174 Table 21-10 Currency Exchange Rates ...... 175 Table 21-11 Mining OPEX – Key Input Parameters ...... 175 Table 21-12 Process Plant OPEX – Reagents ...... 176 Table 21-13 Process Plant OPEX – Power ...... 177 Table 21-14 Process Plant OPEX – Labour (Phase I) ...... 177 Table 21-15 Process Plant OPEX – Maintenance ...... 179 Table 21-16 Process Plant OPEX – Liner Consumption ...... 179 Table 21-17 Process Plant OPEX – Laboratory...... 180 Table 21-18 Process Plant OPEX – Tailings Handling and Storage ...... 180 Table 21-19 Operating Costs – Base Case ...... 180 Table 21-20 Project Operating Cost – Alternative Case ...... 182 Table 22-1 Economic Model – Key Inputs ...... 184 Table 22-2 Milling Rate and Expansion Phases – Base Case ...... 185 Table 22-3 Capital Expenditure – Base Case ...... 186 Table 22-4 Operating Costs – Base Case ...... 187 Table 22-5 Discounted Cashflow Summary – Base Case ...... 189 Table 22-6 Discounted Cashflow – Base Case (US$ 12,000/t) ...... 190 Table 22-7 Discounted Cashflow – Base Case (BMI Pricing Model) ...... 191 Table 22-8 Capital Expenditure – Alternative Case ...... 193 Table 22-9 Operating Costs – Alternative Case ...... 193 Table 22-10 Discounted Cashflow Summary – Alternative Case ...... 194 Table 22-11 Discounted Cashflow – Alternative Case (US$ 12,000/t) ...... 195 Table 22-12 Discounted Cashflow – Alternative Case (BMI Pricing Model) ...... 196 Table 24-1 Statistics for trench samples at Tres Hermanas ...... 199 Table 24-2 Tres Hermanas exploration target potential ...... 200 Table 25-1 Capital Expenditure – Base Case ...... 204 Table 25-2 Operating Costs – Base Case ...... 204 Table 25-3 Discounted Cashflow Summary – Base Case ...... 205 Table 25-4 Discounted Cashflow Summary – Alternative Case ...... 205 Table 26-1 Estimated Schedule and Costs of Recommended Activities ...... 206
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LIST OF FIGURES
Figure 1-1 Base Case Mining Production Schedule ...... 7 Figure 1-2 Base Case Plant Feed Schedule ...... 7 Figure 1-3 Sensitivity Analysis Summary – Base Case ...... 14 Figure 4-1 Locality Plan ...... 28 Figure 4-2 Mineral Tenure Plan ...... 29 Figure 6-1 History of ownership of Plateau Energy Metals ...... 35 Figure 7-1 Regional Geological Setting ...... 38 Figure 7-2 Local Geology ...... 39 Figure 7-3 Illustrative photograph of Upper Rhyolite contact with the Upper Breccia (local stratigraphy as inset) 40 Figure 7-4 Upper Breccia in core (top) and Lithium-rich Tuff in core (bottom) ...... 41 Figure 10-1 Drilling configuration ...... 46 Figure 10-2 Locations of drillhole platforms ...... 47 Figure 11-1 Error Deviation Plot for Lithium Standards ...... 51 Figure 11-2 Mean Deviation plot for Field and Laboratory Duplicates ...... 52 Figure 11-3 Analytical results for Field and Laboratory Blanks ...... 53 Figure 13-1 Mineral Resource Classification Plan ...... 57 Figure 13-2 Lithium Concentration in PLS versus Time (h) - Diagnostic Leaches (Source: ANSTO) ... 65 Figure 13-3 Lithium Extraction At Various Free Acidities versus Time (h) - Diagnostic Leaches ...... 68
Figure 13-4 Lithium Extraction at Various Free Acidities and P80 versus Time (h) - Diagnostic Leaches (Source: ANSTO) ...... 68 Figure 13-5 Comparison of Li Extraction in Autoclave and Atmospheric Leach (Source: ANSTO) ...... 70 Figure 14-1 Geological and analytical log for PCHAC04-TV (left) and Geological and analytical log for PCHAC09-TV (right) ...... 84 Figure 14-2 Structural plan for the base of LRT1 ...... 85 Figure 14-3 Isometric view of the geological model (not to scale) ...... 87 Figure 14-4 South to North cross section (A’-A) showing geological model and drill data ...... 88 Figure 14-5 South to North cross section (B’-B) showing geological model and drill data ...... 89 Figure 14-6 Histograms for mineralized zones ...... 91 Figure 14-7 Variograms for mineralized zones ...... 92 Figure 14-8 South to North lithium grade cross section (A’ to A in Figure 24) ...... 98 Figure 14-9 South to North lithium grade cross section (B’ to B in Figure 24) ...... 99 Figure 14-10 Mineral Resource classification plan...... 100 Figure 16-1 Core Photo PCHAC33, 124-128.5m ...... 104 Figure 16-2 Immediate Project Area ...... 104 Figure 16-3 Base Case Whittle Optimisation Results ...... 108 Figure 16-4 Base Case Mining Production Schedule ...... 112
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Figure 16-5 Base Case Plant Feed Schedule ...... 113 Figure 16-6 Base Case Conceptual View Mine Progression ...... 114 Figure 16-7 Typical Mining Production Fleet ...... 115 Figure 16-8 Base Case Production Fleet per Annum ...... 120 Figure 16-9 Alternative Case Whittle Optimisation Results ...... 123 Figure 16-10 Base Case Mining Production Schedule ...... 124 Figure 16-11 Alternative Mining Production Schedule ...... 127 Figure 16-12 Alternative Case Plant Feed Schedule ...... 127 Figure 16-13 Alternative Case Conceptual View Mine Progression ...... 128 Figure 16-14 Alternative Case Production Fleet ...... 128 Figure 17-1 Acid Leach Block Flow Diagram ...... 132 Figure 17-2 Falchani Lithium Overall General Arrangement Plan – Process Plant Phase I ...... 133 Figure 18-1 Proposed Route of Access Road from the Interoceanica Highway to Site ...... 140 Figure 18-2 Tailings Storage Facility Options (Source: Vice Versa Consulting) ...... 142 Figure 18-3 TSF Capital Cost Options ...... 143 Figure 22-1 Mine Schedule – Base Case ...... 185 Figure 22-2 Production Schedule – Base Case ...... 186 Figure 22-3 Mine Schedule – Alternative Case ...... 192 Figure 22-4 Production Schedule – Alternative Case ...... 193 Figure 22-5 Sensitivity Analysis Summary – Base Case ...... 197 Figure 24-1 Tres Hermanas target for further exploration ...... 201
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1 SUMMARY
1.1 Introduction The Falchani Project (the “Project”) is located within the Falchani and Ocacasa 4 concessions held by Macusani Yellowcake S.A.C. (Macusani), a 100% controlled subsidiary of Plateau Energy Metals Inc. (“Plateau”, “Plateau Energy Metals” or the “Company”). The Project is situated on the Macusani Plateau, located in the Carabaya Province, Puno District of south-eastern Peru in the Andes Mountains, which has been actively explored for uranium since the 1980’s, and more recently for lithium. Located approximately 650 km east southeast of Lima and about 220 km by the Interoceanica Highway from Juliaca in the south, two roads connect the Falchani Project to the Interoceanica Highway and are accessible year-round. The town of Macusani is 25 km to the southeast of the Company’s Project area.
This Technical Report presents a Base Case scenario which is inclusive of both the Falchani and Ocacasa 4 concessions. The Alternative Case presented represents only the Falchani concession to demonstrate the economic value as a standalone Project in light of the current dispute with regards to the ownership of the Ocacasa 4 concession.
The Project consists of an open pit mine and an associated processing facility along with onsite and off-site infrastructure to support the operation. The Base Case design for the process plant is based on achieving a peak milled tonnage of 6Mtpa over three phases. An overview of the phased production strategy is presented in Table 1-1.
Table 1-1 Milling Rate and Expansion Phases – Base Case Description Years Milling Rate Phase I 1 - 8 1.5 Mtpa Phase II 8 - 13 3.0 Mtpa Phase III 13 - 33 6.0 Mtpa
A total of 2.1 million tonnes of lithium carbonate (minimum purity 99.5%) is produced over life of mine at a lithium recovery of 80%.
1.2 Geology & Mineralization The Andes are a geographical feature formed by active mountain building processes driven by plate tectonics. In the Puno, mainly Paleozoic sediments (520-250Ma old) that were formed on the western Brazilian Craton have been highly deformed by thrusting and folding due to the westwards movement of the South American tectonic plate (Brazilian Craton) over-riding the Pacific tectonic plate (Nazca Plate) along the western margin of the Americas over the last ±150Ma. The Andes represents a large anticlinorium complicated by a series of faults and intrusions, with the flanks of this superstructure made up of the coastal Mesozoic and eastern Palaeozoic belts.
In the Project area, late Tertiary tuffs, ignimbrites and associated sediments are preserved in a NW-SE trending graben. Much of the Early Tertiary and Mesozoic cover was eroded prior to deposition of the
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pyroclastics so they were deposited in part directly on the Palaeozoic rocks including Late Palaeozoic intrusives (Hercynian granites) and extrusives (Mitu volcanics).
Limited mineralogical work has been undertaken on samples from the Falchani Project to date, but the understanding of the stratigraphy has evolved through exploration mapping and drilling programmes. In the immediate vicinity of the boreholes drilled at Falchani, the youngest rocks would appear to be these described in the field by Plateau Energy Metals as the Upper Rhyolite. Below the Upper Rhyolite is the Upper Breccia, which separates the Upper Rhyolite from the Lithium-rich Tuff. Limited mineralogical or petrological studies have been undertaken to date; however, additional mineralogical work has commenced. The interpretation of the geological environment and lithium deportment at the Project is based on observations in drill core and outcrop, and the analysis of lithium and other element distributions in the exploration results to date.
The Upper Breccia, Lithium-rich Tuff and Lower Breccia show remarkably consistent vertical zonation of lithium, strontium, cesium and other elements. The highest concentration of lithium is at the top and bottom of the Lithium-rich Tuff.
The Lithium-rich Tuff, and the transitional Upper and Lower Breccias are interpreted to have been deposited in a technically active, crater-lake environment, where the breccias represent the transition from the rhyolitic ash-flows above and below, and the Lithium-rich Tuff, represents a period of sub-aerial deposition. This is supported by the regular layering observed in the tuff, and the angular clasts of the breccia.
The lithium mineralization is thought to be primary, although alteration and enrichment by groundwater or hydrothermal fluids in the interim has not been ruled out.
1.3 Mineral Resource Estimation The Ocacasa 4 concession, which forms part of the mineral resources considered in the Base Case of the Falchani Project PEA, is currently subject to Administrative and Judicial processes (together, the “Processes”) in Peru to overturn resolutions issued by INGEMMET and the Mining Council of MINEM in February 2019 and July 2019, respectively, which declared Macusani’s title to the Ocacasa 4 concession invalid due to late receipt of the annual validity payment. In November 2019, the Company applied for injunctive relief on 32 concessions in a Court in Lima, Peru and was successful in obtaining such an injunction on 17 of the concessions. The grant of the Precautionary Measures (Medida Cautelars) has restored the title, rights and validity of those 17 concessions to Macusani until a final decision is obtained in at the last stage of the judicial process. A Precautionary Measure application was made at the same time for the remaining 15 concessions, including Ocacasa 4, however the process has been delayed due to various in-country factors. A date for the hearing has not yet been set. If the Company does not obtain a successful resolution of Processes, Macusani’s title to the Ocacasa 4 concession could be revoked and the Falchani Project would proceed as presented in the Alternative Case.
Both cases consider only the lithium-rich bearing tuffs (LRT), namely LRT1, LRT2, and LRT3, three of five geological units presented in the Falchani Project technical report, effective March 1, 2019, titled “Mineral Resource Estimates for the Falchani Lithium Project in the Puno District of Peru”, prepared in accordance
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with NI 43-101 by The Mineral Corporation and filed under the Company’s profile on SEDAR on April 18, 2019 (the “2019 Technical Report”). As a result, the Base Case and Alternative Case utilize less than 48% and 47%, respectively, of the total mineral resource estimates included in the 2019 Technical Report. The Mineral Resource estimates have not been updated to inform the PEA, however, owing to the current mineral tenure dispute, for the Alternative Case, only the Falchani Concession Mineral Resource estimate has been considered. These mineral tenure circumstances have been considered, and on the basis of the information provided to the QP by Plateau, the QP considers it reasonable to continue to report these estimates as Mineral Resources.
Table 1-2 summarises the Indicated and Inferred Mineral Resources for the Base Case project, effective 1 March 2019, based on a 1000ppm lithium cut-off grade.
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Table 1-2 Falchani Project Mineral Resources (Base Case) effective 1 March, 2019 Metric 1 2 Contained Licence Category Zone Tonnes Li (ppm) Li2O (%) Li2CO3 (%) Li2CO3 (Mt) (Mt) UBX 5.38 1 472 0.32 0.78 0.04 LRT1 6.15 3 718 0.80 1.98 0.12 LRT2 16.66 3 321 0.72 1.77 0.29 Indicated LRT3 11.03 3 696 0.80 1.97 0.22 LBX 10.16 1 901 0.41 1.01 0.10 Total 49.39 2 961 0.64 1.58 0.78 FALCHANI UBX 8.44 1 616 0.35 0.86 0.07 LRT1 13.84 3 290 0.71 1.75 0.24 LRT2 28.68 2 994 0.64 1.59 0.46 Inferred LRT3 16.13 3 292 0.71 1.75 0.28 LBX 57.39 2 250 0.48 1.20 0.69 Total 124.48 2 629 0.57 1.40 1.74 UBX 0.85 1 750 0.38 0.93 0.01 LRT1 1.32 3 668 0.79 1.95 0.03 LRT2 5.37 3 232 0.70 1.72 0.09 Indicated LRT3 2.00 3 658 0.79 1.95 0.04 LBX 2.00 1 379 0.30 0.73 0.01 Total 11.53 2 926 0.63 1.56 0.18 OCACASA 4 UBX 5.33 1 911 0.41 1.02 0.05 LRT1 10.17 3 422 0.74 1.82 0.19 LRT2 33.62 3 292 0.71 1.75 0.59 Inferred LRT3 21.11 3 349 0.72 1.78 0.38 LBX 65.36 2 297 0.49 1.22 0.80 Total 135.59 2 777 0.60 1.48 2.00
1.4 Mineral Reserve Estimates At the present level of development there are no Mineral Reserves quoted for the Falchani Project.
Inferred Mineral Resources were used in the LoM plan.
Inferred Mineral Resources represent approximately 70% of the currently defined Mineral Resources. This PEA Study is preliminary in nature, includes Inferred Mineral Resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as not Mineral Reserves and there is no certainty that the preliminary economic assessment will be realized. have not demonstrated economic viability. Mineral Reserves can only be estimated as a result of an economic
1 UBX = upper breccia; LRT = lithium rich tuff; LBX = lower breccia
2 Li Conversion Factors as follows: Li:Li2O=2.153; Li:Li2CO3=5.323; Li2O:Li2CO3=2.473
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evaluation as part of a preliminary feasibility study or feasibility study of a project. Accordingly, at the present level of development, there are no Mineral Reserves quoted at the Falchani project.
A preliminary open pit Whittle optimisation and conceptual production schedules to support this PEA Study was completed in order to assess the potential of the Falchani Lithium Project.
1.5 Mining Methods Open pit mining is planned to use conventional truck and shovel mining methods with drill and blasting to break the rock mass into manageable particle sizes. Mining operations are planned to be undertaken by a contractor operated fleet, which is the cost basis for this preliminary economic assessment. Mining and processing operations will be conducted 24 hours day, seven (7) days week and 353 days per year.
The following design parameters where used for the PEA study revision: -
• Fully mobile production equipment, consisting of medium sized hydraulic shovels and 90 tonne rigid dump trucks has been planned
• Total mining costs of $2.40/t of material moved at altitude is the basis for the Project economics
• Support equipment will be Front End Loaders, tracked dozers, graders, and water trucks
• The run-of-mine (RoM) pad at near the Process Plants primary crusher will be the mining and process battery limit
• Benchmarked operation elevation of 4,700masl was used.
• Optimisation of mining sequencing to minimise the waste stripping costs in phase I of the production ramp up
• 10m waste benches, with stacking of 2 benches was basis of the design used to access mineralise material to a maximum depth of 200m.
• Geotechnically designed slope are applied to relevant pit areas.
The Base Case open pit design contains 145Mt (LoM) of mineralised material with an average Li grade of 3,338ppm. The stripping ratio is low at 0.97:1, waste t to mineralisation t, and the total waste mined is 142Mt.
Mine planning pushback selection and production scheduling was undertaken the selected pit shells for the base case. The conceptual mine scheduling was based on the base case ramping up to a maximum 6Mtpa of process plant feed. The resource summary result is shown in Table 1-3.
Table 1-3 Base Case Mineral Resource Summary Base Case Mineral Resources in Optimisation Engineered Parameter Unit Value Mine Production Life yr 33
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Base Case Mineral Resources in Optimisation Engineered Diluted/Recovered Process Feed Material Mt 145.4 Diluted Li grade (mill head grade) ppm 3 338 Contained LCE (Mt) Mt 2.588 Waste Mt 141.6 Total Material Mt 287.0 Strip Ratio tw:to 0.97
Dilution & Loss
Due to the fact that the mining deposits are massive with low strip ratios the following dilution and losses parameters were used:
• Mining losses of only 2% where used due to the limited zones of interaction between waste and mineralised material.
• Geological losses of 5.8% average are derived from the geological resource works which consider the current relatively low drilling density.
Base Case open pit scheduling was completed using Whittle. The annual mining schedule has been developed based on maximum ramped up mill feed of 6Mtpa, (≈16,500tpd). The life of the mine of this Project is approximately 33 years, (including 6 months pre-production), based on the 145Mt of Indicated and Inferred Mineral Resources.
The life-of-mine (LoM) stripping ratios, a pre-production waste strip has been included in the mine scheduling. 6.33Mt of waste has been included owing to the local topography and orientation of mineralisation.
Production plant ramp-ups for the base case are detailed in Table 1-4.
Table 1-4 Production Ramp Up Base Case
Production Ramp Up Yr 1 Yr 2 Yr 3 to 7 Yr 8 Yr 9 to 12 Yr 13 Yr 14 to 32 Base Case (Plant Feed Mtpa) 0.75 1.00 1.50 2.25 3.00 4.50 6.00
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Base Case Mining Production Schedule 16.0 7.00 14.0 6.00
Millions 12.0 5.00 10.0 4.00 8.0 3.00 6.0 4.0 2.00
2.0 1.00 Strip Ratio (tw:to) 0.0 - FY2023 FY2025 FY2027 FY2029 FY2031 FY2033 FY2035 FY2037 FY2039 FY2041 FY2043 FY2045 FY2047 FY2049 FY2051 FY2053
Year Mineralization Waste Stripping ratio Mineralisation Mineralisation Waste& (Mtpa)
Figure 1-1 Base Case Mining Production Schedule
Base Case Plant Feed Schedule 7.0 4,000 6.0 3,500
Millions 5.0 3,000 2,500 4.0 2,000 3.0 1,500 2.0 1,000 1.0 500 Lithium Grade (ppm) 0.0 0 Plant Plant Feed (Mtpa) FY2023 FY2025 FY2027 FY2029 FY2031 FY2033 FY2035 FY2037 FY2039 FY2041 FY2043 FY2045 FY2047 FY2049 FY2051 FY2053 FY2055 Year Plant Feed Lithium (Li) ppm
Figure 1-2 Base Case Plant Feed Schedule The plant feed tonnage and grade are inputs to the mineral processing and product generation processes.
1.6 Mineral Processing & Metallurgical Testing A substantial body of metallurgical testwork has been carried out on the Falchani lithium-bearing tuff material. The testwork referenced in this report was carried out by Tecmmine in Peru (prior to 2018) and testwork carried out in 2018 and 2019 was carried out by Techmine and ANSTO Minerals in Australia. Both the Tecmmine and ANSTO testwork was carried out on the lithium rich tuff obtained from a trench on site. The testwork supports a number of technically viable process flowsheet routes (hydrochloric acid leaching, salt roast, sulfation baking, pressure leaching, purification processes) but for the purpose of this PEA a flowsheet using atmospheric leaching in a sulfuric acid medium, followed by downstream purification processes, was selected for the production of battery grade lithium carbonate. The early focus of the acid
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leach process was on maximizing the extraction of lithium using aggressive leach conditions and the later work focused on optimizing the leach parameters and confirming inputs to the process design criteria.
The process flow sheet was developed by DRA, working with ANSTO Minerals (ANSTO) and with input from M.Plan International (M.Plan). Following mining, mineralized material will be crushed to a P80 of 150 μm, followed by a warm (95 °C) sulfuric acid tank leach with a residence time of 24 hours, to extract ~89% of lithium to leach solution. The process utilizes conventional up-front tank leaching, widely used in various mining operations to extract metals from mineralized material today. This is followed by a three-stage purification process to reduce various impurities in the leach solution, mechanical evaporation and conventional precipitation, using a crystallization plant, to produce a battery grade Li2CO3 product. An overall recovery of 80% from mineralized material to Li2CO3 is utilized in the PEA.
As a significant portion of the operating costs are derived from sulfuric acid use as the leaching reagent, the PEA includes the construction of a 1,700 tonnes per day (tpd) sulfur burning acid plant at site in Phase I (P1) to produce, on average, 1,500 tpd of sulfuric acid. The acid plant includes a power generation facility that generates approximately 18MW of clean energy from the steam generated in the sulfur burner. In subsequent phases, additional modules are added to meet expanded processing capacity.
1.7 Market Studies and Contracts The Falchani Project is not currently in production and has no operational sales contracts in place. To evaluate the market for its product, Plateau Energy Metals commissioned Benchmark Mineral Intelligence (BMI) to undertake a lithium market overview and outlook study. The assessment conducted by BMI described the lithium supply chain, long-term supply forecasts for Lithium to 2040, long-term supply cost curves for lithium to 2035 and lithium supply price forecast. Forecast prices to the year 2040 for both for technical and battery grade lithium carbonate are also provided, and these have formed the basis for the economic analysis undertaken for the PEA.
The outcome of the assessment indicated that there is an ongoing need for capacity investments in lithium raw material extraction, chemical processing and cathode manufacturing throughout the life of the BMI forecast to 2040. Given the direction of travel and level of investment in the downstream of the electric vehicle supply chain, at an auto-manufacture and battery cell level, there is an impending shortfall in all areas of the upstream supply chain which needs to be addressed. As a result of this BMI expect that despite recent weakness in lithium pricing, prices will recover in order to incentivise investment in both raw material and chemical processing capacity. For lithium carbonate and hydroxide BMI forecast long-term pricing to settle in the region of US$ 13,000 per tonne.
1.8 Permitting, Environmental and Social Considerations Permitting
Peru has many environmental laws and regulations that apply to resources sector. These are arranged in a general framework of laws, legislative decrees, supreme decrees, legislative resolutions, ministerial resolutions and decisions. Key among these are: the General Environmental Law (28611-2005) (GEL); the
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Environmental Impact Assessment (EIA) Law (27446-2001); the Environmental Impact Assessment Regulation (Supreme Decree 019-2009); the Environmental Regulation on Exploration Activities (020-2008- EM) (EREA); the Environmental Regulation for mining exploration activities (020-2008-EM); and the Regulations on the Protection and Environmental Management for exploitation, operation, general labor, transportation and storage (040-2014-EM).
Prior to commencing mine development and operation, Peruvian Environmental Regulations require an EIA- d to be carried out. The EIA-d must be approved by SENACE before mining activities may commence.
Environmental
A baseline environmental study undertaken by ACOMISA, a Lima-based environmental consulting company, and continued in collaboration with Anddes is ongoing. The study was expanded to include each of the Falchani Lithium Project and Macusani Uranium Project areas and now covers the affected areas belonging to the communities of Isivilla, Tantamaco, Corani, Chimboya and Paquaje, and Chacaconiza. The study has recently progressed into an EIA that includes community relations and impacts of future development, as well as flora, fauna, water, air and noise sampling and comprehensive archaeological studies.
Social, Community and Environmental Impacts
An environmental study is required to be completed to fully understand the potential social and environmental impacts due to the implementation of the Project.
The development of the Project will include the following Green Initiatives:
• Water Efficiency: Use of filtered tailings enables recycling of up to 90% of process water;
• Environmental and Personnel Safety: Use of environmentally responsible dry stacking tailings technology;
• Clean Energy Generation: The sulfuric acid plant on site produces sufficient clean energy to power entire process plant and provide excess power;
• Future development work to evaluate opportunities such as:
o Electric mine fleet with excess clean energy storage on site;
o Rainwater run off storage and additional water recycling;
o Low CO2 transport and logistics for consumables.
1.9 Project Infrastructure An investigation into infrastructure requirements for the Project revealed the following requirements for the Falchani site.
• Access road;
• Raw water supply;
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• Power transmission line and sub-stations;
• Emergency power;
• General site services;
• Buildings;
• Tailings transportation and storage.
Access Road
The existing connecting road between the highway and the Project site is not suitable for heavy vehicle transit. A study was conducted by Vice Versa consulting to evaluate potential access road options. On the outcomes from this study, the Project has assumed a new road starting at the diversion that is currently used to access the area of Project. This option takes advantage of the existing section of access to the town of Tantamaco, Isivilla and the accesses built for the communities of Quelccaya and Chaccaconiza.
Water
Water is sourced from local river courses. In its 2014 Preliminary Economic Assessment (PEA) for Plateau Energy Metals’ uranium projects, GBM Mining Engineering Consultants Limited (GBM) was of the view that the area has access to sufficient water resources for the purposes of mining operations at a rate of 1Mt/y (Short et al, 2016). The availability of water has not been assessed during the PEA and it is recommended that the availability of suitable water be quantified in later stages of the Project’s development.
Power
The plant’s primary source of electrical power will be the power co-generation facility at the acid plant.
Diesel-fuelled generators will provide power for remotely located equipment (the raw water pumps at the river and equipment located at the tailings storage facility).
The grid will provide power for emergency lighting and for key process drives (for example, leach tank agitators, scrubber fans, thickener rakes).
Tailings Transportation and Storage
Tailings from the plant will be pumped to a belt filter adjacent to the Tailings Storage Facility. The filtered tailings will be stacked in the TSF and the filtrate will be pumped back to the process water tank in the plant. Vice Versa Consulting have identified a number of suitable locations for the TSF that will be utilised throughout the life of the Project. The Base Case will utilize a total of three deposition locations over LoM based on capacity requirements.
1.10 Capital Cost Estimate A contractor-operated fleet has been adopted for the purposes of this Project and capital requirements relating to mining cover pre-site establishment. The capital cost estimate for the plant has been compiled based on a priced mechanical equipment list. Factors were applied to the equipment cost to derive costs for
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bulk materials, freight, installation and for Project indirects. Initial (Phase I) capital estimates are identical for both the Base Case and Alternative Case. Quotations from suppliers have accounted for approximately 80% of total equipment costs. Non-process infrastructure costs relating to access roads and the TSF have been based on a study concluded by Vice Versa Consulting.
The prepared estimate is classified by DRA as a Class 4 estimate with a +40 % / -40 % accuracy, similar to an AACE International Class 4 (+50 % / -30 %) and deemed suitable for a PEA level study.
A 10% contingency, relative to total process plant cost and exclusive of non-process infrastructure, has been allocated to the direct and indirect costs. The contingency is a weighted average obtained by applying different contingency percentages, ranging from 7.5% to 20%, to the different cost elements of the capital estimate based on the level of detail of the quotes received. A 15% contingency allowance has been included for non-process infrastructure which is inclusive of the TSF and access roads..
A summarized version of the capital estimates over LoM has been presented in the table below and cover the Base Case. The initial capital outlay amounts to US$ 587m of which direct costs constitute 58% of total costs. Table 1-5 shows the capital cost summary for the Project by area presented in US$.
Table 1-5 Project Capital Cost Overview – Base Case Phase I (Initital), Phase II, Phase III, Total Capital Area US$’000 US$’000 US$’000 (LoM), US$’000 Mining Capital, Pre-strip 19,195 - - 19,195
Process Plant, Direct Costs 341,486 273,189 546,378 1,161,053
Process Plant, Infrastructure 30,309 24,247 48,495 103,051
Process Plant, Indirect Costs 91,409 73,127 146,254 310,790
Process Plant, Contingency 50,952 40,762 81,524 173,238 Tailings and Bulk Infrastructure (incl. 53,618 7,321 112,113 173,049 contingency) Closure - - - 30,000
Total Project Capital Cost 586,968 418,646 934,763 1,970,377
Note: Costs for closure capital have been estimated.
1.11 Operating Cost Estimate The operating cost estimate has been completed from a zero base and presented in US$. Costs associated with power, labour, materials, consumables and general and administration have been included in this estimate. A contractor-operated fleet has been adopted for the purposes of this Project.
The prepared estimate is classified by DRA as a Class 4 estimate with a +40 % / -40 % accuracy, similar to an AACE International Class 4 (+50 % / -30 %) and deemed suitable for a PEA level study.
A contingency of 0% has been applied to the Project operating costs due to the level of scope definition.
The overall operating cost estimate is presented in Table 1-6 for the Base Case. The breakdown shows all the costs associated with mine and plant operation covering costs for contractor mining, labour, power, maintenance, reagents, consumables and general administration. The reduction in unit operating costs,
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relative to Phase I, are realised due to economies of scale. Key cost drivers for both options reside with the process plant of which reagents constitute the largest single cost category overall.
Table 1-6 Operating Costs – Base Case
Description Unit Phase I Phase II Phase III LoM % of Total (LoM) Total Material Milled tonnes 11,500,000 16,500,000 117,453,660 145,453,660 - Lithium Carbonate Produced tonnes 173,096 240,269 1,666,748 2,080,113 Mining Costs Total Cost US$’000 92,842 88,212 492,779 673,832 8 Mining Unit Cost US$/t Milled 8.07 5.35 4.20 4.63 - Mining Unit Cost US$/t LCE 536 367 296 324 - Processing Costs Total Cost US$’000 623,026 831,293 5,707,833 7,162,152 87 Process Unit Cost US$/t Milled 54.18 50.38 48.60 49.24 - Process Unit Cost US$/t LCE 3,599 3,460 3,425 3,443 - G&A Costs Total Cost US$’000 42,000 37,000 178,000 257,000 3 G&A Unit Cost US$/t Milled 3.65 2.24 1.52 1.77 - G&A Unit Cost US$/t LCE 243 154 107 124 - Tailings Disposal Costs Total Cost US$’000 10,335 14,828 115,261 140,425 2 Tailings Disposal Unit Cost US$/t Milled 0.90 0.90 0.98 0.97 - Tailings Disposal Unit Cost US$/t LCE 60 62 69 68 - Total Operating Costs Total Operating Costs US$’000 768,203 971,334 6,493,873 8,233,409 100 Overall Unit Operating Cost US$/t Milled 66.80 58.87 55.29 56.60 - Overall Unit Operating Cost US$/t LCE 4,438 4,043 3,896 3,958 -
1.12 Economic Outcomes – Base Case The financial evaluation presents the determination of the net present value (NPV), payback period (time in years to recapture the initial capital investment), and the internal rate of return (IRR) for the Project. Annual cash flow projections were estimated over the life of the mine based on the estimates of capital expenditures, production cost, and sales revenue. The analysis has been conducted in real terms with no consideration given to inflation or escalation of costs or prices over the life of the Project.
The economic analysis is prepared on a 100% equity project basis and does not consider financing scenarios. An 8% real discount rate has been used in the analysis. An average throughput rate of 4,407,687tpa producing 63,034tpa of product is projected for the Base Case. Two pricing models, an approximate rounded three year trailing average price and a BMI forecast based price (battery grade lithium, FOB South America), have been assessed in the model.
The total capital cost over LoM is estimated to be US$ 1.97bn, inclusive of mine rehabilitation and closure costs, with an initial capital expenditure of US$ 587m allocated for Phase I. Mining and processing costs are estimated to be US$ 324/t LCE and US$ 3,443/t LCE on average, respectively over LoM. General and
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administration costs begin at US$ 5m ramping up to US$ 9m and then tapering down to US$ 7m during the last year of production. The analysis has revealed a post-tax Net Present Value (NPV) of US$ 1.55bn with an internal rate of return (IRR) of 19.7% and post-tax payback period of 4.7 years based on a trailing average LoM price of US$ 12,000/t. The BMI price forecast model realises an improved Project value with a post-tax NPV of US$ 1.98bn with an IRR of 23.4% and post-tax payback period of 3.6 years. The outcomes of the analysis are summarised and presented in Table 1-7.
Table 1-7 Discounted Cashflow Summary – Base Case Trailing Average LoM Price BMI LoM Price Description Units US$ 12,000/t Forecast Financial Outcomes (PRE-TAX)
NPV (8%) US$ '000 2,712,690 3,374,013
IRR % 24.2 28.9
Payback Period (undiscounted) years 4.3 3.2
Financial Outcomes (POST-TAX)
NPV (8%) US$ '000 1,554,461 1,978,007
IRR % 19.7 23.4
Payback Period (undiscounted) years 4.7 3.6
A sensitivity analysis, as shown in Figure 1-3, has been conducted assessing the impact of variations in capital cost, operating cost, lithium carbonate selling price and reagent pricing (lime, limestone and sulphur). Each variable is assessed in isolation to determine the impact on NPV and IRR.
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Figure 1-3 Sensitivity Analysis Summary – Base Case
1.13 Economic Outcomes – Alternative Case The Alternative Case represents less than 50% of the combined Falchani and Ocacasa 4 concession. The Alternative Case shares the identical initial capital outlay as per the Base Case while realizing a reduction in LoM capital requirements due to the reduced throughput and plant capacity.
The economic outcomes of the Alternative Case are presented in Table 1-8. An average throughput rate of 2,421,780tpa producing 33,842tpa of product is projected for the Alternative Case. As with the Base Case, two pricing models, a three-year trailing average price and forecast based price, have been assessed in the model.
The analysis has revealed a post-tax NPV of US$ 844m with an IRR of 18.8% and a post-tax payback period of 4.6 years based on a trailing average LoM price of US$ 12,000/t. The BMI price forecast model realises and improved Project value with a post-tax NPV of US$ 1.14bn with an IRR of 23.0% and a post-tax payback period of 3.6 years.
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Table 1-8 Discounted Cashflow Summary – Alternative Case Trailing Average LoM Price BMI LoM Price Description Units US$ 12,000/t Forecast Financial Outcomes (PRE-TAX)
NPV (8%) US$ '000 1,514,083 1,972,281
IRR % 23.5 28.7
Payback Period years 4.2 3.1
Financial Outcomes (POST-TAX)
NPV (8%) US$ '000 843,766 1,144,548
IRR % 18.8 23.0
Payback Period years 4.6 3.6
1.14 Adjacent Properties The only other explorer of significance within the region is Fission 3.0 Corp. (Fission), whose portfolio of properties in the Macusani area resulted from a spin-out from Strathmore Minerals Corp. in 2007 (Fission Energy Corp., 2010). In April 2013, Fission announced the completion of an arrangement whereby Denison Mines Corp. acquired all the outstanding common shares of Fission and the spin-out of certain assets into a new exploration company, Fission Uranium Corp. In November 2013, certain properties and assets of Fission Uranium, including the Macusani, Peru property, became properties and assets of Fission 3.0 Corp. Nine claim blocks encompassing 51km2 are held in the Macusani area (Fission 3.0 Corp., 2020).
1.15 Interpretations and Conclusions The PEA for the Falchani Project is based upon limited and time-sensitive information, such as lithium carbonate, fuel and reagent pricing. Changes in the understanding of the Project such as access to power, social/environmental issues, the ability to convert Mineral Resources to Mineral Reserves and market demand conditions could have significant effects on the Project’s overall economic viability.
The Base Case project economics have revealed a post-tax Net Present Value (NPV) of US$ 1.55bn with an internal rate of return (IRR) of 19.7% and a post-tax payback period of 4.7 years based on a trailing average LoM price of US$ 12,000/t. The BMI price forecast model realises an improved project value with a post-tax NPV of US$ 1.98bn with an IRR of 23.4% and a post-tax payback period of 3.6 years.
1.16 Recommendations It is recommended that a Pre-feasibility Study (PFS) be completed to demonstrate the Project’s technical and economic viability and to provide a greater degree of confidence in the capital and operating cost estimates. Further definition of the Project is required to allow a PFS to be completed and the following is recommended to further develop the Project and reduce its technical uncertainty and risk:
• Infill drilling to upgrade the category of the Mineral Resources;
• Mineralised material characterisation (to better define the design data for the crushing and milling circuits);
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• Mineralised material variability (to understand how variability across the orebody may impact on plant performance and to make design allowances accordingly);
• Process optimisation testwork (to optimise operating parameters and reagent consumptions);
• Equipment Sizing (to allow equipment vendors to size their equipment and provide performance guarantees);
• By-product Recovery (to define the design conditions for the recovery of valuable by-products)
• Engage with equipment vendors to carry out testwork (for example, thickeners, filters, crystallisers) to allow them to offer performance guarantees;
• Engage with vendors of the major packages to better define their scope and investigate possibilities for build, own, operate commercial arrangements.
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2 INTRODUCTION
2.1 Background The Falchani Lithium Project falls within licenses held by Macusani Yellowcake S.A.C. (Macusani Yellowcake) which is controlled by Plateau Energy Metals Inc. (Plateau). The Project is situated on the Macusani Plateau, a region of Peru which has been actively explored for uranium since the 1980s, and more recently for lithium. Plateau also controls several other properties on the Macusani Plateau, as described in Section 4.2. The combination of Plateau Energy Metals exploration properties on the Macusani Plateau is referred to as the Macusani Project Area (MPA).
This Technical Report presents a Base Case scenario which is inclusive of both the Falchani and Ocacasa 4 concessions. The Alternative Case presented represents only the Falchani concession to demonstrate the economic value as a standalone Project in light of the current dispute with regards to the ownership of the Ocacasa 4 concession.
The Project consists of an open pit mine and an associated processing facility along with onsite and off-site infrastructure to support the operation.
2.2 Project Scope and Terms of Reference The Project consists of an open pit mine and an associated processing facility along with onsite and off-site infrastructure to support the operation with a mine life of 33 years. The initial Project (Phase I) has been designed to produce nominally 22,000 tonnes per annum of battery grade lithium carbonate. Production will increase in subsequent phases by the addition of circa 22,000 tonne per annum processing modules up to a peak of 89,000 tonnes per annum.
This technical report has been prepared by DRA Pacific Pty Ltd and DRA EMEA (DRA) on behalf of Plateau Energy Metals Inc. (Plateau), a company listed on the TSX Venture Exchange. This technical report documents the results of a Preliminary Economic Assessment (PEA) for the Falchani Lithium Project (Falchani) located on the Macusani Plateau in the Puno District of southeastern Peru.
2.3 Study Participants DRA is an independent company specialising in the development, design, construction and operation of mining and metallurgical projects globally. DRA was commissioned by Plateau to carry out a PEA to design and cost a process facility, with associated infrastructure, to treat the Falchani lithium-bearing material to produce battery grade lithium carbonate. DRA also prepared the mine plan. The prepared estimate is classified by DRA as a Class 4 estimate with a +40 % / -40 % accuracy, similar to an AACE International Class 4 (+50 % / -30 %) and deemed suitable for a PEA-level study.
The Mineral Corporation (TMC) is a leading advisory firm focused on the provision of geological and mining engineering services and has prepared the Mineral Resource estimates and completed data verification for the project.
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2.4 Primary Information Sources This report makes use of the following primary information sources:
• The technical report titled “Mineral Resource Estimates for the Falchani Lithium Project in the Puno District of Peru” with an effective date of 1 March 2019 prepared by The Mineral Corporation for Plateau Energy Metals Inc under National Instrument 43-101 and accompanying documents NI 43-101F1 and NI 43-101CP. The Mineral Corporation Report No. C-MYI-EXP-1727-1134. Effective Date: 01 March 2019 (The Mineral Corporation, 2019).
• ANSTO Minerals, “Lithium Recovery From the Macusani Deposit - C1568,” ANSTO, 2018.
• “Plateau Energy Metals Falchani Lithium Trade-off Study Report,” DRA, Perth, 2019.
• Benchmark Mineral Intelligence, “Lithium Market & Pricing Report for Plateau Energy Metals” BMI, November 2019.
• ANSTO Minerals, “Optimisation of Sulfuric Acid Extraction of Lithium From The Macusani Deposit - C1630 DRAFT,” ANSTO, 2019.
DRA has also used various other information sources which are referenced where applicable in this report.
2.5 Qualified Persons The DRA Qualified persons are:
• John Riordan BSc, CEng, FAuslMM, MIChemE, RPEQ • Valentine Eugene Coetzee MEng, PrEng • David Thompson B-Tech, Pr Cert Eng, ECSA The Mineral Corporation (TMC) Qualified Person is Stewart Nupen BSc, FGSSA, Pr Sci Nat
This PEA was prepared by, or under the supervision of, the Qualified Person(s) identified in Table 2-1.
Table 2-1 Report Sections and Qualified Persons Section Section Title Qualified Person(s) # 1 Summary DRA (John Riordan) 2 Introduction DRA (John Riordan) 3 Reliance on Other Experts DRA (John Riordan) 4 Property Description and Location TMC (Stewart Nupen) Accessibility, Climate, Local Resources, Infrastructure and 5 TMC (Stewart Nupen) Physiography 6 History TMC (Stewart Nupen) 7 Geological Setting and Mineralization TMC (Stewart Nupen) 8 Deposit Types TMC (Stewart Nupen) 9 Exploration TMC (Stewart Nupen) 10 Drilling TMC (Stewart Nupen) 11 Sample Preparation, Analyses and Security TMC (Stewart Nupen)
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Section Section Title Qualified Person(s) # 12 Data Verification TMC (Stewart Nupen) 13 Metallurgy and Metallurgical Testing DRA (John Riordan) 14 Mineral Resource Estimates TMC (Stewart Nupen) 15 Mineral Reserve Estimates DRA (Dave Thompson) 16 Mining Methods DRA (Dave Thompson) 17 Recovery Methods DRA (John Riordan) 18 Project Infrastructure DRA (John Riordan) 19 Market Studies and Contracts DRA (John Riordan) Environmental Studies, Permitting and Social or Community 20 DRA (John Riordan) Impact DRA (John Riordan, David 21 Capital and Operating Costs Thompson) 22 Economic Analysis DRA (Val Coetzee) 23 Adjacent Properties TMC (Stewart Nupen) 24 Other Relevant Data and Information DRA (John Riordan) 25 Interpretation and Conclusions DRA (John Riordan) 26 Recommendations DRA (John Riordan) 27 References DRA (John Riordan)
2.6 Qualified Person Site Visit A visit to site in May 13-16, 2018 was attended by TMC’s Stewart Nupen. A subsequent visit to site in January 2019 was attended by DRA’s Val Coetzee. DRA’s mining QP has not visited site visit but has reviewed all relevant reports and associated annexures. DRA was given full access to relevant data on the Project areas.
2.7 Financial Interest Disclaimer Neither DRA, TMC nor any of their agents or consultants employed in the preparation of this report have any beneficial interest in the assets of Plateau Energy Metals.
2.8 Frequently Used Abbreviations, Acronyms and Units of Measure Table 2-2 Abbreviations, Acronyms and Units of Measure Abbreviation Description
A Ampere
AACE AACE International
amsl Above Mean Sea Level
ANSTO Australian Nuclear Science and Technology Organisation
BCM Bulk Cubic Meter
BG Battery Grade
BOO Build Own Operate
°C Degrees Celsius
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Abbreviation Description
Capex Capital Expenditure
cm Centimetre
CRM Certified Reference Material
d Day
d/y Days per year
Datamine Datamine Strat3DTM modelling software
DEM Digital Elevation Model General Directorate of Mining Environmental Affairs (Dirección General de Asuntos DGAAM Ambientales Mineros) DRA DRA Pacific
EA Environmental Evaluation
EBITDA Earnings before interest, taxes, depreciation and amortisation
EIA Environmental Impact Assessment
EIA-d Detail Environmental Impact Assessment
EIA-sd Semi-detail Environmental Impact Assessment
EPC Engineering, Procurement, Construction
EPCM Engineering, Procurement & Construction Management
EREA Environmental Regulation on Exploration Activities (020-2008-EM)
FEED Front End Engineering and Design
FEL Front End Loader
FS Feasibility study
GEL General Environmental Law (28611-2005)
h Hour
h/d Hours per day
ha Hectare
HV High Voltage
ICP-OES Inductively Coupled Plasma Optical Emission Spectrometry
ICP-MS Inductively Coupled Plasma Mass Spectrometer
IDW Inverse-distance weighted algorithm
INGEMMET Institute of Geology, Mining and Metallurgy
IRR Internal rate of return
IX Ion exchange
J Joule (energy)
k Kilo or thousand
kg Kilogram
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Abbreviation Description
km Kilometre
kt Kilo tonne (thousand metric tonne)
kW Kilowatt (power)
kWh Kilowatt hour
L Litre
LCE Lithium Carbonate Equivalent
LCT Locked Cycle Testwork
LoM Life of Mine
LV Low voltage
m Metre
M Million
m2 Square metre
m3 Cubic metre
MEM Ministry of Energy and Mines (See MINEM)
Metsim Metsim metallurgical modelling software
MCC Motor control centre
MINAM Ministry of the Environment (Ministerio del Ambiente)
MINEM Ministerio de Energía y Minas de Perú (See MEM)
mm Millimetre
MPA Macusani Project Area
MRE Mineral Resource Estimate
Mt Million tonnes (metric)
Mt/y Million tonnes per year
MW Megawatt
NPV Net present value Environmental Assessment & Control Agency (Organismo de Evaluación y OEFA Fiscalización Ambiental) OK Ordinary kriging Supervisory Agency for Investment in Energy and Mining (Organismo Supervisor de la OSINERGMIN Inversión en Energía y Minas) P80 80% passing size
PAMA Program for Environmental Management and Adjustment
PEA Preliminary Economic Assessment
PFS Pre-Feasibility Study
Plateau Plateau Energy Metals
PLS Pregnant Leach Solution
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Abbreviation Description
QA/QC Quality Assurance and Quality Control
QP Qualified Person as defined in NI43-101
RoM Run-of-mine
s Second National Environmental Certification Service for Sustainable Investments (Servicio SENACE Nacional de Certificación Ambiental para las Inversiones Sostenibles) t Tonne (metric)
t/h Tonnes per hour
t/m3 Tonnes per cubic metre
t/y Tonnes per year
TMC The Mineral Corporation
TSF Tailings storage facility
US$ United States Dollar
µm Micrometre or micron
UTM Universal Transverse Mercator
V Volt
VAT Value added tax
VSD Variable speed drive
WAI Wardell Armstrong International
XRD X-Ray Diffraction
XRF X-Ray Fluorescence
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3 RELIANCE ON OTHER EXPERTS The Qualified Persons have relied on expert opinions and information provided by Plateau Energy Metals pertaining to environmental considerations, taxation matters and legal matters including mineral tenure, and surface rights.
With respect to Mineral Tenure (Section 4.2), The Mineral Corporation has relied on information that has been provided by Plateau. This information is believed to be correct to the best of the QP’s knowledge and it would appear that no information has been intentionally withheld that would affect the contents of this report. It is noted that the QP has not interrogated the legal aspects of title or mineral rights for the properties and concessions and cannot therefore express a legal opinion as to the ownership status of the mining concessions.
For the purposes of Section 19 (Market Studies and Contracts) of this report, the Qualified Person has relied on information pertaining to market studies provided by Benchmark Minerals Intelligence as referenced within the section. The Qualified Person has reviewed the information provided by Plateau and believes this information to be correct and adequate for use in this report.
For the purposes of Section 20 (Environmental Studies, Permitting, and Social or Community Impact) of this report the Qualified Person has relied on information provided by Plateau and prepared by Benchmark Minerals Intelligence as referenced within the section. The Qualified Person has reviewed the information provided by Plateau and believes this information to be correct and adequate for use in this report.
For the purposes of Section 22 (Economic Analysis) of this report the Qualified Person has relied on information provided by Plateau and other sources as referenced within the section, pertaining to taxation. The Qualified Person has reviewed the taxation information provided and believes it to be correct and adequate for use in this report.
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4 PROPERTY DESCRIPTION AND LOCATION
4.1 Introduction Peru is divided into 24 “Departments”, each of which is subdivided into provinces and districts or regions. The Plateau Energy Metals concessions are located in the Carabaya Province which is a province of the Department of Puno in the south-eastern part of Peru. The Carabaya Province is divided into ten districts or regions. It is bounded to the north by the Madre de Dios Region, on the east by the Sandia Province, to the south by the provinces of Azángaro, Melgar and Putina and on the west by the Cusco Region. The capital of the province is Macusani. The people in the province are mainly indigenous citizens of Quechua descent. Quechua is the language which the majority of the population (84%) learn to speak from childhood, while 15% of the residents use the Spanish language and <1% communicate in Aymara.
Falchani is an exploration property located on the Macusani Plateau and falls within licenses held by Macusani Yellowcake S.A.C (Macusani Yellowcake), formerly Global Gold S.A.C, which is 100% controlled and 99.5% owned by Plateau Energy Metals. Plateau Energy Metals has a number of other exploration properties on the Macusani Plateau, which are primarily uranium exploration properties, and for which Mineral Resources have been declared. The combination of Plateau Energy Metals’ exploration properties on the Macusani Plateau is referred to as the Macusani Project Area (MPA). The locality of the Macusani Project Area (MPA) is shown in Figure 4-1. The portfolio comprises the amalgamation of those rights held by Plateau Energy Metals, and includes the Falchani Project, along with six uranium Complexes (Figure 4-2).
The MPA is located approximately 650km east southeast of Lima and about 220km by road from Juliaca in the south. The town of Macusani is some 25km to the southeast of the Macusani Plateau. The MPA covers a total area of 93 000 hectares.
The survey reference system utilized for this report is Universal Transverse Mercator, Zone 19S, using the WGS 1984 datum, hereafter referred to as WGS84 UTM Zone 19S. The MPA concessions lie between the co-ordinates 320 000 and 340 000 East and 844 4000 and 846 7500 North.
4.2 Mineral Tenure
Mining in Peru is primarily regulated by national laws and regulations enacted by the Peruvian Congress and the executive branch of government. The principal legal framework on mining is set forth in the 1992 General Mining Law and its amendments to promote the development of the mineral resources of the nation. The mining sector is regulated by its Law and Regulations on Organization and Functions, pursuant to which the Ministry of Energy and Mines (MEM) was created. It is the principal government entity that, together with its various offices, departments and agencies, is responsible for the mining sector in Peru.
The MEM is a member of the executive branch of government and is responsible for putting in place specific policies and rules governing the matters in its jurisdiction, namely energy, hydrocarbon and mining activities.
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Investment promotion laws, the Peruvian tax regime and environmental framework are other components of the Peruvian mining landscape. Concessions are granted for exploration, exploitation, beneficiation, auxiliary services and transportation by the MEM. No concessions are required for reconnaissance, prospecting or trading.
The general mining law defines and regulates different categories of mining activities according to stage of development (prospecting, exploitation, processing and marketing). The ownership of mineral claims is controlled by mining concessions which are established using UTM coordinates to define areas of interest and measured in hectares.
While the holder of a mining concession is protected under the Peruvian Constitution and the Civil Code, it does not confer ownership of land and the owner of a mining concession must deal with the registered land owner to obtain the right of access to fulfil the production obligations inherent in the concession grant. It is important to recognize that all transactions and contracts pertaining to a mining concession must be duly registered with the Public Mining Registry in the event of subsequent disputes at law.
The General Mining Law, administered by the MEM, may require a mining company to prepare an Environmental Evaluation (EA) Peru, an Environmental Impact Assessment (EIA), a Program for Environmental Management and Adjustment (PAMA) and a Closure Plan prior to mining construction and operation.
MEM grants mining concessions to local or foreign individuals or legal entities, through a specialized body called The Institute of Geology, Mining and Metallurgy (INGEMMET). A mining concession grants its holder the right to explore and exploit minerals within its area and the key characteristics include:
• Concessions are exclusive, freely transferable and mortgageable
• Location is in WGS84 UTM Zone 19S
• The aerial extent of concessions ranges from 100ha to 1,000ha
• Granted on a first-come, first served basis, without preference given to the technical and financial qualifications of the applicant
• With the exception of mining concessions granted within urban expansion areas, the term of a mining concession is indefinite but with restrictions and objective based criteria including payment of annual license fees of US$3 per hectare. Failure to pay the applicable license fees for two consecutive years will result in the termination of the mining concession
• A single annual fee is payable; and
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• Access to the property must be negotiated with surface landowners.
A work programme and expenditure schedule has to be presented in Year 7 of the life of a mining concession to the MEM and penalties are incurred for under expenditure. By Year 12 of the life of a mining concession, it is expected that exploitation should be ongoing; if this is not the case, then justification has to be presented to the MEM and an extension of 6 years may be conferred (Henkle, 2014).
The work programme budget and expenditure defined in the “objective based criteria” for Macusani Yellowcake was approximately US$3.8m against a budget of US$5m.
The Mineral Resources in this report fall within two mining concessions, as shown in Table 4-1 . As described in Section 6.3, Macusani Yellowcake is 100% controlled and 99.5% owned by Plateau Energy Metals. For the purpose of this Mineral Resource estimate, The Mineral Corporation is satisfied that the right to explore and exploit “mineral substances” includes lithium.
Table 4-1 Mining concessions
Mining Concession Code Mining Concession Name Date Conferred Owner
010320205 Falchani 13/10/2005 Macusani Yellowcake S.A.C.
010215005 Ocacasa 4 11/07/2005 Macusani Yellowcake S.A.C.
On February 20, 2019, INGEMMET issued Resolution No. 0464-2019-INGEMMET/PD (the “Resolution”) declaring the expiration of the Ocacasa 4 concession, among others, citing the late payment of annual concession fees. The affected concessions are shown in Figure 4-2, and it is noted that the Falchani concession does not form part of the Resolution. The Resolution was upheld by MINEM in July 2019, through Resolution No. 363-2019-MINEM/CM (together with the Resolution, the “Admin Resolutions”).
As the expiration of Ocacasa 4 was not issued through a court of law, Administrative Acts may be declared invalid within 2 years of the original issuance, through a legal process. In October 2019, the court in Peru admitted the “Demanda Contencioso Administrativa” (the “Contentious-Administrative Filing”) submitted by Macusani, in adherence with the prescribed deadline (3 months) to commence the judicial process requesting annulment of the Admin Resolutions that cancelled the concessions and seeks to restore their validity and Macusani´s legal title to the Concessions.
As reported by Plateau Energy Metals in November 2019, Macusani has been granted a “Medidas Cautelares”, or “Precautionary Measure” with respect to 17 of these 32 concessions. The Precautionary Measure provides for:
• Temporary suspension of the effects of the Resolution declared by INGEMMET
• Temporary suspension of the effects of the resolutions issued by MINEM which confirmed the resolution issued by INGEMMET
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• Temporary suspension of the effects of the Presidential Resolution W/N issued by INGEMMET. dated October 3rd, 2018, that declared inadmissible the accreditation of the payments for the 32 mining concessions, and
• Temporary restoration of the validity and ownership of the 32 mining concessions.
Plateau Energy Metals has further reported that it is anticipated that a Precautionary Measure will be obtained for the remaining 15 mining concessions, one of which is Ocacasa 4, in due course.The Contentious-Administrative proceedings potentially has three phases and could last for between 36 and 78 months. Plateau Energy Metals has indicated to TMC’s QP that it intends pursuing both judicial and administrative remedies in the interim. If Plateau does not obtain a successful resolution to these proceedings, Macusani’s title to the Ocacasa 4 concession could be revoked and Plateau would not be able to proceed with the Base Case.
The parts of the Falchani Project which fall within the Falchani concession lie within a valid and secure mining concession. There have been changes to the mineral tenure circumstances of Ocacasa 4 when compared to that reported in the 2019 Technical Report. These changes have required the QP to consider if the reporting of Mineral Resource estimates within the Ocacasa 4 concession remains appropriate.
The effect of the Precautionary Measure is that Macusani maintains the validity and ownership of 17 of the 32 mining concessions as they were prior to the issuance of the INGEMMET resolutions, until all administrative and judicial remedies have been exhausted. Although Ocacasa 4 was not included in the first Precautionary Measure, Plateau Energy Metals believes that there is a reasonable expectation that a Precautionary Measure will be granted for the remaining 15 concessions. Furthermore, Plateau Energy Metals maintains that the concession payments were valid, on time, in accordance with the “General Mining Law” and that there is a reasonable prospect for a permanent resolution, either through judicial or administrative processes. Plateau Energy Metals, and its subsidiaries, have a demonstrated track record of managing the mineral tenure for a number of projects in Peru over several years. On this basis, the QP considers it reasonable to still report the estimates within Ocacasa 4 as Mineral Resources. To provide additional clarity, the Mineral Resource statement in Section 14 has been sub-divided by concession, and the PEA itself considers a Base Case (which includes both Falchani and Ocacasa 4) and an Alternative Case, which includes only the Falchani Concession.
The Mineral Corporation has restricted its review of the Mining Concession held by Macusani Yellowcake to checking the individual licence boundaries on plans against those depicted on the mining concession outputs from the MEM. No legal reviews of the validity of the process Macusani Yellowcake went through to obtain the mining concessions have been undertaken, nor has an attempt been made to understand the various company structures and ownerships prior to transfer to Macusani Yellowcake.
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Figure 4-1 Locality Plan
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Figure 4-2 Mineral Tenure Plan
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5 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY
5.1 Access to Site The MPA is located approximately 650km east south-east of Lima and about 220km by road from Juliaca to the south. The nearest towns to the MPA are Macusani (25km to the south-east) and Corani (14km to the north-west).
The Interoceanica Highway (IH) is a system of tarred/sealed roads that link the ports of Materani, Molendo and Ilo on the west coast of Peru over the Andes Mountains to the west side of Brazil. The IH passes within 10km to 15km to the east of the MPA. Two unpaved roads connect the Project to the IH and other unpaved roads, generally in good condition, connect the various sites within the MPA to one another. These roads are accessible during the dry season in two-wheel drive vehicles and during the wet season in four-wheel drive vehicles.
The closest airport to the MPA is located at Juliaca. The facility is in good condition and services daily flights from Lima and Cusco.
5.2 Access to Land The issue of land tenure is of increasing significance in Peru, particularly as the national cadastral system for agricultural land ownership is not always accurate due to many rights over private land not being registered. Peruvian law does not vest surface rights with mineral rights and any proposed development requires the developer to purchase the surface rights or negotiate an appropriate access agreement with the surface rights owners to have access to the property.
At present the company has working agreements ("convenios") with the following communities within the MPA: Chaccaconiza, Isivilla, an independent Cooperative (Imagina), Quelccaya and various independent small land holders. The working agreement with the community of Quelccaya is valid until July 2020. Until sanctioned otherwise, the agreement with the Cooperative and the small land holders is open ended and based on the progress achieved by exploration. The agreement with the communities of Chaccaconiza and Isivilla have expired and are being renegotiated. Short-term agreements and subsequent renewals are the model under which Plateau has been working with its host communities for the past 15 years. The Company is in constant dialogue with all of its host communities in the MPA as part of its continuity of community relations programs and does not foresee any issues with subsequent renewals when the time comes.
5.3 Climate The climate on the Macusani Plateau is characterized by two distinct seasons – the wet season (which starts in September but peaks from January to April) and the dry season (May to September). The rainy season is controlled by tropical air-masses and the dry winters by subtropical high pressure.
While the exposed eastern slopes of the Andes receive more than 2,500mm of rain annually, the average rainfall for the Carabaya Province varies between 600mm to 1,000mm. The period between May and August
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is characterized by very dry conditions and cold nights. Significant electrical storm activity is common in the wet season and moisture falls in the form of rain, hail and, occasionally snow.
Temperatures range from 19°C in November to -10°C in July. While temperatures are mild, high ultraviolet readings are common in the middle of the day. These climatic conditions and the altitude dictate that the area is vegetated by coarse scrub and grasses.
5.4 Local Resources Peru has a robust mining economy with many operations exploiting copper, gold, iron ore, lead, molybdenum, rhenium, silver, tin and zinc, as well as industrial minerals and mineral fuels (coal, natural gas and crude oil). Founded on this mining culture, it is thus reasonable to assume that a workforce consisting of skilled and semi-skilled people could be sourced for the Project.
5.5 Infrastructure The San Gaban II hydro generation station is approximately 40 kms (88 kilometers via the IH) to the north of the MPA and high voltage power lines run adjacent to the MPA. In order for a grid connection to be made an extension of the power line will be required to reach the project site and any connection will be subject to negotiation with the supply authority. These matters will need to be taken into account as the project progresses.
At this time, the supply of water is derived from local river courses. In its 2014 Preliminary Economic Assessment (PEA) for Plateau Energy Metals’ uranium projects, GBM Mining Engineering Consultants Limited (GBM) was of the view that the area has access to sufficient water resources for the purposes of mining operations (Short et al, 2014).
5.6 Physiography The Macusani Plateau is part of the relatively flat Altiplano of the Eastern Cordillera of the Andes Mountain Range, except where incised narrow canyons exist with a relief of up to 250m. The canyon walls are steep with slope angles up to 60°, with some sections being vertical. The elevation of the Plateau ranges between 4,330m and 4,580m above mean sea level.
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6 HISTORY
6.1 Introduction While the Mineral Resources for the Falchani Project are lithium Mineral Resources, the MPA as a whole contains both lithium and uranium potential, as described in previous technical reports for the other Complexes being developed by Plateau Energy Metals. Furthermore, the geological understanding and exploration history of the Macusani Plateau is founded on exploration for uranium, and as such, a description of both lithium and uranium exploration efforts are appropriate here.
6.2 Previous Regional Exploration
In 1975, the uranium and nuclear activities in Peru were placed under the control of the Instituto Peruano de Energia Nuclear (IPEN). A five-year exploration plan (1976-1981) was initiated with the aim of identifying and developing resources in the country. The Macusani East area was the most studied area in southern Peru by IPEN. After IPEN discovered the first 60 uranium showings in 1978, systematic radiometric prospecting and trenching were carried out over an area of approximately 600km2, culminating in the discovery of numerous additional uranium showings (Young, 2013).
From mid-1977, a long-term United Nation Development Programme/International Atomic Energy Agency (UNDP/IAEA) project was initiated consisting of regional reconnaissance over selected areas. The results of most of the work were negative except for those from a car-borne radiometric survey of the Puno Basin where a significant discovery was made near Macusani in the southern Cordillera Oriental, north of Lake Titicaca. Anomalies were found in the volcanic and interbedded sediments of the Upper Tertiary age Macusani volcanics and the Permian age Mitu Group (Young, 2013).
In the same exploration phase, additional anomalies were located to the south-southwest near Santa Rosa in Tertiary age porphyritic rhyolites and andesites.
These (and other discoveries in the Lake Titicaca region) concentrated the exploration in the area. A helicopter spectrometric survey of selected areas was completed in 1980 in Muñani, Lagunillas and Rio Blanca as an IAEA/IPEN Project and a fixed wing survey was completed in an adjacent area by IPEN. Numerous uranium anomalies were discovered.
In 1984, the Organization for Economic Co-operation and Development’s Nuclear Energy Agency and the IAEA sponsored an International Uranium Resources Evaluation Project Mission (IUREP, 1984) to Peru. The mission estimated that the Speculative Resources of the country fell within the range of 6 000 to 11 000t of uranium.
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6.3 Previous Ownership
To a large extent, the cyclical nature of uranium exploration on the Macusani Plateau has been driven by the fluctuating price of the commodity since the mid-1980s. During the collapse of prices in the 1980s and in the wake of the Three Mile Island accident, there was little incentive for exploration and mining companies to explore for uranium. However, the uranium prices experienced a spectacular rise between 2001 and 2008 during which time junior mining companies mobilized their campaigns by staking properties over prospective ground. Amongst these early explorers was Vena Resources Inc (Vena) who acquired seven concessions in the Macusani Plateau as well as additional concessions elsewhere in Peru (Henkle, 2011). In 2006, Vena commenced scintillometer prospecting, radon and surface outcrop mapping over various IPEN uranium showings.
Global interest in uranium declined in the wake of the Global Economic Crisis of 2008/2009 and, more so, in the aftermath of the Fukushima Daiichi nuclear disaster in March 2011.
Macusani Yellowcake Inc. was a Canadian uranium exploration and development company focused on the exploration of its properties on the Macusani Plateau. The Company was incorporated in November 2006 and was created through the amalgamation of privately held Macusani Yellowcake Inc. and Silver Net Equities Group, a TSX Venture Capital pool company. The Company owns a 100% interest in the Peruvian concessions through Macusani Yellowcake. Macusani has been actively exploring in the Macusani area since 2007.
In 2007, Cameco Corporation (and its wholly owned subsidiary Cameco Global Exploration Limited (Cameco)) entered into a joint venture with Vena with the objective of jointly exploring for uranium in Peru. Minergia S.A.C was formed as the joint venture vehicle, with Cameco providing the funding and Vena undertaking the exploration management. The ownership was founded on 50% shareholding in favor of each party. The combined portfolio covered an area of 14 700ha. The details of this transaction are summarized by Henkle (2014).
During November 2013, Azincourt Uranium announced that it had entered into a definitive share-purchase agreement with joint-venture partners Cameco and Vena to acquire full ownership of the resource-stage Macusani and other exploration projects. In January 2014, Azincourt announced that the acquisition of Minergia S.A.C. had been completed.
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Macusani Yellowcake Inc. and Azincourt Uranium Inc. announced in September 2014 that they had completed the acquisition by Macusani of Azincourt’s adjacent uranium properties located on the Macusani Plateau. Under the terms of the transaction, Macusani acquired 100% of Azincourt’s Peruvian subsidiary, Minergia S.A.C.
Arising from this transaction, there was a consolidation of mining concessions within the MPA.
On April 30, 2015, Macusani Yellowcake Inc. changed its name to Plateau Uranium Inc. Young (2015) reported consolidated uranium Mineral Resources estimates for six mineral Complexes that fell under the Plateau Uranium umbrella. In May 2016, the Mineral Resources for two of the Complexes (Kihitian and Isivilla) were updated to include lithium and potassium (The Mineral Corporation, 2016). Subsequently, the name of the Peruvian operating company was changed from Global Gold S.A.C. to Macusani Yellowcake S.A.C., which holds all the MPA mineral concessions.
In March 2018, Plateau Uranium Inc. changed its name to Plateau Energy Metals Inc. A summary of the transactions which form the history to Plateau Energy Metals is provided in Figure 6-1.
6.4 Previous Exploration No meaningful exploration, apart from the regional exploration described in Section 6.2, was undertaken prior to 2017 on the Falchani Project. All of the exploration initiatives which inform these Mineral Resource estimates are described in Section 9 and Section 10 of this report.
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Figure 6-1 History of ownership of Plateau Energy Metals
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7 GEOLOGICAL SETTING AND MINERALIZATION The Macusani concessions are located in the Carabaya Province, Puno Department of south-eastern Peru in the Andes. The Andes are a geographical feature formed by active mountain building processes driven by plate tectonics.
7.1 Regional Geology A common geological feature of orogenic belts is that they are usually structurally and stratigraphically complex. In the Puno region of Peru, mainly Paleozoic sediments (520-250Ma old) that were formed on the western Brazilian Craton (Figure 4) have been highly deformed by thrusting and folding due to the westwards movement of the South American tectonic plate (Brazilian Craton) over-riding the Pacific tectonic plate (Nazca Plate) along the western margin of the Americas over the last ±150Ma. This occurred when the breakup of the Americas from the African and European continents occurred, with the development of the Atlantic Ocean. The main geological units are shown in Figure 4 with the Oceanic Trench forming the western margin of the South American plate.
The tectonic history has led to the older sediments being bounded by westward dipping thrusts, intense folding and intrusions of dykes, batholiths and being affected by volcanic activity at various times (Henkle, 2014). The Andes represents a large anticlinorium complicated by a series of faults and intrusions, with the flanks of this superstructure made up of the coastal Mesozoic and eastern Palaeozoic belts. The Andes represent the Late Tertiary and Quaternary rejuvenation by block faulting of an eroded, early Tertiary folded mountain range which occupied the axis of Palaeozoic and Mesozoic geosynclines. Topographically the mountains consist of a central dissected plateau, the Intermontane Depressions and Altiplano enclosed by narrow ranges, the Western Cordillera and the Eastern Cordillera as depicted in Figure 7-1.
7.2 Local Geology In the MPA, late Tertiary tuffs, ignimbrites and associated sediments are preserved in a NW-SE trending graben. Much of the Early Tertiary and Mesozoic cover was eroded prior to deposition of the pyroclastics so they were deposited in part directly on the Palaeozoic rocks including Late Palaeozoic intrusives (Hercynian granites) and extrusives (Mitu volcanics).
The known uranium occurrences in the MPA identified by IUREP are associated with these Pliocene and Miocene epoch Quenamari Formation tuffs, ignimbrites and interbedded sediments. Other uranium mineralization was indicated by IUREP (1984) to be hosted in acidic volcanic rocks of rhyolite composition that covers large areas of the Macusani Plateau in horizontally bedded formations from surface to a depth of about 100m but these appeared to be lenticular or confined to fracture zones (Young, 2013).
The geological map of the area (Figure 7-2) indicates that all of the uranium Complexes are underlain by rocks of the Neogene Period, Quenamari Formation (dated between 22.5Ma to 1.8Ma). The youngest rocks (Pliocene Epoch) are known as the Yapamayo Member and these outcrop over most of the MPA. The older Sapanuta and Chaccaconiza Members (Miocene Epoch) underlie the Yapamayo Member.
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The outcropping rocks within the Falchani Project are interpreted to be mostly of the Sapanuta Member (Figure 7-2).
A description of the structural interpretation which supports the Mineral Resource estimates is provided in Section 14.2.2.
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Figure 7-1 Regional Geological Setting
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Figure 7-2 Local Geology
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7.3 Property Geology
The uranium mineralization at the other Complexes within the MPA are interpreted to be hosted in shallowly dipping acidic tuffs, with pyroclasts from sub-macroscopic to 60mm in size. The main minerals constituting the tuff are quartz, orthoclase and plagioclase in a groundmass of amorphous glass. Crude bedding is evident in some outcrops and is based on strata containing larger and smaller pyroclasts.
The petrography of the samples analyzed by Thatcher (2011) indicated that the acid volcanics (crystal lapilli tuffs) can have varying composition from rhyolite to dacite to latite which supports the likely presence of stratigraphic layering of the volcanic pile as noted in Section 7.2 and by Cheilletz et al (1992).
Limited mineralogical work has been undertaken by SGS Canada on samples from the Falchani Project, and the understanding of the stratigraphy has evolved through exploration mapping and drilling programmes. In the immediate vicinity of the boreholes drilled at Falchani, the youngest rocks would appear to be these described in the field by Plateau Energy Metals as the Upper Rhyolite. The Upper Rhyolite forms prominent outcrops (Figure 7-3), and demonstrates a crude bedding, and appears to have a shallow dip to the north-northeast. Outcrops of the Upper Rhyolite have a similar appearance to the acidic tuffs of the Yapamayo and Sapanuta Members of the Quenamari Formation, which host the uranium mineralization. This together with the fact that the Falchani Project is mapped as being underlain by the Sapanuta Member of the Quenamari Formation, support the interpretation.
Figure 7-3 Illustrative photograph of Upper Rhyolite contact with the Upper Breccia (local stratigraphy as
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inset)
Below the Upper Rhyolite is the Upper Breccia, which separates the Upper Rhyolite from the Lithium-rich Tuff. The Upper Breccia is not well defined in outcrop but is very distinctive in core. The Upper Breccia contains angular clasts of volcanic material, in a very fine groundmass (Figure 7-4 - top). The Lithium-rich Tuff is a light grey to white, very fine grained rock, with prominent layering (Figure 7-4 - bottom).
Although the Lithium-rich Tuff has been further sub-divided, on the basis of its chemistry (Section 14.2.1), these subdivisions are not immediately recognizable in outcrop or in core, and the term Lithium-rich Tuff is used to describe the whole unit, between Upper Breccia and Lower Breccia. The contact between the Lithium-rich Tuff and the Lower Breccia is less marked than the Upper Breccia. The Lower Breccia has been identified in outcrop in the Tres Hermanas trenches, and has been interpreted from drilling.
The thickness of the Upper Breccia varies from 10m to 20m, while the thickness of the Lithium-rich Tuff varies in drilling from 50m to 140m. The Lower Breccia unit is variable in thickness, but recent drilling has indicated that the Lower Breccia unit can reach thicknesses of up to 175m and contains large (up to 20m) blocks of Lithium-rich Tuff.
Figure 7-4 Upper Breccia in core (top) and Lithium-rich Tuff in core (bottom)
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Mineralization Model in the Uranium Complexes
Li et al (2012) suggests that the uranium mineralization was formed by leaching of volcanic glass, apatite and monazite, transported as uranyl phosphate complexes and precipitated as autunite (Ca(UO2)2(PO4)2.6-
8H2O) and subordinate weeksite (K2(UO2)(Si2O5)3 4H2O) in fractures formed in response to tectonic uplift. U-Pb ages of the meta-autunite indicate initiation of the uranium mineralization at circa 1Ma, long after the cooling of the last volcanic eruptions and promote a genetic model that relies on an inter-play of the geomorphology, groundwater movement and its evaporation.
Elevated levels of lithium have previously been identified in the uranium host rocks, as described in The Mineral Corporation (2016), in which the lithium Mineral Resources for the uranium Complexes were estimated. Thatcher (2008 and 2011) did not to recognize any of the typical lithium minerals (spodumene, lepidolite or hectorite) from limited hand specimens, but did identify significant clay alteration in the ground mass of the crystal lapilli tuffs of rhyodacitic composition. In the case of the uranium Complexes, the lithium is interpreted to be a primary component of the acidic tuffs and the majority of the lithium mineralization was interpreted to be located in the groundmass of remaining volcanic glass and secondary clay. It is reasonable to assume that the alteration producing the uranium mineralization, via leaching of the volcanic glass, apatite and monazite, would also have had, to a certain extent, some impact on the original lithium mineralization.
Mineralization Model at the Falchani Project
Limited mineralogical and petrological studies have been undertaken at SGS Canada. The SGS Canada work included thin section petrography, X-Ray diffraction, scanning electron microprobe and laser ablation ICP-MS in-situ mineralogical analysis. Interpretation of the geological environment and lithium deportment at the Project is based on the SGS Canada work as well as observations from drill core and outcrop, and the analysis of lithium and other element distributions in the exploration results to date.
The Upper Breccia, Lithium-rich Tuff and Lower Breccia show remarkably consistent vertical zonation of lithium, strontium, cesium and other elements. The highest concentration of lithium is at the top and bottom of the Lithium-rich Tuff.
The Lithium-rich Tuff, and the transitional Upper and Lower Breccias are interpreted to have been deposited in a technically active, crater-lake environment, where the breccias represent the transition from the rhyolitic ash-flows above and below, and the Lithium-rich Tuff, represents a period of sub-aerial deposition. This is supported by the regular layering observed in the tuff, and the angular clasts of the breccia.
The lithium mineralization is interpreted to be primary – related directly to the chemistry of the parent magma, although alteration and enrichment by groundwater or hydrothermal fluids in the interim has not been ruled out. The reason for the elevated lithium concentration, relative to the surrounding acidic tuffs is directly related to the parental magmas resulting from extreme fractionation of peraluminous melts and will be further investigated by Plateau Energy Metals through additional university and internal research.
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As with the lithium in the uranium Complexes, typical lithium minerals are not visible in hand specimen, and it is interpreted that the majority of the lithium is located in the glassy, siliceous groundmass of the tuffs.
The SGS Canada work has identified only rare Li-minerals, and the current stage of understanding of the lithium deportment at Falchani is that the bulk of the extractable lithium resides in alumino-silicate volcanic glass. The overall assessment of the potential extractability of lithium is based on metallurgical tests at this stage. A description of the metallurgical work carried out to date can be found in Section 13.
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8 DEPOSIT TYPES Lithium minerals are commercially exploited from three principal sources – brines, pegmatites and the clay mineral hectorite.
Lithium rich brines are formed through the chemical weathering of volcanic lithium bearing rocks by hydrothermal fluids usually restricted to basins in areas of high evaporation, forming lithium carbonate minerals such as zabuyelite. Close to 70% of the world’s lithium brine deposits are situated in the borders of Chile, Bolivia and Argentina (Lithium Triangle) area. The Lithium Triangle contains the largest brine source lithium deposits such as Salar de Atacama, Sala de Uyuni and Salar de Hombre Muerto.
Lithium minerals such as spodumene, petalite and lepidolites are found in coarse crystalline hydrothermal pegmatites, formed by the crystallization of post magmatic fluids. Lithium containing pegmatites are rare and are generally associated with tin and tantalite.
The style of lithium mineralization for the Macusani region is very different to these types of deposits, as it is interpreted to be inherent within the glass-rich acidic volcanic tuffs.
At Falchani, the lithium-rich volcanic tuff unit is interpreted to be sub-aerial and the transitional Li-rich breccias are interpreted to have been deposited in a crater lake volcano-sedimentary environment.
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9 EXPLORATION Uranium exploration activities in Peru were initiated on the back of the work of IPEN in the 1970s and 1980s. Uranium anomalies were found near Macusani in the Upper Tertiary volcanics and the Permian Mitu Group by the UNDP/IAEA project.
The typical exploration rationale for the Macusani region involves the delineation of potential uranium anomalies through a combination of regional geological interpretation and surface radiometric techniques in order to delineate targets for further investigation through drilling. Macusani Yellowcake has conducted ground-based radiometric surveys from a hand-held scintilometer over large portions of its properties as a guide for its drilling programmes.
Exploration was initiated at the Falchani Project as a result of a radiometric anomaly. In addition to the radiometric information, Plateau Energy Metals have undertaken surface sampling and at the end of April 2018, had collected some 180 samples, which were analyzed for lithium. The surface samples were not used in the Mineral Resource estimate, but provide additional confidence, combined with recent drilling, that the Lithium-Rich Tuff extends to surface, as has been modelled in the geological model.
The total number of boreholes drilled at the Falchani Project at the end of January 2019 was 51.
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10 DRILLING
10.1 Drilling programme Two diamond drilling programmes have been undertaken at the Falchani Project. The first campaign was initiated in 2017, and the second programme continued to the end of December 2018. In total, 51 drillholes have been drilled by Macusani Yellowcake, as shown in Table 10-1 from 15 platforms.
Table 10-1 Drilling programme summary
Deposit Number of Length of Drilling No. of Samples (excluding Drillholes (m) QA/QC)
Total 51 14 816 9 102
10.2 Drilling methodology Due to drill access limitations, the drilling was mainly undertaken from a series of platforms, with anything from two to nine drillholes being drilled radially from each platform (Figure 10-1).
Figure 10-1 Drilling configuration
The platform spacing resulted in mineralized zone intersection separation distances ranging from 50m to up to 200m.
The platform and drillhole locations are shown in Figure 10-2, which also shows the drillhole platforms which informed the September 2018 Mineral Resource estimates and those which have been added to inform the current Mineral Resource estimates.
Additional representative logs, drill plans and cross sections are provided in Figure 14-1 to Figure 14-6.
A summary of the drillhole intersections used in the Mineral Resources estimate is provided in Appendix 1 and Appendix 2 of the 2019 Technical Report.
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10.3 Sample Recovery and Core The drilling conditions in the Lithium-rich Tuff were good, however, within the Upper and Lower Breccias, more difficult conditions were encountered. The core recovery over the length of the drillholes ranged from 85% to 100%, with an average of 97%, indicating that the overall core recovery is acceptable.
Figure 10-2 Locations of drillhole platforms
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11 SAMPLE PREPARATION, ANALYSES AND SECURITY
11.1 Introduction The data which informs these lithium Mineral Resource estimates are derived from the exploration efforts of Macusani Yellowcake, which is controlled by Plateau Energy Metals.
11.2 Sampling Methods Whole core (over the entire length of the drillhole) was sampled. Individual samples varied from a minimum of 0.5m to a maximum of 1.0m, with a mean of 0.9m. Selection of the length to sample was based on visual observation of the mineralization and assisted by radiometric measurements.
11.3 Sampling Recovery Core from these deposits was scrutinized by the QP during the May 2018 site visit and, although the overall quality of the core recovered was good, there are zones, particularly within the Upper and Lower Breccia, where drilling conditions are difficult, and the core recovery is relatively poor. The perception gained by scrutiny of the core available on site was that, although the core could in some cases be somewhat blocky, the core recovery in the Lithium-rich Tuff was good, and the core pieces fitted together well in the core boxes prior to sampling. In the Upper and Lower Breccias, the core recovered was often broken, and an assessment of core recovery was difficult. The overall core recovery was 97%.
Given the overall thickness of the mineralized zones, the consistent lithium grade within the zones and the relatively good core recovery, it is considered unlikely that any bias related to core recovery could be introduced.
11.4 Sample Quality As the entire core was sampled, the sample taken from the core box is considered representative. Whole core was sampled in order to minimize the risk of sample loss. Thus, the method of sampling the whole core is sound, even though no intact library sample was retained. A comprehensive photo archive has been retained however, along with the sample reject material.
11.5 Sample Preparation, Assaying and Analytical Procedures
Sample preparation occurred on site at a mobile field station which was located close to the drill rigs and periodically re-located. Once logged and photographed, the entire core identified for sampling was placed into a sampling bag. The pre-marked aluminium tag was stapled to the sample bag.
Sample depths were recorded together with a basic geological description on a sampling reconciliation log. This log was later captured into an Excel spreadsheet.
Quality control samples in the form of standards were inserted at the permanent field office located in the village of Isivilla. These standards were prepared by Macusani Yellowcake and certified by ALEPH Group & Asociados S.A.C. Metrologia de las Radiaciones (Radioactivity Measuring Techniques) by having check
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analyses of the standards completed at CERTIMIN SA (CERTIMIN), which was previously known as the Centro de Investigación Minera y Metalủrgica (CIMM), laboratory in Lima.
The complete sample batch, accompanied by a senior representative of the Macusani Yellowcake exploration team, was sent by road to the town of Juliaca. The samples entered the CERTIMIN LIMS system at this point.
From the preparatory laboratory in Juliaca, the pulverized samples were transported by CERTIMIN, to the main CERTIMIN Laboratory in Miraflores, Lima, by either road or as air freight.
The Mineral Corporation examined the sample receiving facilities at all three laboratories and found them to be well organized. It would appear that the chain of custody of the Macusani Yellowcake samples from site to final analysis is reasonably secure.
Sample preparation and analysis was carried out through the CERTIMIN Laboratory.
Preparation Laboratory (CERTIMIN - Juliaca)
The samples were weighed on delivery and entered into the LIMS system. Drying was completed over a 12 hour period at 100˚C. Crushing was done by two jaw crushers; the first to 6mm and the second to 2.5mm. Crushing was completed when the sample was 100% <2.5mm. Laboratory standards were entered into the stream after the first jaw crusher. The jaw crushers were flushed with quartz, some of which were sent to the Lima offices for analysis on a regular basis.
One certified reference material, one blank sample and two duplicate samples were incorporated into each batch of 50 samples delivered to CERTIMIN for laboratory analytical quality assurance and control (QAQC). These results were given to Macusani Yellowcake on the analysis certificates.
After homogenization, the crushed sample was riffle split to an approximate 250g sample that was pulverized by a ring mill. The ring mill was flushed with quartz after approximately every five samples or if there was a marked color change in the crushed material. The preparation facility strives to have the pulverized material at 85% <200 mesh grain size.
The jaw crushers, riffles and ring mills are all cleaned with compressed air and are located within sub- housings to keep contamination to a minimum. The reject material is kept on site but will eventually be transported to the Macusani Yellowcake warehouse in Lima.
Acid Digestion and Final Analysis (CERTIMIN - Miraflores)
The pulverized material was manually homogenized. Wet samples were dried before an approximate 0.20g aliquot (±0.02g) sample was spooned out and digested with a mixture of HCl+HNO3+HF+HClO4 acid over a period of 8hrs.
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The concentration of lithium was determined from the acid digested liquid by inductively coupled plasma - mass spectrometry (ICP-MS) for abundances of 0.05ppm to 10 000ppm (1%). Any results greater than 10 000ppm were re-analyzed via inductively coupled plasma - optical emission spectrometry (ICP-OES). The latter instrument would require a new acid digest to be completed on an aliquot of 0.25g. The ICP-MS and ICP-OES equipment is calibrated daily with three appropriate standards.
The methods undertaken by CERTIMIN to prepare and analyze the samples for lithium are considered acceptable by The Mineral Corporation. As described in Section 12.1, the QP undertook a site visit to the CERTIMIN Laboratory in Lima, and walked through the acid digestion and ICP-MS sections. The laboratory was well organized and professional.
11.6 Analytical Quality Assurance and Control (QAQC) Procedures
The data which informs these lithium Mineral Resource estimates was generated by Plateau Energy Metals, or its subsidiaries, since the initiation of exploration on the Falchani Project in 2017. Plateau Energy Metals inserted standards, blanks and duplicate (Field) samples into the sampling streams, in addition to those inserted by the laboratory, in order to assess the accuracy and precision of the lithium analytical results.
A summary of the overall statistics for the QAQC samples is shown in Table 11-1
Table 11-1 Summary of QAQC samples Duplicates Standards Blanks No of samples % QAQC Field Laboratory Field Laboratory Field Laboratory
10 517 264 307 54 148 54 232 10%
The results for the Field and Laboratory Standards have been analyzed using Error Deviation plots, where Error Deviation is calculated as follows:
푋푎푛푎푙푦푠푖푠 − 푋푠푡푎푛푑푎푟푑 퐸푟푟표푟 퐷푒푣푖푎푡푖표푛 = 푥100 푋 푠푡푎푛푑푎푟푑
The Error Deviation results are portrayed in Figure 11-1. Positive results indicate an over-estimation, while negative results indicate an under-estimation of grade. With this technique, an Error Deviation within the ±10% range is considered to signify acceptable levels of accuracy by the laboratory.
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20
FIELD LAB 15
10
5
0 - 1 000 2 000 3 000 4 000 5 000 6 000 7 000 8 000 9 000 10 000
-5 Error Deviation (%) ErrorDeviation
-10
-15
-20 Expected value of standard (Li ppm)
Figure 11-1 Error Deviation Plot for Lithium Standards
The bulk of the results for both the Field and Laboratory Standards fill within the ±10% range and all of those which fall outside are for the very low concentration lithium standard. The results for the standards inserted for lithium are considered acceptable.
The results for Field and Laboratory Duplicates have been analyzed using the Mean Deviation method, where Mean Deviation as calculated as follows (where Xa and Xb are duplicate pairs):
0.5 ∗ (푋푎 − 푋푏) 푀푒푎푛 퐷푒푣푖푎푡푖표푛 = 푥100 푀푒푎푛(푋푎, 푋푏)
The result of the lithium Mean Deviation analysis is shown in Figure 11-2.
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20
FIELD LAB 15
10
5
0 - 1 000 2 000 3 000 4 000 5 000 6 000
-5 Mean Deviation (%) Mean Deviation
-10
-15
-20 Result of primary analysis (Li ppm)
Figure 11-2 Mean Deviation plot for Field and Laboratory Duplicates
The Mean Deviation results show good reproducibility of lithium analysis, for both Field and Laboratory duplicates, and The Mineral Corporation would consider the analytical precision to be acceptable for lithium.
The analytical results for blanks submitted are shown in Figure 11-3. As would be expected, the Laboratory Blanks return values below the detection limit of >0.1 Li ppm. The Field Blanks show low levels of lithium. The levels of lithium returned are not considered material, when compared with the anticipated lithium grades within the Project.
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8
FIELD LAB 7
6
5
4 Li (ppm)Li 3
2
1
0
1
9
16
23
30
37
44
51
58
65
72
79
86
93
100
107
114
121
128
135
142
149
156
163
170
177
184
191
198
205
212
219
226
235
242
249
256
263
270
277 284 Number of blank samples
Figure 11-3 Analytical results for Field and Laboratory Blanks
The Mean Deviation results show good precision and the Error Deviation for the lithium standard was generally below 5% which signifies acceptable levels of accuracy by the laboratory. The blank control sample results reported negligible Li concentrations.
The Mineral Corporation concludes that the results of the inserted QAQC samples are acceptable for lithium Mineral Resource estimation.
11.7 Sample Database The Mineral Corporation received the drillhole logging results as a series of Microsoft Excel files. The same data was also provided in the form of a Microsoft Access database. The data from the database was imported in Datamine Studio™ for further analysis. A check on the accuracy of the transposition of approximately 5% of the sample results from assay certificate to database was completed by The Mineral Corporation, and no transcription errors were identified.
11.8 Overall Adequacy Statement The QP considers the sampling methods, sampling recovery and sample quality to be acceptable. The procedures undertaken by the laboratory were noted to be of a high standard, and appropriate for the analysis of lithium. The QAQC results indicate that acceptable levels of accuracy and precision, and no contamination, have been obtained by the laboratory. Finally, the validation undertaken on the sample database found no deficiencies in the capture and storage of information. The database is thus considered sufficiently reliable to be used to inform the Mineral Resource estimates.
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12 DATA VERIFICATION
12.1 Site Visit TMC’s QP visited the Falchani Project in May 2018, during which outcrops of the tuff and breccia units were visited, and the drilling and sampling operations observed. In addition, the QP also visited the CERTIMIN laboratory in Lima where all the Lithium analyses for the Falchani Project have been undertaken. An independent set of samples were randomly selected from the storage facility in Macusani.
12.2 Drillhole Locations In addition to validating collar positions, the drilling, logging and sampling procedures were scrutinised for two drillholes in progress during the site visit. The procedures undertaken by the geologists on site, were found to align with the description of the geological logging and sampling procedures described in Section 11.
12.3 Geological Observations The core from five drillholes, selected by the QP, was viewed in the Macusani coreyard, together with representatives of Plateau Energy Metals. The geological units identified in the logs were found to be readily recognizable in core, and no discrepancies between the core viewed, and the geological logs provided, were found. A noticeable, and consistent pattern in lithium, cesium and rubidium concentrations was evident, when the analytical logs and the lithological logs were viewed together - this prompted the subdivision of the Lithium-rich Tuff into the three units described further in Section 14.2.1.
While on site, outcrops of the Lithium-rich Tuff, the Upper Breccia and the overlying rhyolites were observed. Although a cover of scree prevents the direct observation of the contacts between the units, the occurrence of the tuff is clearly identifiable on the basis of the color of the scree. In outcrop, the tuff appears to be consistent in thickness and dip / dip direction.
12.4 Re-sample Campaign Analyses Twenty-one samples from three boreholes were randomly selected by the QP. The sample rejects from these samples were re-submitted to CERTIMIN, and to the ALS laboratory in Lima. The samples selected were a mixture of high, medium and low lithium grades. The results in Table 12-1 show a reasonably good correlation between the original result and the re-sampling.
Table 12-1 Independent analysis from the Falchani Project From To Original Re-analysis - CERTIMIN Re-analysis - ALS Borehole Number & Sample (m) (m) (Li ppm) (Li ppm) (Li ppm)
PCHAC-03-TV-42 36.00 37.00 345 325 363
PCHAC-03-TV-43 37.00 38.00 358 343 360
PCHAC-03-TV-44 38.00 39.00 338 348 351
PCHAC-03-TV-45 39.00 40.00 345 356 354
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From To Original Re-analysis - CERTIMIN Re-analysis - ALS Borehole Number & Sample (m) (m) (Li ppm) (Li ppm) (Li ppm)
PCHAC-03-TV-46 40.00 41.00 351 362 351
PCHAC-03-TV-47 41.00 42.00 344 359 351
PCHAC-03-TV-48 42.00 43.00 344 342 355
PCHAC-08-TNE-110 81.00 82.00 1 822 1 719 1 710
PCHAC-08-TNE-111 82.00 83.00 1 980 2 203 2 160
PCHAC-08-TNE-112 83.00 84.00 2 517 2 752 2 810
PCHAC-08-TNE-113 84.00 85.00 2 919 3 145 3 360
PCHAC-08-TNE-114 85.00 86.00 3 245 3 565 3 650
PCHAC-08-TNE-115 86.00 87.00 4 126 3 714 3 570
PCHAC-09-TV-84 76.00 77.00 448 462 460
PCHAC-09-TV-85 77.00 78.00 471 447 470
PCHAC-09-TV-86 78.00 79.00 442 494 480
PCHAC-09-TV-87 79.00 80.00 455 460 470
PCHAC-09-TV-88 80.00 81.00 454 447 470
PCHAC-09-TV-89 81.00 82.00 430 423 425
PCHAC-09-TV-90 82.00 83.00 422 421 430
PCHAC-09-TV-91 83.00 84.00 387 397 410
Average 1 073 1 099 1 112
12.5 Limitations or failure to Conduct Verification There are no limitations or failure to conduct verification.
12.6 Overall Adequacy Statement The procedures in place at the CERTIMIN laboratory meet current industry standards and requirements and in the opinion of the QP, the results are adequate for the purposes used with regards to data verification in this report.
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13 METALLURGY AND METALLURGICAL TESTING
13.1 Background A substantial body of metallurgical testwork has been carried out on the Falchani lithium-bearing tuff material. The testwork referenced in this report was carried out by Tecmmine in Peru and by ANSTO Minerals in Australia. Both the Tecmmine and ANSTO testwork was carried out on the lithium rich tuff obtained from trenches on site. Table 13-1 shows the head analysis of the trench sample and Figure 13-1 shows the locations of the trenches. The mineralized material for the ANSTO testwork was sourced from the easternmost trench.
Table 13-1 Head Analysis of Lithium-rich Tuff Trench Sample
Element Weight % Al 8.17
As 0.012
B 0.064
Ca 0.189
Cr 0.019
Cs 0.060
Cu <0.001
F 1.99
Fe 0.515
K 2.95
Li 0.337
Mg 0.016
Mn 0.079
Mo <0.001
Na 2.39
Ni 0.024
P 0.370
Pb 0.002
Rb 0.146
S <0.001
Si 33.3
Sr 0.002
U 0.002
Zn 0.009
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Figure 13-1 Mineral Resource Classification Plan
The testwork supports a number of technically viable process flowsheet routes (hydrochloric acid leaching; sulfate, chloride and carbonate roasting; sulfation baking, pressure leaching, various purification processes) three of which were evaluated in a concept-level techno-economic trade-off study carried out in 2019 for the Project. The three options are:
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• Sulphuric Acid Atmospheric Leach (Acid Leach)
• Chloride Salt Roast (Salt Roast)
• Sulphation Bake
In addition, a sub-option to include a sulfur-burning acid plant on site was added to the Acid Leach and Sulphation Bake options in order to reduce operating costs and improve the overall economics of those options. The key design parameters of the options are shown in Table 13-2.
Table 13-2 Trade-off Study Key Design Parameters Acid Sulphation Parameter Unit Salt Roast Leach Bake Ore Processed t/year 1,388,859 1,485,626 1,388,859
Overall Lithium Recovery % 80 75 80
Lithium Head Grade ppm 3367 3367 3367
Production of Li2CO3 t/year 20,000 20,000 20,000
The estimated capital costs for the three process flowsheet options are shown in Table 13-3. A priced mechanical equipment list formed the basis for the factored capital cost estimate. The costs are for the process plant only and exclude items outside the scope of the trade-off study.
Table 13-3 Trade-off Study Capital Cost Estimate Process Plant Capital Cost US$ Flowsheet Option On-site Acid Plant No Acid Plant Acid Leach 423,000,000 259,000,000
Salt Roast 299,000,000
Sulphation Bake 594,000,000 431,000,000
Operating cost estimates are shown in Table 13-4 and Table 13-5.
Table 13-4 Trade-off Study Process Plant Operating Cost Estimate Summary (No Acid Plant) US$/ tonne Option US$/year Lithium Carbonate Acid Leach 148,600,000 7,430
Salt Roast 279,000,000 13,950
Sulphation Bake 128,900,000 6,444
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Table 13-5 Trade-off Study Process Plant Operating Cost Estimate Summary (Acid Plant) US$/ tonne Option US$/year Lithium Carbonate Acid Leach 106,800,000 5,340
Salt Roast 279,000,000 13,950
Sulphation Bake 94,900,000 4,745
A financial model was generated in @Risk™ to evaluate the financial outcomes of the three processing routes and the impact of including the sulphur-burning acid plant. Table 13-6 shows the differential NPV and IRR of the various processing options.
Table 13-6 Trade-off Study Financial Model Results
Option 1 Option 2 Option 3 Description Units Add Leach Salt Roast Sulphation Bake Capital (Process Plant) USD million 317 – 575 224 – 406 446 – 808
Annual Production tpa (Li2CO3) 17091 – 20683 17002 – 20724 17091 – 20682 Operating Cost (Process Plant) USD/t (milled) 68 – 86 149 – 277 60 – 76 Operating Cost (Process Plant) USD/t (LCE) 4761 – 6380 11407 – 21679 4181 – 5694
Revenue (Li2CO3) USD million 8204 – 9928 8161 – 9947 8204 – 9927 Revenue (Salt by-product) USD million 0 – 0 0 – 0 0 – 0 EBITDA USD million 3371 – 5328 -7577 – 85 3618 – 5585
NPV (Excl Infrastructure, Mining and G&A) USD million 644 – 1246 -2384 - -187 569 – 1222
IRR (Excl Infrastructure, Mining and G&A) % 18.9 – 37.2 -2384 - -187 14.8 – 29.2 Differential NPV[1] USD million 0 0 - -43 Differential IRR [1] % 0.0 N/A 5.5
Following discussions between DRA and Plateau it was decided to select the Acid Leach process as the preferred option to take forward to the PEA. The decision was taken based on financial performance predicted by the financial model, the greater body of supporting metallurgical testwork, and a qualitative assessment of the level of risk associated with each option. However, so as not to prematurely eliminate an option that showed potential to yield significant benefits in terms of leach solution purity and savings in downstream processing costs, albeit at the expense of higher capital cost, it was decided to retain the Sulphate Bake option pending the results of further testwork.
13.2 Completed Testwork Summary Testwork completed to date for the Project is listed below. The discussion on results in Section 13.4 focuses on the testwork that supports the production of battery-grade lithium carbonate precipitated from a leach solution produced by the Acid Leach process, the selected process for the PEA.
• Grade confirmation
• Size by size assays
• Atmospheric H2SO4 leach test
• Size by size H2SO4 leach test
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• Leach residue re-leach tests
• Recycle PLS leach tests
• H2SO4 leach and downstream validation testwork
• Sulfation bake using Na2SO4 – water leach tests
• PLS evaporation test
• Sulfation bake
• Sulfation bake/volatilisation tests
• Sulfation bake using Na2SO4 and CaSO4 – Water leach tests
• High temperature CaSO4/CaCO3 roasts
• Chloride roast using NaCl/CaCl2
• Atmospheric HCl leach tests, and
• Autoclave HCl leach tests.
A summary of all the testwork conducted can be found in Table 13-7.
Table 13-7 Completed Testwork Summary Item Company Experiment Key Findings Sulfuric acid leach - Varying residence time P80: 212µm, ~22% solids, 87-117kg/t H2SO4, Li extraction: 37%-54%. Increasing residence time increases recovery. Li 1 Tecmmine extractions still increasing after leach ended, suggesting that reaction not completed.
Sulfuric acid - Varying solids content P80: 150µm, ~23-35% solids, 121-141kg/t H2SO4. Li 2 Tecmmine extraction: 62%-64%.
Sulfuric acid - Varying P80: 150-212µm, 162-167kg/t H2SO4. Li extraction: 75%-77%. 3 Tecmmine particle size Reducing particle size had little effect on Li extraction -38-1000µm. Little difference in relative proportions of major 4 Tecmmine Size by size assay elements between size fractions. Unlikely to be amenable to upgrading by beneficiation -38-1000µm, 162-227kg/t H2SO4. Li extraction 75-79%. 5 Tecmmine Size by size leach Similar extraction results across all size fractions 3 stages, 40% solids for the first stage and 20% solids for the subsequent stages. Maintained 300g/L H2SO4 at the end of 6 Tecmmine Leach residue re-leach each stage. 3 hours for each stage, totalling 9 hrs. Stage extractions of 43%,61%,41% with a total cumulative Li extraction of 86%. 3 stages, 300g/L H2SO4 in stage 1 discharge liquor. Assumed 7 Tecmmine PLS recycle same for all 3 stages. Precipitation of alum salts in the third stage being observed. Sulfation roast -Water 1 hour at 900°C, 200kg/t Na2SO4, then water leach for 30-60 8 Tecmmine leach min at ~20% solids. P80: 38-150µm. Li extractions 70-71% P80: 75µm, ~33% solids, 746kg/t HCl, Li extraction: 87%. 9 ANSTO Atmospheric HCl leach Residence time: 8hrs. Li extractions comparable to H2SO4 results.
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Item Company Experiment Key Findings
P80: 75µm, ~10% solids, 2280kg/t HCl, Li extraction: 84%. Residence time: 2hrs. Temp: 120°C. Li extractions 10 ANSTO Autoclave HCl leach comparable to H2SO4 results. Unlikely that Li extraction would exceed 87-90% achieved at atmospheric conditions. Temp: 85-120°C, recovered ~86% of unreacted HCl through 11 ANSTO PLS evaporation distillation. P80: 10-150µm, 319-343 kg/t H2SO4,95°C, Li extraction: 87%- Acid leach - Varying 12 ANSTO 91%. Reducing particle size had little effect on Li extraction. particle size Increased leaching of Al, B, K, Na, P and Rb was observed. Sulfation bake - Varying P80: 10-50µm, ~10% solids in water leach, 199-493 kg/t 13 ANSTO particle size and acid H2SO4, Li extraction: 48-65%%. Residence time 4 hr bake, 2 addition (150°C) hr water leach. Li extraction >70% could not be achieved. P80: 10µm, ~10% solids in water leach, 490-979 kg/t H2SO4, Sulfation bake - Varying Li extraction:80-86%, indicating that higher temperature and 14 ANSTO particle size and acid higher acid addition was required. Residence time 4 hr bake, addition (200°C) 2 hr water leach. Minor acid volatilisation of H2SO4 at 200°C. P80: 10µm, ~10% solids in water leach, 500-1000 kg/t H2SO4, Li extraction:50-56%. Residence time: 4 hr bake at 200°C, Hybrid Sulfation 15 ANSTO 2hr volatilisation at 700°C, 2 hr water leach at 50°C. bake/roast Significantly reduced Al and F extractions, albeit at the cost of significantly reduced Li extraction. P80: 10µm, ~10% solids in water leach, 250-450kg/t Na2SO4. Sulfation bake using Na2SO4: CaSO4 ratio of 1:1, Li extraction:62-72%. Residence 16 ANSTO Na2SO4/CaSO4 - Water time 2 hr bake at 200°C, 2 hr water leach at 50°C. No leach significant Li extraction improvement with ultra-fine feed. P80: 10µm, ~10% solids in water leach, 251-350kg/t CaSO4. High temperature CaSO4: CaCO3 ratio of 1:1, Li extraction:3%. Residence time 17 ANSTO CaSO4/CaCO3 roast 2 hr roast at 900°C, 2 hr water leach at 50°C. No to minimal Li extraction. P80: 10µm, ~10% solids in water leach, 250-350kg/t NaCl. Salt roast using NaCl/ NaCl: CaCl2 ratio of 1:1, Li extraction:70-77%. Residence 18 ANSTO CaCl2 time 2 hr roast at 900°C, 2 hr water leach at 50°C. Rejection of major impurities (Al, Fe, Si) of >99% Sulfation bake (using P80: 10µm, ~50% solids in water leach, 250-450kg/t Na2SO4., 19 ANSTO Na2SO4) and downstream Li extraction:82%. Residence time 2 hr bake at 200°C, 2 hr validation testwork water leach at 50°C. Favorable Cs, Al and F extractions. Sulfuric acid leach and P80: 150µm, ~45% solids, 396kg/t H2SO4, Li extraction: 85%. 20 ANSTO downstream validation 24-hour residence time at 95oC. High Cs, Al and F testwork extractions. (Test PL19-18B)
The extent and findings of the testwork are discussed in the Falchani Lithium Test Work Summary Report S128-REP-PR-001 and ANSTO reports C1568, C1628, and C1630.
13.3 Metallurgical Testwork Review – Chloride Roast and Sulfate Bake Although the Chloride Roast and Sulfate Bake processes were not selected for further evaluation in the PEA due to less favourable operating costs (in the case of the Chloride Roast) and capital costs (in the case of the Sulfate Bake / Volatilisation), their testwork results are worthy of note. Typically, the extraction of lithium was lower for both options but the leach solution purity was superior in terms of rejecting deleterious elements (for example aluminium, silica and iron) and better extracting elements that could potentially be recovered as high-value by-products (for example, potassium, caesium and rubidium). A reasonable conclusion is that some downstream processes may either not be required or could be smaller if these process routes were selected. Further testwork is required to optimise lithium recovery (particularly at grind sizes coarser than the P80 of 10 microns used for the current tests), maximise acid recovery (in the
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Volatilisation step) and minimise or substitute costly reagents (in the Chloride Roast). Results are shown in Table 13-19 and Table 13-9 for the Sulfation Bake and Chloride Roast processes, respectively.
Table 13-8 Summary of Sulfation Bake & Volatilisation Results (Source: ANSTO) Test (#) 10 18 22 Bake P80 (um) 10 10 10 H2SO4 (kg/t) 684 700 786 Stage 1 Bake Temp. (oC) 200 200 200 Stage 1 Bake Time (h) 4 4 4
Volatilisation Volat Temp (oC) - 400 320 Volat Time (h) - 2 2 Pulverise Pre-Leach? (Y/N) Y Y N
Leach Approx Solids (wt%) 10 Leach Temp (oC) 50 Leach Time (h) 2 pH 0.59 2.43 1.70 Element PF Extract PF Extract PF Extract (mg/L) (%) (mg/L) (%) (mg/L) (%) Al 1496 31 1258 23 1282 22 Cs 26 68 30 62 36 80 Fe 331 88 176 41 253 54 K 485 27 769 31 762 34 Li 194 82 189 63 227 82 Na 149 17 332 18 474 29 Rb 51 51 61 49 73 60 S 14213 97 4020 88 5150 86 Si 21 4 7 6 5 5 F 195 56 55 36 31
Table 13-9 Summary of Chloride Roast Results Test (#) PCL01 PCL02
Chloride Roast
P80 (μm) 10 10
NaCl (kg/t) 250 350
CaCl2 (kg/t) 250 350 Roast Temp. (C) 900 900 Roast Time (h) 2 2
Leach Approx Solids (wt%) 10
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Test (#) PCL01 PCL02 Leach Temp (C) 50 Leach Time (h) 2 pH 6.41 6.70 Element PF Extract. PF Extract. (mg/L) (%) (mg/L) (%) Al 1 - 1 - Ca 2308 14 4118 23 Cs 39 98 35 98 Fe 1 - 1 - K 1723 83 1753 90 Li 182 70 170 77 Na 5530 56 7685 63 Rb 101 93 88 96 Si 1 - 1 -
13.4 Metallurgical Testwork Review – Acid Leach to Lithium Carbonate Precipitation The following sections discuss the testwork results that support the Acid Leach process selected for the PEA.
The testwork carried out by Tecmmine provided the following information:
• Leach Residence Time – a minimum of 12 hours is required at elevated free acidity, but may be extended to 24 hours at somewhat reduced acidity to improve extraction
• Temperature – already operating at maximum atmospheric temperature of 95oC, due to the altitude of the mine site
• Slurry Density – preliminary testing at 45 wt% to maximise lithium concentration in the PLS
• Particle Size – originally tested at P80 150 µm, with some minor improvement in extraction achieved
at reduced particle size of P80 10-35 µm; and
• Acid addition and consumption – addition of >500 kg/t is required to maintain sufficient free acidity to maximise the extraction of lithium with <24-hour residence time. The corresponding acid consumption is also elevated at >200 kg/t, with there being a significant correlation between the extraction of lithium and gangue dissolution.
The main objectives of the subsequent test work program by ANSTO were as follows:
• Provide further definition to the acid leaching of lithium-bearing tuff material and demonstrate whether acceptable lithium extraction can be achieved at reduced acid additions
• Demonstrate the impact of less aggressive leach conditions on gangue dissolution and the composition of the resultant PLS; and
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• Complete the process steps from acid leach through to lithium carbonate production to validate the process model and demonstrate the overall lithium recovery.
ANSTO carried out the following test work programme:
• A series of five diagnostic leach tests on lithium-bearing tuff material to determine the maximum
extraction of lithium at varying H2SO4 free acidities
• A series of batch leach tests on lithium-bearing tuff material under varying leach parameters
including free acidity (H2SO4), slurry density, residence time and particle size
• A single autoclave leach test on lithium-bearing tuff material with sulfuric acid
• A series of PLS recycle tests where the PLS is recycled after alum crystallisation at low temperature
• Complete multi-step processes from acid leach through to lithium carbonate production to validate the process model and provide information for the process design criteria (PDC) of the PEA study.
Leaching – Diagnostic Tests
Table 13-10 shows the testwork parameters and the results of the diagnostic leach tests. Lithium extractions of 88% were obtained for the four tests that had free acid concentrations greater than 100g/L. Free acidities greater than 200g/L did not yield higher lithium extractions but it can be observed from Figure 13-2 that the rate of lithium extraction is increased with higher free acid concentrations showing the potential for a trade- off between free acid concentration and residence time.
Table 13-10 Diagnostic Leach Parameters and Results (Source: ANSTO)
Test ID PL19-1 PL19-2 PL19-3 PL19-4 PL19-5
Free Acid H2SO4 (g/L) 100 200 250 300 400 Slurry Density (wt%) 2 2 2 2 2 P80 (µm) 30 30 30 30 30 Time (h) 24 24 24 24 24 Temp (°C) 95 95 95 95 95 Head Li (ppm) 3940 3940 3940 3940 3940 Residue Li (ppm) 700 538 559 535 536 Element Extraction (%) Al 34 40 41 39 43 B 12 25 20 11 22 Ca 84 84 83 81 83 Cs 84 85 85 83 85 F 69 75 68 67 65 Fe 88 85 90 92 92
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Test ID PL19-1 PL19-2 PL19-3 PL19-4 PL19-5 K 40 49 52 52 59 Li 84 88 88 88 88 Mg 73 87 75 87 85 Mn 98 99 99 99 99 Na 15 20 21 17 24 P 51 55 55 54 57 Rb 67 73 74 75 79
Figure 13-2 Lithium Concentration in PLS versus Time (h) - Diagnostic Leaches (Source: ANSTO)
Leaching – Batch Tests
With consideration given to the results of the diagnostic leach tests, a series of tank leach tests was undertaken with varying free acidities and Li-tuff feed particle size. The first three tests examined reduced (relative to the baseline target of 250-300 g/L) free acidities of ~75, 100 and 150 g/L at extended residence time of 48 hours and P80 150 µm. The next three tests were conducted at comparable free acidities but with reduced particle sizes of P80 53 and 75 µm.
The extraction results reflected an expected reduction in lithium extraction with reduced free acidity, achieving only 72% at 75 g/L H2SO4 and 78% at 100 g/L H2SO4, even after leaching for 48 hours. The reduced extraction of lithium correlated with reduced extractions of Cs, Rb and key gangue elements such as Al, K and F. As expected, the total acid addition and consumption was also reduced under these conditions. Leaching at 150 g/L was more favourable in that a final lithium extraction of 88% was achieved, however this required the full 48 h residence time employed.
Table 13-11 shows the test parameters and results. The extraction profiles for the first three tests are plotted and compared to a previous test at ~250 g/L in Figure 13-3, clearly showing the kinetic impact of increasing
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acid concentration on leaching of the lithium tuff. Figure 13-4 shows that lithium extraction increases with residence time, free acid concentration and decreasing particle size.
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Table 13-11 Batch Leach Parameters and Results (Source: ANSTO) Test (#) PL19-6 PL19-7 PL19-8 PL19-9 PL19-10 PL19-11 Baseline Test
P80 (µm) 150 150 150 53 75 53 150 Residence Time (h) 48 48 48 48 48 48 12 Slurry Density (wt%) 45 45 45 45 45 45 45 Temp. (oC) 95 95 95 95 95 95 95 Head Li (ppm) 3370 3370 3370 3825 3571 3825 3370 Residue Li (ppm) 1264 970 592 1000 1117 738 597 Target Free Acid (g/L) 75 100 150 100 100 150 250-300 Final Free Acid (g/L) 61 83 129 90 106 132 261 Acid Addn. (kg/t) 216 236 322 269 269 342 519 Acid Consump. (kg/t) 152 166 186 196 169 233 209 Mass Loss (%) 9 9 10 9 10 11 15 Extraction Extraction PLS Extraction PLS Extraction PLS Extraction PLS Extraction PLS Extraction Element PLS (mg/L) PLS (mg/L) (%) (%) (mg/L) (%) (mg/L) (%) (mg/L) (%) (mg/L) (%) (mg/L) (%) Al 41 18400 42 18300 49 21400 47 20300 41 22100 49 24100 43 23240 B 17 73 18 81 21 102 19 93 15 100 23 109 14 98 Ca 74 501 68 608 71 427 88 937 86 546 88 545 83 502 Cs 69 309 72 330 78 408 82 361 80 402 87 405 84 300 Fe 80 3210 83 3410 89 3845 85 3670 80 4130 88 4040 88 4110 K 41 7040 42 7760 51 9060 46 7730 41 8680 49 9770 48 9910 Li 72 1870 78 2060 88 2480 80 2100 77 2370 86 2420 87 2320 Mn 88 468 91 497 98 624 96 567 93 638 98 605 98 638 Na 8 1310 8 1440 13 2380 7 1470 6 1610 14 2800 9 2300 P 55 1380 53 1430 59 1540 56 1620 55 1740 60 1740 55 1700 Rb 59 538 63 581 72 745 68 655 62 739 73 769 71 738 S - 60600 - 68500 - 92000 - 73800 - 78600 - 95800 - 126300 F 47 7450 51 7960 58 9340 60 8510 37 9140 57 9130 59 7970
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Figure 13-3 Lithium Extraction At Various Free Acidities versus Time (h) - Diagnostic Leaches
Figure 13-4 Lithium Extraction at Various Free Acidities and P80 versus Time (h) - Diagnostic Leaches (Source: ANSTO)
Leaching – Autoclave Test
o All H2SO4 leach test work conducted to date had focused on an upper leach temperature of 95 C as an approximate temperature at which a high ionic strength PLS would boil at elevation. In order to assess whether there was a reason to examine leaching in mechanically sealed reactors (but not a high-pressure autoclave), a single autoclave test using sulfuric acid was carried out to test the impact of temperature.
The test parameters and results are summarised in Table 13-12.
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The extraction of lithium was 89% after 6 hours, with intermediate liquor assaying indicating the extraction was complete after only 2 hours, as shown in Figure 13-5. In comparison to a previous atmospheric leach test at 250 g/L H2SO4, the autoclave results show a clear kinetic effect due to the higher temperature, despite the lower free acidity. Approximately 10% of the lithium in the feed mineralised material remained unleachable, similar to previous tests.
Table 13-12 Autoclave Leach Test with H2SO4 (150 g/L) (Source: ANSTO)
Test ID PL19-13 P80 (µm) 150 Residence Time (h) 6 Slurry Density (wt%) 10 Temp. (oC) 150 Head Li (ppm) 3370 Residue Li (ppm) 579 Initial Free Acid (g/L) 150 Final Free Acid (g/L) 121 Acid Addn. (kg/t) 1205 Acid Consump. (kg/t) 268 Mass Loss (%) 10 Element Extraction (%) PLS (mg/L) Al 52 3660 B 21 18 Ca 87 215 Cr - 622 Cs 89 64 Fe 98 935 K 55 1660 Li 89 386 Mn 99 106 Mo - 531 Na 11 392 Ni - 2370 P 62 254 Rb 78 116 F 62 1260
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Figure 13-5 Comparison of Li Extraction in Autoclave and Atmospheric Leach (Source: ANSTO)
Leaching – Recycling PLS Test
The objective of recycling the PLS was to use the free acid it contained and thereby reduce the overall acid addition to the leach. Direct recycling of unused acidity in the PLS was not considered feasible due to the ready formation of alum from the PLS containing high sulfate and gangue element concentrations. Although recycling the PLS after alum crystallisation is a technically viable option, the crystallisation process requires the PLS temperature to be reduced from 95oC to 5oC which introduces a significant operating cost. For the PEA, it was decided not to pursue this route but to revisit it at a subsequent project development stage when additional work will inform the efficiency of the process, its likely cost, and the possible benefits arising from the recovery of high-value products such as caesium and rubidium from the alum crystals. Table 13-13 compares the compositions of the PLS feed and primary filtrate after crystallisation. Two PLS streams, one containing 142 g/L of free acid and the other 249 g/L, were tested.
Table 13-13 PLS Composition Before and After Alum Crystallisation Test (#) PL19-14 (150 g/L free acid) PL19-15 (300 g/L free acid) Alum Cryst. Alum Cryst. Primary Element PLS (mg/L) Primary Filtrate % Precip. PLS (mg/L) Filtrate % Precip. (mg/L) (mg/L) Al 22800 19600 20 31960 25200 26 B 90 97 - 132 147 - Ca 536 426 26 327 245 30 Cs 499 2 >99 464 <1 100 Fe 4110 4330 - 4340 4760 - K 9160 2960 70 13700 1050 93 Li 2530 2710 - 2670 2950 - Mn 637 676 - 652 726 - Na 1660 1800 - 5000 5820 -
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Test (#) PL19-14 (150 g/L free acid) PL19-15 (300 g/L free acid) P 1710 1840 - 2050 2220 - Rb 809 7 >99 989 <1 100 S 97200 90000 14 148200 134600 15 F 9010 9290 - 8740 9580 -
Multi-step Validation to Li2CO3 Production
The following test work was completed as part of the validation work:
o • Acid leach (24 h, 95 C, 45wt%, free acid of 150-200 g/L H2SO4)
• Alum Crystallisation (6oC)
• Pre-Neutralisation to pH 1
• Impurity Removal
• Ion exchange for fluoride removal (at pH 6)
• Neutralisation / softening (at pH 11); and
• Lithium carbonate precipitation.
13.4.2.5.1 Acid Leach
The sulfuric acid leach was completed at a target free acidity of 150-200 g/L. This was selected to demonstrate potential acid consumption savings with a slightly reduced lithium extraction. To produce sufficient liquor to carry through to lithium carbonate, duplicate leaches were conducted. The results are summarised in Table 13-14.
Table 13-14 Summary of Acid Leach Tests (Source: ANSTO) Test (#) PL19-18A PL19-18B P80 (µm) 150 150 Residence Time (h) 24 24 Slurry Density (wt%) 45 45 Temp. (oC) 95 95 Head Li (ppm) 3370 3370 Residue Li (ppm) 675 635 Final Free Acid (g/L) 209 201 Acid Addn. (kg/t) 386 396 Acid Consump. (kg/t) 160 178 Mass Loss (%) 11 11 Element Extraction (%) Al 38 41 As 27 26 B 21 21 Ca 83 81
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Test (#) PL19-18A PL19-18B Cs 79 82 Fe 86 87 K 40 43 Li 83 85 Mg 48 51 Mn 98 98 Na 11 12 Ni 12 13 P 51 52 Rb 67 69 Zn 91 91 F 41 42
13.4.2.5.2 Alum Crystallisation
The combined primary filtrate and first wash were cooled to facilitate precipitation of caesium, rubidium and potassium as alum. The PLS was cooled in stages from 70 C to 50, 20, 10 and 6 C. Negligible precipitation occurred between 70 and 10 C. In the case of test A, the PLS was cooled to 6 C overnight, whereas test B was cooled for 4 days at 6 C. The increased cooling time in test B resulted in a significant increase in precipitation of alum, as shown by the results in Table 13-15. The caesium precipitation increased from 40% to 92%, and the rubidium from 33% to 67%. However, the removal of caesium and rubidium was still incomplete, compared to the results obtained in the 2018 scoping test program of <1 mg/L Cs and Rb. This is attributed to the lower sulfur concentration in the more dilute PLS stream produced in this testwork. There were minimal lithium losses in Alum Crystallisation, with 0.1 and 0.2% lithium reporting to the alum product in tests A and B, respectively. It is noted that the Alum Crystallistation step is not included in the PEA flowsheet as it is an option to be evaluated in the future.
Table 13-15 Summary of Alum Precipitation Tests (Source: ANSTO) Test (#) PL19-18A-Alum PL19-18B-Alum Residence Time (h) 18 96 Temp. (C) 6 6 Dry Mass Recovered (g) 22.8 88.7 Feed PF Feed PF Element Precip (%) Precip (%) (mg/L) (mg/L) (mg/L) (mg/L) Al 2 13900 13400 10 14300 14060 B 1 61 64 5 67 61 Ca - 617 632 - 511 465 Cs 40 227 211 92 247 43 Fe 0.4 2740 2760 1 2760 2560 K 7 6040 6040 28 6350 4420 Li 0.1 1530 1680 0.2 1580 1590 Mg 1 116 123 1 123 123 Mn - 429 451 - 450 411
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Test (#) PL19-18A-Alum PL19-18B-Alum Na - 1260 1400 - 1420 2000 P 0.1 925 985 0.1 954 958 Rb 33 478 378 67 518 93 S 1 64300 63600 5 67200 76200 F 12 6010 5710 3 6020 6020
13.4.2.5.3 Pre-neutralisation
The primary filtrate from Alum Crystallisation was high in acidity (~200 g/L) and was neutralised to pH ~1 by addition of solid limestone. Due to the formation of gypsum there was some removal of water from the system and concentration of the liquor, by 5-10%, as shown by the results in Table 13-16. There were losses of lithium (5-9%) as well as potassium, iron and aluminium. The increase in magnesium concentration in the liquor was a result of ~1% Mg contamination in the limestone.
Table 13-16 Summary of Pre-neutralisation Tests (Source: ANSTO)
Test (#) PL19-18A-PN PL19-18B-PN
Residence Time (h) 4 4 Temp. (C) 30 30 Test Volume (L) 5.03 4.89
CaCO3 (g/L) 135 144 Dry Mass 1122 996 Recovered (g) Precip Feed PF Wash Precip Feed PF Wash Element (%) (mg/L) (mg/L) (mg/L) (%) (mg/L) (mg/L) (mg/L)
Al 8 14500 15100 11500 18 14300 15100 1260 B - 59 64 45 - 66 69 27 Ca - 512 536 532 - 497 558 430 Cs 2 134 127 119 10 51 55 23 Fe 10 2460 2760 2000 13 2790 3010 619 K 9 5260 5570 4170 7 4510 4720 1930 Li 5 1510 1650 1190 9 1650 1790 684 Mg - 114 654 512 - 120 629 371 Mn - 373 437 394 - 435 449 211 Na 6 1670 1360 998 6 1350 1360 582 P 8 952 981 711 20 972 1070 1 Rb 9 291 282 255 2 126 137 55 S 46 77800 38800 35300 51 75600 40400 5730 F 2 5780 6440 4780 23 8960 5670 900
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13.4.2.5.4 Impurity Removal (IR1 and IR3)
Intermediate Evaporation - Prior to proceeding to impurity removal, an additional evaporation step was incorporated in to increase the lithium tenor to ~3 g/L. Both the 18A and 18B test liquors were evaporated and combined, with no lithium losses. The resulting liquor became the feed liquor to Impurity Removal 1. Some further alum precipitation did occur in this stage.
The first stage of Impurity Removal (IR1) required adjustment of the pH from 1 to a target of pH 4 by semi-continuous lime addition in a batch continuous test. The results are summarised in Table 13-17. The precipitation results show a very large increase in lithium co-precipitating with the waste residue, at 36%. This was much higher than previously observed losses of 5% (Test PL-IR1, 2018) and ANSTO surmised that it may be associated with poor pH control.
Table 13-17 Summary of Impurity Removal 1 (IR1) Test Results (Source: ANSTO) Test (#) PL19-18-IR1 Temp. (C) 30 Duration (h) 4 Neutralisation Type Batch Continuous Lime Slurry (wt%) 30 Lime Addition (g/L) 106 Lime Addition (kg/kg Li in PLS) 21 Inital pH 0.5 Final pH 4 Stream Feed PF Precipitation Element (mg/L) (mg/L) (%) Al 34387 10808 67 As 32 1 94 B 194 154 23 Ca 469 735 - Cr 87 5 98 Cs 30 23 56 Fe 8365 3853 59 K 7192 5646 28 Li 4975 3904 36 Mg 2108 2076 9 Mn 1510 1364 9 Na 3986 3494 18 Ni 46 43 17 P 2632 102 89 Rb 77 61 52 S 91747 32682 56 Zn 154 153 12 F 17600 10400 31
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The IR1 primary filtrate was subsequently taken to the pH target of 12 in Impurity Removal 3 (skipping the intermediate IR2 stage to pH 7 carried out in 2018) by semi-continuous lime addition in a batch continuous test. Once again, the lithium co-precipitating with the waste product was much higher than previously observed, with a 27% lithium loss. The removal of key impurities was successful with Fe, Mg, Mn and P all present at <1 mg/L in the primary filtrate, and only minor concentrations of Al and B. The residual Cs and Rb is not of concern as it is not expected to report to the lithium carbonate at these concentrations. The residual flouride of 23 mg/L still requires removal by ion-exchange.
Table 13-18 Summary of Impurity Removal 3 (IR3) Test Results (Source: ANSTO) Test (#) PL19-18-IR3 Temp. (C) 30 Duration (h) 2 Neutralisation Type Batch Continuous Lime Slurry (wt%) 30 Lime Addition (g/L) 72 Lime Addition (kg/kg Li in PLS) 18 Inital pH 4 Final pH 12 Stream Feed PF Precipitation Element (mg/L) (mg/L) (%) Al 10808 4 98 As 1 1 - B 154 4 97 Ca 735 435 - Cr 5 1 100 Cs 23 20 42 Fe 3853 1 100 K 5646 4617 5 Li 3904 2694 27 Mg 2076 1 100 Mn 1364 1 100 Na 3494 2774 7 Ni 43 1 94 P 102 1 97 Rb 61 53 3 S 32682 11440 50 Zn 153 1 98 F 10400 23 >99
It is recommended that further testwork be carried out to confirm the preferred pH targets and to validate the superior results achieved in the 2018 testwork.
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13.4.2.5.5 Flouride Ion Exchange (FIX)
Following evaporation, the fluoride concentration in the liquor was 44 mg/L and the lithium concentration increased from 2694 mg/L to 4280 mg/l. Fluoride was removed from the liquor using a La-loaded amino phosphonic resin (TP-260). The resin was also pre-conditioned with LiOH prior to contact. The batch contact was performed at 30 oC for 22 hours at pH 6. A relatively large ratio of resin to liquor was employed (1:3). The results are shown in Table 14. 95% of the fluoride was rejected.
Table 13-19 Summary of Flouride Ion-Exchange Test Results (Source: ANSTO) Test (#) PL19-18-FIX Resin La-TP260 Contact Ratio (L/Lwsr) 3 Temp (C) 30 Duration (h) 22 pH 6 Stream Feed Barren Evap Recovered Element (mg/L) (mg/L) (mg/L) (%) Al 10 1 1 - As 1 1 1 - B 3 2 2 89 Ca 697 288 346 48 Cr 1 1 1 - Cs 29 22 32 92 Cu 1 1 1 - Fe 3 1 1 - K 7380 5550 6660 88 Li 4280 3360 3890 92 Mg 3 1 1 - Mn 2 1 1 - Mo 1 1 1 - Na 5280 3710 4340 82 Ni 1 1 1 - P 1 1 2 - Pb 1 1 1 - Rb 85 62 82 85 S 18280 13140 16210 84 Si 7 6 6 - Sr 3 2 2 - U 1 1 1 - Zn 4 1 1 - F 44 1.4 2.0 5
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13.4.2.5.6 Softening
Softening of the FIX barren liquor using sodium carbonate is required to remove the majority of calcium prior to lithium carbonate precipitation as calcium readily precipitates in that step. This conventional approach precipitated 86% of the calcium with 46 mg/L remaining in solution prior to lithium carbonate precipitation. There was ~2% Li precipitated with the CaCO3, however, this could be recovered through recycling upstream to either the Pre-Neutralisation or IR1 steps where limestone is proposed to be used.
13.4.2.5.7 Lithium Carbonate Precipitation
The primary filtrate from the Softening test was added at temperature over two hours to a solution of sodium carbonate (Na2CO3) heated to 95°C. The resultant slurry was filtered at temperature and re-pulp washed with saturated lithium carbonate solution, followed by a final hot water wash. A summary of these results is presented in Table 13-20. The major point to note from these results is the low lithium feed concentration and the impact that this has on the quality of the resultant lithium carbonate. Despite the low lithium concentration the purity obtained was still 99.17%.However, this was less than the target specification of 99.5%.The major issue with the low lithium concentration in the feed liquor is that there is less lithium that ultimately reports to the lithium carbonate precipitate. Where there are impurities which completely precipitate, such as calcium, magnesium etc, the final concentration of these elements is always elevated due to the reduced Li : impurity ratio in the feed liquor.The major impurities were calcium (~2000 ppm), potassium (~200 ppm), sodium (~1000 ppm) and sulphur (~400 ppm). Some fluoride contamination due to the Na2CO3 reagent employed was also noted. The original primary lithium carbonate from the 2018 scoping test program, which was produced from the same multi-step process as demonstrated in this testwork campaign, is shown for comparison in Table 13-21, along with the product from a concurrent program employing an up-front sulfation bake/volatilisation step.
Table 13-20 Lithium Carbonate Precipitation Results
Concentration, mg/L ppm Primary Na2CO3 Feed Li2CO3 Filtrate Li2CO3 (%) >99.5 Al 13 1 2 21 As 1 1 1 21 B 1 2 2 21 Ca 13 46 9 2053 Cr 1 1 1 21 Cs 1 29 23 2 Cu 1 1 1 21 Fe 1 1 1 45
3 Bold figures are “less than” values.
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Concentration, mg/L ppm Primary Na2CO3 Feed Li2CO3 Filtrate K 8 6330 5500 207 Li 1 3590 2250 18.644 Mg 1 1 1 53 Mn 1 1 1 21 Mo 1 1 1 21 Na 117800 31430 57180 1038 Ni 1 1 1 21 P 1 4 2 469 Pb 1 1 1 21 Rb 1 74 59 2 S 1 15490 12490 390 SO4 1170 Si 5 9 19 224 Sr 1 2 1 46 U 1 1 1 2 Zn 1 1 1 21 F 29 4.9 9.8 172
In the 2018 campaign, the lithium feed concentration was 6.3 g/L and the product purity was >99.7% lithium carbonate, which exceeded the purity of the target specification (also presented in Table 13-21). Similarly, the primary lithium carbonate produced using the up-front sulfation bake/volatilisation step produced lithium carbonate with a purity better than the specification (99.82%). However, the overall purity (% lithium carbonate) is just one metric, and the concentrations of the various impurities are also extremely important. In the case of the primary lithium carbonate produced in 2018 (upfront acid leach), only the sulfur was out of specification. In the case of the primary lithium carbonate produced with an up-front bake/volatilisation, only the sodium specification was exceeded. In both cases, these are exceptional results as the feed liquors contain significant concentrations of sodium/potassium and sulfate. ANSTO state that in their experience, refining of these primary lithium carbonate materials via bicarbonation, ion exchange and re-crystallisation, would comfortably reduce the concentrations of sodium, sulphur etc to well below those in the target specification.
Table 13-21 Lithium Carbonate Precipitation – Comparison of 2018 Acid Leach LC, Acid Bake/Volatilisation LC and Commercial Specification (Source: ANSTO) ppm ppm ppm Bake/ Acid Leach (2018) Commercial Volatilisation (2019) Li2CO3 (%) 99.74 99.82 99.50
4 Calculated weight percent based on purity.
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ppm ppm ppm Bake/ Acid Leach (2018) Commercial Volatilisation (2019) Al 9.9 2.55 10 As 2.5 2.5 B 17 2.5 Ca 293 31 400 Cr 2.5 2.5 Cs 2.5 0.3 Cu 2.5 2.5 5 Fe 2.5 4.0 5 K 248 81 Mg 2.5 39 Mn 2.5 2.5 Mo 2.5 2.5 Na 467 594 500 Ni 2.5 2.5 6 P 16 29 Pb 2.5 2.5 Rb 3.0 0.3 S 429 215 SO4 1283 645 1000 Si 25 13 Sr 4.3 2.5 U 2.5 0.3 Zn 5.0 2.5 5 F 6.2 7.5
The objective of the multi-step validation tests was to examine the lithium losses through the proposed flowsheet and compare the PEA-selected sulfuric acid leach process with the sulfation bake/volatilisation flowsheet being studied in a concurrent testwork program. However, the issues encountered in this program with low lithium concentrations to the primary lithium carbonate step and the effect on the purity of the resultant lithium carbonate program were not considered representative of what would be expected from the sulfuric acid leach flowsheet based on previous work for the Project. A decision was made to compare the original multi-step test work results from the 2018 testwork programme. The individual stage losses and calculated overall recovery of lithium to primary lithium carbonate are presented in Table 13-22. The lithium
5 Bold figures are “less than” values.
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extraction reported from acid leach tests in the scoping program in 2018 was 87%, but up to 90% can be achieved with finer grinding of the ore. The batch leach test data presented in section 13.4.2.2 demonstrated the relationship between free acidity in the leach and the extraction of lithium and other key elements. With over half of the lithium loss in the overall process coming from the up-front leach step, obtaining maximum extraction at this step is critical. However, this will come at the cost of increased acid consumption. Recycling of the solids from multiple stages (IR2 and Softening) and various liquor streams (FIX and lithium carbonate barrens) effectively mitigates any lithium losses from these stages. Negligible losses of lithium are expected during alum crystallisation (a potential future processing step to separate by-products of value), IR3 and glauber salt crystallisation (not examined in this test program) is an option. Overall recovery of ~63% of lithium to the primary lithium carbonate was achieved. Approximately 27% of lithium remained soluble in the lithium carbonate precipitation barrens and therefore did not report to the primary lithium carbonate precipitate. However, this is a characteristic of the lithium carbonate precipitation step and should not be considered a loss of lithium. Recycling this stream back to the process is essential to minimise losses of lithium. Based on the optimal extraction of lithium for the sulfuric acid leach test work and ANSTO’s experience, expected stage recoveries and an overall recovery of lithium to Primary lithium carbonate are outlined in Table 13-22.
Table 13-22 Summary of Multi-Step Validation Overall Li Recovery (Source: ANSTO)
2018 Scoping Tests Expected
Stage Overall Stage Overall Stage Loss Recovery Loss Recovery
Leach 13 87 90
Sub-total 13 87 10 90 Alum Xtlsn <0.5 99.5 <0.5 99.5 Pre-Neutralisation 5.0 95.0 5.0 95.0 Impurity Removal 1 5.0 95.0 5.0 95.0 Impurity Removal 2 19*6 100* 10* 100* Impurity Removal 3 <0.1 99.9 <0.1 99.9 Softening <0.2* 99.8* <0.2* 99.8* Evaporation 0* 100 0* 100 Fluoride IX 6* 94* 0* 100 Glauber Salt Cryst. <0.5 99.5 <0.5 99.5 Sub-total 10 90 10 90 Lithium Carbonate Precip. Sub-total 63 63 Lithium Carbonate
Recycle 27 27 Sub-total Total 78 81
6 Recycle streams and no lithium loss expected
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From the overall recovery range of 78% to 81%, DRA selected 80% as the overall recovery for the process design criteria.
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14 MINERAL RESOURCE ESTIMATES
14.1 Drillhole Database The drillhole database described in Section 10 was the primary source of data for the Mineral Resource estimates.
14.2 Geological Modelling Methodology
The local geology of the Project has been described in Section 7.3.
The subhorizontal lithium mineralization occurs within the Lithium-rich Tuff, which varies in thickness from 50m to 140m, and the Upper Breccia and Lower Breccia, which occur in the immediate hangingwall and footwall of the Lithium-rich Tuff, respectively. The breccias and tuff are found within a sequence of rhyolites. The rhyolites above the tuff and breccia units are described as the Upper Rhyolites, and the rhyolites below the tuff and breccia are described as the Lower Rhyolites.
Table 14-1 contains the main lithologies, their sub-units, and the codes assigned to them for geological modelling and, where applicable, for the Mineral Resource estimates.
Table 14-1 Lithological units and Mineralized zones used in geological model and Mineral Resources Lithological units Description Sub-units Zone code Non-mineralized unit overlying the Upper Upper Rhyolite Breccia - not included in Mineral Resource n/a URH estimate Mineralized zone - included in Mineral Upper Breccia n/a UBX Resource estimates Upper LRT1 Mineralized zone - included in Mineral Lithium-rich Tuff Resource estimates. Subdivided into three Middle LRT2 sub-units. Lower LRT3 Mineralized zone - included in Mineral Lower Breccia n/a LBX Resource estimates Non-mineralized unit below the Lower Breccia Lower Rhyolite n/a LRH - not included in Mineral Resource estimate The Upper Rhyolites, Upper and Lower Breccia and Lithium-rich Tuff are readily identifiable in core. As shown in Table 14-1 the Lithium-rich Tuff has been sub-divided into the LRT1, LRT2 and LRT3. This sub- division is based on the patterns of lithium, cesium and rubidium concentrations visible in the analytical results, and these sub-divisions are not readily identifiable in core.
Figure 14-1 shows two typical geological logs from the Falchani Project. The lithological control of the lithium abundance, as well as the cesium, rubidium and other trace elements, is noticeable.
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The mineralized zones are interpreted to form a broad basin, dipping gently to the north-north east. The zones are thinnest on the edge of the basin and are thicker towards the centre. Three north-south striking faults have been interpreted, with throws of between 10m and 50m. The position and orientation of one of the faults is informed by the north-south oriented valley, which is in the central part of the Falchani Project. The position and throw of the other two faults are informed by drilling, and it is interpreted that they have the same north-south orientation.
A structural plan of the base of the LRT1 is shown in Figure 14-2.
The QP considers the structural interpretation to be a reasonable basis on which to build the Mineral Resource estimates. The occurrence of other structures, particularly east-west or near east-west structures cannot be ruled out. The relative confidence in the structural interpretation has been considered in the application of geological losses (Section 14.3.7) and the Mineral Resource classification (Section 14.3.10).
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Figure 14-1 Geological and analytical log for PCHAC04-TV (left) and Geological and analytical log for PCHAC09-TV (right)
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Figure 14-2 Structural plan for the base of LRT1
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The Mineral Corporation imported the drillhole data contained in Plateau Energy Metals Microsoft Access database into Datamine Studio™. Modelling codes (Table 14-1) were assigned to each borehole, on the basis of the lithological description provided by Plateau Energy Metals, and the analytical patterns described above.
The upper and lower bounding surface for each of the zones identified were constructed utilizing Datamine Strat3D™ modelling software, applying Inverse Distance (ID) interpolation of the zone thickness.
For those boreholes where analytical results were not yet available, only the Upper and Lower Breccia intersections (and hence the thickness of the Lithium-rich Tuff) was utilized for modelling, and the position of the sub-units of the Lithium-rich Tuff was estimated from the thickness of these units in nearby boreholes.
The result of the geological modelling is shown in cross section in Figure 14-4 and Figure 14-5.
The QP is satisfied that the geological model is a robust representation of the volumes and geometry of the mineralized zones. As is common when estimating zone thicknesses into blocks, there are occasions where the contact between two zones in a borehole is not absolutely honored in the geological model; however, these instances are not considered to materially influence the volumetric estimates.
The surface topography used to constrain the Mineral Resource model was generated using Google Earth™ by Plateau Energy Metals. A mesh of coordinated elevation points was digitized, and the points exported to Datamine Studio. Although a high-resolution topography should be sourced for detailed mine planning in the future, the QP is satisfied that the topographic surface generated by Plateau Energy Metals is sufficiently detailed to allow robust estimates of Mineral Resource tonnages.
An isometric view of the geological model is provided in Figure 14-3.
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Figure 14-3 Isometric view of the geological model (not to scale)
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Figure 14-4 South to North cross section (A’-A) showing geological model and drill data
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Figure 14-5 South to North cross section (B’-B) showing geological model and drill data
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14.3 Grade Estimation Methodology
Downhole, length-weighted composites of 2.5m in length were generated within each of the mineralized zones. The dip of the mineralized zones is relatively shallow, and the drillholes are drilled in a variety of different directions. The intersection angle between the drillhole and mineralized zone is therefore variable. As a result of the shallow dip, and variable intersection angle, the 2.5m downhole composites are considered appropriate, and the risk of introducing a bias to the Mineral Resource tonnages by using high-angle intersections is negligible.
The nature of the lithium grade distribution was analyzed through histograms. The histograms for all of the mineralized zones are shown in Figure 14-6.
It can be noted that the lithium grade distribution in the majority of the zones approximate a normal distribution, and that no outliers or anomalous intersections are shown on the histograms. As a result, no cutting or capping of the 2.5m bench composites was deemed necessary. Furthermore, as a result of the normal distribution, it was appropriate to undertake geostatistical analysis in normal space (as described in Section 14.3.3).
Variography was undertaken on the 2.5m composites, in normal space. As the composites were of equal length, it was appropriate to utilize the lithium grade directly in the variography, as opposed to utilizing an accumulation of lithium over a length of the sample.
Omni-directional variograms were investigated, within 5m layers of each mineralized zone, with the average variogram for all the layers being modelled. Well-structured variograms, with a horizontal range of between 250m and 500m and a nugget / sill ratio of approximately 30% were obtained for the zones.
The modelled variograms are provided in Figure 14-7 and summarized in Table 14-2. It can be noted that second-order stationarity is achieved for these variograms, and hence it was considered appropriate to utilize Ordinary Kriging for the estimation of grade.
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Figure 14-6 Histograms for mineralized zones
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Figure 14-7 Variograms for mineralized zones
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Table 14-2 Variogram Modelling Results
No. Zone Nugget X and Y Range (m) Sill
1 UBX 628 571 240 1 010 421
2 LRT1 26 933 700 269 334
3 LRT2 30 000 250 90 000
4 LRT3 220 645 500 428 587
5 LBX 104 326 370 1 043 264
Ordinary Kriging was undertaken for lithium grades, into a block model of 25m X 25m X 5m (X:Y:Z).
The search criteria in Table 14-3 were applied for the estimates. A 3-stage search strategy was applied. The first search range approximated the range of the variogram in X and Y. If insufficient samples were found in this search, a second and / or third search was employed. The range in Z was kept relatively short, in order to honour the grade zonation identified in the boreholes.
Table 14-3 Search criteria (applied to all mineralized zones) X and Y Range Z Range Min Max Search Angle Search Angle Search (m) (m) Samples Samples 1 2 1st Search 250 20 5 20 Dip Direction Dip 2nd 500 40 5 20 Dip Direction Dip Search 3rd 1250 100 5 20 Dip Direction Dip Search
The edges of the Mineral Resource model have been constrained using the following criteria (Figure 14-10):
• A maximum horizontal extrapolation distance of 100m from the last borehole intersection;
• The location where the surface topography cuts the mineralized zones;
• An unmineralized intrusion has been encountered in the drilling on Platform 19 and Platform 19A. This intrusion defines the interpreted southern extent of the Mineral Resources;
• A thin (5cm) intersection of tuff was encountered in Platform 5 and no tuff was encountered in Platform 7. The thickness estimates for the mineralized zones take into account this apparent thinning to the east, which is interpreted to represent the approaching edge of the crater lake. The eastern extent of the Mineral Resources has been constrained to where the thickness of the LRT1 is approximately 5m, to take into account a practical mining limit; and
• A control drillhole was created to the north of PCHAC 14, in order to constrain the northern flank and honor the geological interpretation that the zones thin towards the north.
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The Mineral Resources have been extended across the valley between the Falchani East and Falchani West. Evidence for the continuity of the mineralization is provided by the outcrop of the Upper Breccia on the east- and west- facing slopes of the valley. Platform 25 and Platform 10 were drilled on the edge of the valley and provide further evidence of the continuity of mineralization in the valley area.
The continuity of the lithology and grade within the Mineral Resource area constrained by the features described in Section 14.3.6 is noteworthy. Nonetheless, the QP has considered it appropriate to apply geological losses to the tonnages within the Mineral Resource constraints. In general, a 5% geological loss has been applied, to take into account potential losses due to faulting. Two areas have been identified where the risk to the tonnage estimates is considered higher than normal, due to a combination of limited drilling data and the close proximity of the mineralized zones to the surface topography. In these two areas, which include the valley area between Falchani East and Falchani West, a geological loss of 10% has been applied.
The average volume-weighted geological loss applied in the Mineral Resource estimate is 5.8%.
A uniform density of 2.4t/m3 has been applied to derive the tonnage estimates from the modelled volume. The density is based on 8 field samples collected by Plateau Energy Metals, which were analyzed by means of a pycnometer, at the CERTIMIN laboratory in Lima.
The density database which supports the Mineral Resource estimates is not extensive. It should be noted however, that uniform density estimates have typically been employed for Mineral Resource estimates in other Projects on the Macusani Plateau, and dataset is considered sufficient for the Indicated Mineral Resource category. Additional density measurements would improve the confidence in the tonnage estimates and would be required for Measured Mineral Resources.
Two types of cut-offs have been applied.
The application of a lithological cut-off determined the top of the UBX, and to the base of the LBX. This is a natural lithological boundary, which corresponds with a lithium grade of around 0.1% Li2O (460ppm Li), and this boundary was applied during the definition of the geological wireframes.
The lithium grade within the five mineralized zones constrained by the top of the UBX and the base of the
LBX is consistently and significantly above 0.1% Li2O. A block cut-off grade of 1000 ppm Li was applied.
Mineral Resource classification was informed by geostatistical confidence, as expressed in the block Kriging Efficiency (KE), after giving consideration to the confidence in the supporting database.
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KE is defined as follows:
Block Variance − Kriging Variance KE = Block Variance
Using the criteria for utilizing KE for Mineral Resource classification provided by Mwasinga (2001), blocks with:
• KE < 0.3 can be classified as Inferred;
• KE >0.3 but <0.5 can be classified as Indicated and;
• KE > 0.5 can be classified as Measured.
KE plots for each zone were used as a guideline and a final set of Mineral Resource classification polygons was determined by the QP, which took the following into account:
• The need for practical and contiguous polygons for planning;
• The proximity to surface geological mapping.
The resulting Mineral Resource classification is shown in Figure 14-10.
14.4 Mineral Resource Statement
The Base Case considered the entire Mineral Resource estimate for the Falchani and Ocacasa 4 concessions, as described in the 2019 Technical Report, and the Mineral Resource estimates have not been updated or changed for the PEA. As there have been changes to the mineral tenure circumstances, particularly with respect to Ocacasa 4 and as described in Section 4.2, the split between Falchani and Ocacasa 4 is provided for additional clarity. These mineral tenure circumstances have been considered and on the basis of the information provided to the QP by Plateau Energy Metals, the QP considers it reasonable to continue to report these estimates as Mineral Resources.
The Mineral Resource estimates are shown in Table 14-4 (effective 1 March, 2019.
Table 14-4 Base Case Falchani Lithium Project Resources
Metric Tonnes Li Li2O Li2CO3 Contained Li2CO3 License Category Zone (Mt) (ppm) (%) (%) (Mt) UBX 5.38 1 472 0.32 0.78 0.04
LRT1 6.15 3 718 0.80 1.98 0.12
Falchani Indicated LRT2 16.66 3 321 0.72 1.77 0.29
LRT3 11.03 3 696 0.80 1.97 0.22
LBX 10.16 1 901 0.41 1.01 0.10
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Metric Tonnes Li Li2O Li2CO3 Contained Li2CO3 License Category Zone (Mt) (ppm) (%) (%) (Mt) Total 49.39 2 961 0.64 1.58 0.78
UBX 8.44 1 616 0.35 0.86 0.07
LRT1 13.84 3 290 0.71 1.75 0.24
LRT2 28.68 2 994 0.64 1.59 0.46 Inferred LRT3 16.13 3 292 0.71 1.75 0.28
LBX 57.39 2 250 0.48 1.20 0.69
Total 124.48 2 629 0.57 1.40 1.74
UBX 0.85 1 750 0.38 0.93 0.01
LRT1 1.32 3 668 0.79 1.95 0.03
LRT2 5.37 3 232 0.70 1.72 0.09 Indicated LRT3 2.00 3 658 0.79 1.95 0.04
LBX 2.00 1 379 0.30 0.73 0.01
Total 11.53 2 926 0.63 1.56 0.18 Ocacasa 4 UBX 5.33 1 911 0.41 1.02 0.05
LRT1 10.17 3 422 0.74 1.82 0.19
LRT2 33.62 3 292 0.71 1.75 0.59 Inferred LRT3 21.11 3 349 0.72 1.78 0.38
LBX 65.36 2 297 0.49 1.22 0.80
Total 135.59 2 777 0.60 1.48 2.00 Minor discrepancies due to rounding may occur. Li (ppm) grade cut-off of 1000 Li (ppm) was applied Tonnes are Metric
Li Conversion Factors as follows: Li:Li2O=2.153; Li:Li2CO3=5.323; Li2O:Li2CO3=2.473 Density =2.4t/m3
The Alternative Case considers a sub-set of the Mineral Resource estimate described in the 2019 Technical Report, that being the Mineral Resources contained within the Falchani concession only. The Mineral Resource estimates have not been updated to inform the PEA, however, owing to the current mineral tenure circumstances as described in Section 4.2, only the Falchani Concession Mineral Resource estimate has been considered for the Alternative Case. On the basis of the information provided to the QP by Plateau Energy Metals, the QP considers it reasonable to continue to report the estimates for Falchani and Ocacasa 4 concessions as Mineral Resources.
Table 14-5 Alternative Case Falchani Lithium Project Resources (effective 1 March, 2019) Contained Tonnes Grade Li2O Li2CO3 License Classification Zone Li2CO3 (Mt) (Li ppm) (%) (%) (Mt) Falchani Indicated UBX 5.38 1,472 0.32 0.78 0.04
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Contained Tonnes Grade Li2O Li2CO3 License Classification Zone Li2CO3 (Mt) (Li ppm) (%) (%) (Mt) LRT1 6.15 3,718 0.80 1.98 0.12
LRT2 16.66 3,321 0.72 1.77 0.29
LRT3 11.03 3,696 0.80 1.97 0.22
LBX 10.16 1,901 0.41 1.01 0.10
TOTAL 49.39 2,961 0.64 1.57 0.78
Inferred UBX 8.44 1,515 0.35 0.86 0.07
LRT1 13.84 3,290 0.71 1.75 0.24
LRT2 28.68 2,994 0.64 1.59 0.46
LRT3 16.13 3,292 0.71 1.75 0.28
LBX 57.39 2,250 0.48 1.20 0.69
TOTAL 124.48 2,629 0.57 1.40 1.74 Minor discrepancies due to rounding may occur. Li (ppm) grade cut-off of 1000 Li (ppm) was applied Tonnes are Metric
Li Conversion Factors as follows: Li:Li2O=2.153; Li:Li2CO3=5.323; Li2O:Li2CO3=2.473 Density =2.4t/m3
14.5 Reconciliation The prior Mineral Resource estimate (September 2018) for the Falchani Project (The Mineral Corporation, 2018) is provided in Table 14-6.
Table 14-6 Mineral Resource estimates for the Falchani Project (September 2018) Metric tonnes Contained Zone Density Li (ppm) Li2O (%) Li2CO3 (%) (Mt) Li2CO3 (Mt) UBX 5.77 2.4 1 259 0.27 0.67 0.04
LRT1 6.89 2.4 3 667 0.79 1.95 0.13
Indicated LRT2 19.75 2.4 3 236 0.70 1.72 0.34
LRT3 8.18 2.4 3 611 0.78 1.92 0.16
Total 40.58 2.4 3 104 0.67 1.65 0.67
UBX 9.44 2.4 1 589 0.34 0.85 0.08
LRT1 14.17 2.4 3 681 0.79 1.96 0.28
LRT2 43.18 2.4 3 254 0.70 1.73 0.75 Inferred LRT3 20.45 2.4 3 551 0.76 1.89 0.39
LBX 34.46 2.4 1 486 0.32 0.79 0.27
Total 121.70 2.4 2 724 0.59 1.45 1.76 Minor discrepancies due to rounding may occur.
A lithological boundary cut-off was applied, at or around 0.1% Li2O Tonnes are Metric
Li Conversion Factors as follows: Li:Li2O=2.153; Li:Li2CO3=5.323; Li2O:Li2CO3=2.473
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Figure 14-8 South to North lithium grade cross section (A’ to A in Figure 24)
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Figure 14-9 South to North lithium grade cross section (B’ to B in Figure 24)
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Figure 14-10 Mineral Resource classification plan
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15 MINERAL RESERVE ESTIMATES At the present level of development there are no Mineral Reserves quoted for the Falchani Project.
Inferred Mineral Resources were used in the LoM plan.
Inferred Mineral Resources represent approximately 61% to 70% of the currently defined Mineral Resources. Mineral Resources that are not Mineral Reserves have not demonstrated economic viability. Mineral Reserves can only be estimated as a result of an economic evaluation as part of a preliminary feasibility study or feasibility study of a project. Accordingly, at the present level of development, there are no Mineral Reserves quoted at the Falchani Project.
A preliminary open pit Whittle optimisation and conceptual production schedules to support this PEA Study was completed in order to assess the potential of the Falchani Lithium Project.
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16 BASE CASE MINING METHODS
16.1 Introduction This report comprises a technical study assessing the proposed mining operations which contribute towards the findings of an independent preliminary economic assessment (PEA) of the Falchani Lithium Project in Puno, south-eastern Peru. DRA Global Mining (DRAM) prepared this report in collaboration with DRA Pacific (DRAP), who are acting as lead author of this PEA. Previous PEA contributions from Wardell Armstrong, The Mineral Corporation (TMC), and other consultants, the Australian Nuclear Science and Technology Organisation (ANSTO) have been taken into consideration in the preparation of this section of the report.
The estimate of Mineral Resources was carried out independently of work undertaken within this report by The Mineral Corporation and comprises of an updated Mineral Resource estimate (18 April 2019) under NI 43-101 guidelines, (Report No: C-MYI-EXP-1727-1134).
The economic analysis provides only a preliminary overview of the Project economics based on broad or factored assumptions. As per CIM guidelines, Mineral Reserves can only be declared with a preliminary feasibility (PFS) level or higher study.
The Mineral Resources used in the life of mine (LoM) plan and economic analysis includes Inferred classified material. Inferred Mineral Resources are estimated based on limited geological or sampling data and cannot be converted into Mineral Reserves.
The preliminary economic assessment is preliminary in nature, includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves and there is no certainty that the preliminary economic assessment will be realized.
16.2 Units of Measurement Unless otherwise stated, all units used in this report are metric units of measure. The currency used throughput this report is in U.S. dollars unless otherwise stated. Lithium values are reported in percentages (%) or (ppm) unless other units are specifically stated. Grades are also expressed as lithium compounds in percentages or ppm, lithium oxide (Li2O) or lithium carbonate (Li2CO3) content.
Common comparisons for the lithium market use lithium carbonate equivalent (LCE), which is an industry standard terminology equivalent to lithium carbonate (Li2CO3). Use of LCE is to provide data comparable to industry reports and is the total equivalent amount of lithium converted to lithium carbonate using conversions factors detailed below (Table 16-1). The use of LCE assumes 100% recovery and no processing losses in the conversion.
Lithium industrial reporting is normally presented in tonnes of LCE or Li.
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Table 16-1 Conversion Factors for Lithium Compounds and Minerals Convert From Convert to Li Convert to Li2O Convert to Li2CO3
Lithium Li 1 2.153 5.323
Lithium Oxide Li2O 0.464 1 2.473
Lithium Carbonate Li2CO3 0.188 0.404 1
Note: Lithium Carbonate (Li2CO3) = LCE (Lithium Carbonate Equivalent)
16.3 Sources of Information
This report is based on information provided by Plateau Energy Metals Inc. (Plateau) who, through its subsidiary Macusani Yellowcake S.A.C., owns a 100% interest in the Falchani deposit, located on the Macusani Plateau, Puno, Southern Peru. Refer to Section 4.2.6 in this technical report for important information regarding the concessions. Other information sources are quoted where appropriate.
The Mineral Corporation has estimated Mineral Resources, information is available on SEDAR, and the current Mineral Resource is detailed in the 2019 Technical Report.
Draft PEA mining study report by Wardell Armstrong. WAI completed a draft PEA report on the lithium deposit for Plateau. DRA worked mainly on the optimisation and scheduling of the deposit with some new information and alternative approaches. The WAI work was reviewed by DRA and many instances that work was presented in this document as there was no need for alteration of that information and fulfilled the PEA requirements for this project.
Mineral processing recovery and operating costs have been reliant on work completed by both ANSTO (mineralogy/testwork) and DRA Global (infrastructure).
16.4 Geotechnical
A review of previous geotechnical work was done and the following observation made.
No specific geotechnical investigations have been carried out on the Project area to date. The resource drilling program from TMC reports drilling conditions in the Lithium-rich Tuff were good, however, within the Upper and Lower Breccias, more difficult conditions were encountered. The core recovery over the length of the drill holes ranged from 85% to 100%, averaging at 97%.
Photographs of recovered core from the resource drilling program and general site conditions are shown in Figure 16-1 and Figure 16-2.
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Figure 16-1 Core Photo PCHAC33, 124-128.5m
Figure 16-2 Immediate Project Area Slope angles of 50° have been used for the Whittle optimisation parameters. The slope angle has been selected from preliminary assessment of slope angles based on the parameters in Table 16-2. The
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preliminary assessment has been used to inform the pit optimisation and does not constitute a geotechnical investigation; seismic acceleration has been considered in the analysis.
Table 16-2 Summary Geotechnical Testwork
Sample Lithology UCS (MPa) Young’s Modulus (GPa) Poisson’s Ratio (v)
M-2 (GS-01) Tuff 31.8 15.3 0.31
M-6 (GS-02) Tuff 27.2 21.5 0.27
Note: Anddes Report EPE-19.10.033
16.5 Current Surveys Topography files have been supplied by Plateau. The surface topography was generated using Google Earth™ by Plateau Energy Metals.
16.6 Base Case Open Pit Optimisation
The open pit optimisation is based on the Mineral Resource block model generated by TMC. The block model is in Datamine format. Table 16-3 summarises the block model origin and extensions. Key fields used in the block model are detailed below, DRA added additional fields on the block model which is detailed in Table 16-4.
Table 16-3 Block Model Origin and Dimensions
Dimension Origin Block Size (Parent) Number of Blocks
X 316741.34 25 175
Y 845033.325 25 111
Z 4300 5 300
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Table 16-4 Summary of Key Fields in Block Model
Field Name Code Coded Description
1 TMC Coded in Model by TMC
2.0 DRA Density for Waste (23/08/18)1 Density 2.4 DRA Density for Mineralisation (23/08/18)1
URH TMC Upper Rhyolite
UBX TMC Upper Breccia
LRT1 TMC Lithium-rich Tuff (upper)
LRT2 TMC Lithium-rich Tuff (middle)
Stratum LRT3 TMC Lithium-rich Tuff (lower)
LBX TMC Lower Breccia
LRH TMC Lower Rhyolite
LIPPM TMC Lithium Grade (ppm)
UPPM TMC Uranium Grade (ppm)
CSPPM TMC Caesium Grade (ppm)
RBPPM TMC Rubidium Grade (ppm)
Grade Fields SRPPM TMC Strontium Grade (ppm)
LI2OPPM DRA Converted Lithium Oxide Grade (ppm)
LI2CO3PP DRA Converted Lithium Carbonate (LCE) Grade (ppm)
1 TMC **Indicated Classified Material – DRA recoded to 2 Class 2 TMC **Inferred Classified Material – DRA recoded to 3
Class 1 DRA Combination of CLASS and Stratum for Optimisation
Note: 1 Received email from TMC (23/04/19)
A summary of the reported Mineral Resource estimates is shown in Table 16-5.
Table 16-5 Summary Mineral Resources 12 December 2019 (Base Case In-situ Optimised Shell Content)
Classification Tonnes (Mt) Li (ppm) Li2CO3 (%) Contained Li2CO3 (Mt)
Indicated 43.2 3 439 1.84 0.81
Inferred 102.2 3 296 1.76 1.79
TOTAL 145.4 3 338 1.78 2.60
Note: 1,000 Li ppm cut-off applied.
Geozoned Geological Losses applied as given in the block model by TMC.
A breakdown of the costs and parameters used in the optimisation are shown in Table 16-6.
The optimisation considered both Indicated and Inferred classified material, but only LRT geological units.
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The reader is cautioned that results from the pit optimisation are used solely for the purpose of testing the deposit with open pit extraction and do not represent an attempt to estimate Mineral Reserves.
Table 16-6 Pit Optimisation Parameters Base Case
Parameter Units Value Comment
Selling Price ($/t) 12000 FOB South America (Lithium Carbonate Li2CO3 99.5%)
Mining Factors
Dilution (%) 2 Assumption (Flat lying, Bulk, Readily Identifiable) 5.8% average geological loss already applied in resource Recovery (%) 98 model Discount Rate (%) 8
Operating Costs
Mining ($/t Rock) 2.4 Benchmarked ($/t G&A Combined and applied according to throughput. Milled) ($/t Processing Years (1-to-5, $59.54, 6-to-12, $52.84, >13-$51.57) Milled) Process Recovery Metallurgical (%) 80 DRA Recovery Mill Throughput (Tonnes Yr 1=0.75m, Yr 2=1.0m, Yr 3-7=1.5m, Yr 8=2.25m, Yr 9-12=3m, Yr Mill Feed Milled/y) 13=4.5m, Yr 14-Lom=6.0m Other
Slope Angles (°) 50 Assumption, based on preliminary analysis 2.0 / Default Density (t/m3) Default Density Waste / Default Density Mineralised 2.4 Note: 1,000 Li ppm cut-off applied. Geozoned Geological Losses applied as given in the block model by TMC.
The Whittle optimisation process producing an open pit, pit shell yielding the maximum NPV or maximum profit for a given lithium carbonate price; the method was used to determine a series of optimised pit shells, known as push backs or phases, based on the input parameters. The results were analysed with pit shell 11 chosen as the base case.
The results of the pit optimisation evaluation on the cases are summarised in Figure 16-3.
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5,000 Base Case Pit by Pit Graph 400
4,000 300 3,000 200 2,000 100 1,000 Tonnages (kt) Tonnages 0 0 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61 64 67 70 73 76 79 82 85 88 91 94 97 Pit Shells Ore Tonnes Discounted Cashflow ($M) CashflowDiscounted Waste Tonnes Open Cashflow Best $ disc Open Cashflow Specified $ disc Open Cashflow Worst $ disc
Figure 16-3 Base Case Whittle Optimisation Results The selected shell contents are shown below, based on a lithium carbonate price of $12,000. Both Indicated and Inferred classified Mineral Resources were used in the conceptual production schedules.
Only Lithium-rich bearing tuffs, namely LRT1, LRT2, and LRT3, are used in the optimisation. Upper and lower breccia units (UBX and LBX) have been excluded owing to lower grades and no economic parameters for potential by-products are included. See Table 16-7 for summary of shell contents for each case.
Table 16-7 Base Case Summary In-situ Optimised Shell Content
Li2CO3 Strip Ratio Pit Shell Mineralised (Mt) Li (ppm) Contained LCE (Mt) Waste (Mt) (%) (tw:to)
11 145.4 3 338 1.78 2.588 141.6 0.97
Material Classification
Indicated 43.2 3 439 1.84 0.81
Inferred 102.2 3 296 1.76 1.79 Lithium Rich Tuff
TOTAL 145.4 3 338 1.78 2.60 (LRT) only
16.7 Base Case Mine Planning Post whittle pit shell selection, production scheduling and push back planning was undertaken on the selected pit shells. The conceptual mine scheduling for the base case was based on the base case ramping up to 6Mt annum process plant feed. The summary resource results is shown in Table 16-8.
Table 16-8 Base Case Mineral Resource Summary Base Case Mineral Resources in Optimisation Engineered
Parameter Unit Value
Mine Production Life yr 33
Diluted/Recovered Process Feed Material Mt 145.4
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Base Case Mineral Resources in Optimisation Engineered
Diluted Li grade (mill head grade) ppm 3 338
Contained LCE (Mt) Mt 2.588
Waste Mt 141.6
Total Material Mt 287.0
Strip Ratio tw:to 0.97
Due to the fact that the mining deposits are massive with low strip ratios the following dilution and losses parameters where used:
• Mining losses of only 2% where used due to the limited zones of interaction between waste and mineralised material.
• Geological losses of 5.8% average are derived from the geological resource works which consider the current relatively low drilling density. Mine Sequencing/Scheduling
The annual mining schedule has been developed based on the three phased production rampup detailed in Table 16-9. The base case will ultimately be ramped up to a maximum mill feed of 6Mtpa, (≈16,500tpd). The life of the mine of this Project is approximately 33 years, (including 6 months pre-production), based on the 145Mt of Indicated and Inferred Mineral Resources.
Table 16-9 Production Ramp Phases
Production Ramp Up Yr 1 Yr 2 Yr 3 to 7 Yr 8 Yr 9 to 12 Yr 13 Yr 14 to 32
Base Case (Plant Feed Mtpa) 0.75 1.00 1.50 2.25 3.00 4.50 6.00
Table 16-10 details the conceptual production rates and Figure 16-5 to Figure 16-6 shows graphs of the conceptual production schedule results. The mine progression (pushback cuts) phased can be seen in Figure 16-6. The annual and life-of-mine (LoM) stripping ratios and pre-production waste strip has been show the mine scheduling. Only 6.33Mt of waste has been identified as predevelopment waste owing to the local topography, orientation of mineralisation and the planned phased process plant.
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Table 16-10 Base Case Conceptual LoM Production Schedule Summary
Mill Mill Mineralised Grade Waste Strip Ratio Total Move LRT 2 Li LRT 2 Li LRT 3 Li LRT 3 Li Period Feed LRT 1 Li (Mt) LRT 1 Li (ppm) (Mt) (Li (Mt) (tw:to) (Mt) (Mt) (ppm) (Mt) (ppm) (Mt) ppm)
Y 1 0.96 0.75 3 475 6.33 6.58 7.29 0.51 3 695 0.26 3 312 0.20 3 115
Y 2 1.09 1.00 3 609 3.14 2.88 4.22 0.65 3 838 0.32 3 329 0.12 3 129
Y 3 2.39 1.50 3 599 3.49 1.46 5.87 1.12 3 811 1.06 3 437 0.20 3 282
Y 4 2.69 1.50 3 555 3.26 1.21 5.95 0.99 3 735 1.41 3 396 0.29 3 719
Y 5 2.27 1.50 3 491 3.10 1.36 5.37 0.71 3 675 1.24 3 294 0.32 3 853
Y 6 2.22 1.50 3 548 3.58 1.61 5.80 0.28 3 658 1.52 3 216 0.42 3 871
Y 7 1.94 1.50 3 461 2.49 1.28 4.43 0.02 3 490 1.41 3 189 0.51 3 878
Y 8 2.33 2.25 3 426 3.75 1.61 6.08 0.01 3 277 1.46 3 173 0.86 3 858
Y 9 1.77 3.00 3 469 4.70 2.66 6.47 0.41 3 660 0.76 3 209 0.61 3 763
Y 10 2.10 3.00 3 487 4.23 2.01 6.33 1.59 3 555 0.48 3 372 0.03 3 691
Y 11 2.93 3.00 3 416 2.93 1.00 5.87 1.50 3 563 1.38 3 240 0.06 3 786
Y 12 3.33 3.00 3 393 3.53 1.06 6.85 0.73 3 563 2.48 3 220 0.11 3 834
Y 13 4.86 4.50 3 287 6.38 1.31 11.24 0.18 3 586 4.33 3 191 0.35 3 795
Y 14 6.14 6.00 3 295 8.25 1.34 14.39 0.04 3 429 4.64 3 157 1.46 3 733
Y 15 6.25 6.00 3 369 8.21 1.31 14.46 0.04 3 389 2.84 3 164 3.37 3 542
Y 16 4.38 6.00 3 479 7.84 1.79 12.22 2.51 3 598 1.73 3 295 0.14 3 613
Y 17 6.19 6.00 3 405 8.03 1.30 14.22 1.95 3 610 4.06 3 291 0.19 3 734
Y 18 6.03 6.00 3 364 8.13 1.35 14.17 1.15 3 654 4.40 3 275 0.49 3 487
Y 19 6.01 6.00 3 277 7.98 1.33 13.99 0.07 3 659 4.56 3 242 1.38 3 375
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Mill Mill Mineralised Grade Waste Strip Ratio Total Move LRT 2 Li LRT 2 Li LRT 3 Li LRT 3 Li Period Feed LRT 1 Li (Mt) LRT 1 Li (ppm) (Mt) (Li (Mt) (tw:to) (Mt) (Mt) (ppm) (Mt) (ppm) (Mt) ppm)
Y 20 6.12 6.00 3 307 8.04 1.31 14.16 0.57 3 507 3.92 3 247 1.63 3 383
Y 21 6.01 6.00 3 404 8.04 1.34 14.06 1.19 3 538 3.28 3 316 1.54 3 489
Y 22 6.09 6.00 3 436 3.96 0.65 10.05 0.69 3 524 2.60 3 323 2.80 3 519
Y 23 6.34 6.00 3 441 5.57 0.88 11.91 0.96 3 259 1.70 3 279 3.68 3 563
Y 24 6.33 6.00 3 277 4.98 0.79 11.31 2.53 3 227 2.42 3 222 1.38 3 464
Y 25 6.17 6.00 3 278 1.40 0.23 7.57 2.14 3 207 2.60 3 247 1.43 3 442
Y 26 6.41 6.00 3 338 0.97 0.15 7.38 0.80 3 111 3.59 3 298 2.02 3 499
Y 27 6.45 6.00 3 392 1.03 0.16 7.48 0.60 3 100 2.97 3 243 2.89 3 606
Y 28 6.20 6.00 3 443 1.41 0.23 7.61 0.41 3 144 1.89 3 075 3.89 3 653
Y 29 6.38 6.00 2 952 0.83 0.13 7.21 0.53 3 162 5.50 2 918 0.35 3 175
Y 30 6.20 6.00 3 026 0.35 0.06 6.55 0.06 3 173 4.15 2 971 2.00 3 137
Y 31 6.23 6.00 3 195 2.83 0.45 9.06 0.42 2 960 1.62 3 262 4.18 3 193
Y 32 4.64 6.00 3 321 2.88 0.62 7.52 0.42 3 007 0.97 3 387 3.25 3 390
Y 33 3.45 3 202
TOTAL 145.45 145.45 3 338 141.64 0.97 287.09 25.75 3 469 77.56 3 210 42.14 3 493
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Base Case Mining Production Schedule
16.0 7.00
Millions 14.0 6.00 12.0 5.00 10.0 4.00 8.0 3.00 6.0
2.00 Strip Ratio (tw:to) 4.0 Ore Waste & (Mtpa) 2.0 1.00
0.0 - FY2023 FY2025 FY2027 FY2029 FY2031 FY2033 FY2035 FY2037 FY2039 FY2041 FY2043 FY2045 FY2047 FY2049 FY2051 FY2053
Year
Mineralization Waste Stripping ratio
Figure 16-4 Base Case Mining Production Schedule
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Base Case Plant Feed Schedule
7.0 4,000
3,500 Millions 6.0 3,000 5.0 2,500 4.0 2,000 3.0 1,500 2.0 1,000 Lithium Grade (ppm) Plant Plant Feed (Mtpa) 1.0 500
0.0 0 FY2023 FY2024 FY2025 FY2026 FY2027 FY2028 FY2029 FY2030 FY2031 FY2032 FY2033 FY2034 FY2035 FY2036 FY2037 FY2038 FY2039 FY2040 FY2041 FY2042 FY2043 FY2044 FY2045 FY2046 FY2047 FY2048 FY2049 FY2050 FY2051 FY2052 FY2053 FY2054 FY2055
Year
Plant Feed Lithium (Li) ppm
Figure 16-5 Base Case Plant Feed Schedule
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Figure 16-6 Base Case Conceptual View Mine Progression
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16.8 Open Pit Mine Operations Open pit mining is planned to use conventional truck and shovel mining methods with drill and blasting to break the rock mass into manageable particle sizes. Mining operations are planned to be undertaken by a contractor operated fleet, which is the cost basis for this preliminary economic assessment. Mining and processing operations will be conducted 24 hours day, seven (7) days week and 353 days per year.
• Fully mobile production equipment, consisting of medium sized hydraulic shovels and 90 tonne rigid dump trucks has been planned
• Total mining costs of US$ 2.40/t of material moved at altitude is the basis for the Project economics
• A bulk supplies diesel price of US$ 0.80/L is incorporate in the mining costs
• Support equipment will be Front End Loaders, tracked dozers, graders, and water trucks
• The run-of-mine (RoM) pad and tip near the Process Plants primary crusher will be the mining and process battery limit
• Operation elevation of 4,700masl was used.
Figure 16-7 Typical Mining Production Fleet The Base Case open pit design of the life-of-mine (LoM) contains 145Mt of mineralised material with an average Li grade of 3,338ppm. The stripping ratio is low at 0.97:1, waste to mineralisation, and the total waste mined is
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142Mt. The last year of production (Yr 33) has incorporated minor remnant material which would otherwise have required a further year of production.
16.9 Waste Dumps Waste dump will be planned in accordance with environmental constraints and located around the pit edges once it has been confirmed that there are no additional mineral resources in these areas.
Backfilling of waste into mined out pit areas should be optimized to reduce haul distances and environmental impacts.
Consideration should made to ensure the position of the waste dump will not impact further exploration or mineralisation.
Some waste material may be used in the construction for the tailings storage facility (TSF), however this will only be addressed in the next study phase.
Waste rock dumps are generally constructed in 5 to 10m lifts to a maximum of 40 to 60m depending on local geotechnical stability and terrain.
16.10 Mining Shift Cycles and Equipment The life of mine is estimated to at 33 years, including 6 months pre-production and a relatively slow process plant ramp up to Phase I at 1.5Mtpa.
At full steady state an average of 14Mtpa rock movement will be required. The mine is operation is planned on two 10-hour shifts per day, 353 days per year. See Table 16-11 for an example of a typical shift roster. The mine plan has been developed based on using one or more mining contractors for all planning and operational aspects of the mining operation.
Table 16-11 Typical Shift Roster
Labour Roster A B C Total
Wednesday 10 10 20
Thursday 10 10 20
Friday 10 10 20
Saturday 10 10 20
Sunday 10 10 20
Monday 10 10 20
Tuesday 10 10 20
Wednesday 10 10 20
Thursday 10 10 20
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Friday 10 10 20
Saturday 10 10 20
Sunday 10 10 20
Monday 10 10 20
Tuesday 10 10 20
Wednesday 10 10 20
Thursday 10 10 20
Friday 10 10 20
Saturday 10 10 20
Sunday 10 10 20
Monday 10 10 20
Tuesday 10 10 20
Wednesday 10 10 20
Thursday 10 10 20
Friday 10 10 20
Saturday 10 10 20
Sunday 10 10 20
Monday 10 10 20
Tuesday 10 10 20
Wednesday 10 10 20
Thursday 10 10 20
Total 210 180 210 600
Total Hour per Week 50 43 50
The conceptual mining schedule is used to produce an indicative fleet list for the operations. The equipment estimate was based on a productivity model and experience of similar sized open pit operations. Production fleets utilization and mechanical availability is based on the planned shift cycles above and is detailed in Table 16-12.
Table 16-12 Contractor Operated Mining Hour Summary
PRELIMINARY CONTRACTOR OPERATED MINING HOURS
Description Unit Fact Assumption Calculated result
Days per year day 365 8760
Non-working days per year day 12 x Public Hols 12
Working days day 353
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PRELIMINARY CONTRACTOR OPERATED MINING HOURS
Average days per week 6.79
Site scheduled working hours hr EFF 20hrs/d 7 060
Shift change including Pre-Shift Check hr 15 mins/s 0.5 2.5%
Refuel & top up: hr 30mins/d 0.5 2.5%
Safety Meetings in shift hr 20mins/d 0.33 1.7%
Comfort Break hr 30mins/s 1 5.0%
Standby & idle hr 30mins/d 0.5 2.5%
Survey/Geology/Foreman hr 20mins/d 0.33 1.7%
Blasting hr 0.0%
Relocate (Tramming) hr 1.00 5.0%
Sub total hr 4.17 20.8%
Operational stops per year 1 471
Machine scheduled hours / annum Utilization 79.2% 5 589
Planned Mechanical Availability Availability 90%
Planned Maintenance stops hr 485
Break Down stops 10% 48
Total stops hr 2 004
Operational stops hr 2 004
Machine operating hours per year hr 5 056
Machine operating hours per month hr 421
Machine operating hours per week hr 97
Machine operating hours per day hr 14
Drilling will be the Mining Contractors responsibility using appropriately sizes track or truck mounted, drill rigs. Drilling is planned for 10m benches, the hole diameter is anticipated to be between 110mm to 140mm depending on local conditions. Drilling penetration rates would be typically between 40 to 50m/hr depending on rock hardness and operators’ skill levels.
Blasting will occur during lunch breaks or between shifts according to drilling pattern and changing plan approved by the Mine Manager.
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Blast holes will be charged with Ammonium Nitrate based explosives with appropriate are initiation systems Explosives will be delivered using an explosive truck which will measure and deliver the planned amount. A powder factor (kg/m3) range of 0.26-0.31, is anticipated, which should limit oversize to be accommodated by the processing plants grizzly spacing on the primary crusher.
Waste loading is undertaken using hydraulic shovels as the primary unit, 200 to 230t class (10 to 12m 3 bucket capacity).
The mineralised material will be loaded with front end loader, 100t class (10 to 12.m3 bucket capacity).
Spare front end loaders will act as backups for waste loading, mineralised material loading and RoM tip re-handle.
The specified loading equipment is suitable for loading the 90t rigid dump trucks or other trucks that the mining contractor may recommend in future study phases.
In-pit haulage distances are estimate based on the current planned pit progression. Distance from pit to RoM pad has planned at 1.5km, based on maximum ex-pit ramp incline of 6 degrees. Pit to waste dumps or backfill locations are based on a 2km average distance, based on maximum ex-pit ramp and waste rock dump ramp incline of 6 degrees.
The following equipment lists
Table 16-13 Preliminary Production Equipment
Base Case Equipment Type No. of Units (max)
Primary Production Fleet
Drill Rigs (110mm to 140mm holes) 1-2
Backhoe Shovel (12m³ / 230t class) CAT 6020B or equivalent 1
Front End Loader (12m³ / 100t class) CAT 992K or equivalent 2
Haul Truck (90t) CAT 777 or equivalent 10 - 16
Auxiliary Support Fleet
Tracked Dozer D9 3
Motor Grader 1
Water Truck 30,000L 2
Fuel Truck 2
Service Truck 3
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Base Case Equipment Type No. of Units (max)
Lighting Plant 4
Light Vehicles 7 - 10
TOTAL 36 - 46
Figure 16-8 are estimated based on the conceptual production schedule and planned equipment production targets.
Base Case Production Fleet 18 16 16 16 16 16 16 16 16 16 16 16 14 14 12 12 10 10 10 10 10 10 10 10 10 8 8 8 8 8 8 8 8 8 8 8 8 8 6 4 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 1 1 1 1 1 1 1 1 Equipment Numbers 0 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10 Y11 Y12 Y13 Y14 YearY15 Y16 Y17 Y18 Y19 Y20 Y21 Y22 Y23 Y24 Y25 Y26 Y27 Y28 Y29 Y30 Y31 Y32 Drill Rigs Waste Excavator 12m³ Ore/Waste FEL 12m³ 100 Tonne RDT
Figure 16-8 Base Case Production Fleet per Annum Pit Access
Construction and maintenance of all pit access, pit ramps and in pit roads will be part of the mining contractors’ responsibilities and will be executed with the appropriate support equipment.
The maximum mine workforce to be employed is estimated to range in the production phases between 160 and 191 persons for the base case.
The three-crew schedule are planned to work 10hr shifts, on a dayshift/nightshift rotation as per the roster detailed previously.
Mechanical checks and minor maintenance will use the 2 x 2-hour non-productive shift change times which will also sometimes be used for blasting.
Management and technical personnel primarily working dayshift, unless required by operational challenges.
Table 16-14 details the preliminary personnel manning structure which will be refined in further study phases based on actual mining contractor budget pricing and or tenders.
Table 16-14 Open Pit Summary Personnel Table (Base Case)
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Area of Operation Start (no.) Max at any time (no.)
Management 6 6
Operations 106 133
Technical Services 22 22
Engineering 26 30
TOTAL 160 191
16.11 Alternative Case Mining Method The Alternative Case open pit design of the life-of-mine (LoM) contains 63Mt of mineralised material with an average Li grade of 3,262ppm. The stripping ratio is low at 1.45:1, waste to mineralisation, and the total waste mined is 91Mt. The last year of production (Yr. 26) has incorporated minor remnant material which would otherwise have required a further year of production.
Table 16-15 Alternative Case Mineral Resource Summary
Alternative Case Mineral Resources in Optimisation Engineered
Parameter Unit Value
Mine Production Life yr 25
Diluted/Recovered Process Feed Material Mt 62.97
Diluted Li grade (mill head grade) ppm 3 262
Contained LCE (Mt) Mt 1.10
Waste Mt 91.0
Total Material Mt 154
Strip Ratio tw:to 1.45
Alternative Case open pit scheduling was completed using Whittle. The annual mining schedule has been developed based on maximum ramped up mill feed of 3Mtpa (8,250tpd). The life of the mine of this Project is approximately 26 years, (including 1-year pre-production), based on the 63Mt of Indicated and Inferred Mineral Resources.
Table 16-16 Production Ramp Up Alternative Case Yr 3 to Yr 9 to Yr 14 to Production Ramp Up Yr 1 Yr 2 Yr 8 Yr 13 7 12 25 Alternative Case 0.75 1.00 1.50 2.25 3.00 3.00 3.00 (Plant Feed Mtpa)
Table 16-17 Summary Mineral Resources 12 December 2019 (Alternative Case In-situ Optimised Shell Content)
Classification Tonnes (Mt) Li (PPM) Li2O (%) Contained Li2CO3 (Mt)
Indicated 24.8 3 492 1.86 0.46
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Classification Tonnes (Mt) Li (PPM) Li2O (%) Contained Li2CO3 (Mt)
Inferred 38.6 3 115 1.66 0.64
TOTAL 63.4 3 262 1.74 1.10
Note: 1,000 Li ppm cut-off applied.
Geozoned Geological Losses applied as given in the block model by TMC.
Only Lithium-rich bearing tuffs, namely LRT1, LRT2, and LRT3, are used in the optimisation. Upper and lower breccia units (UBX and LBX) have been excluded owing to lower grades.
16.12 Alternative Case Pit Optimisation Parameters A breakdown of the costs and parameters used in the optimisation are shown in Table 16-6 and Table 16-18.
The optimisation considered both Indicated and Inferred classified material, but only LRT geological units.
The reader is cautioned that results from the pit optimisation are used solely for the purpose of testing the deposit with open pit extraction and do not represent an attempt to estimate Mineral Reserves.
Table 16-18 Pit Optimisation Parameters Alternative Case
Parameter Units Value Comment
FOB South America (Lithium Carbonate Li2CO3 Selling Price ($/t) 12000 99.5%) Mining Factors
Dilution (%) 2 Assumption (Flat lying, Bulk, Readily Identifiable) 7.5% Geological loss already applied in resource Recovery (%) 98 model Discount Rate (%) 8
Operating Costs
Mining ($/tRock) 2.4 Benchmarked
G&A ($/t Milled) Combined and applied according to throughput.
Processing ($/t Milled) Years (1-to-5, $59.54, 6-to-12, $52.84, >13-$51.57)
Process Recovery Metallurgical (%) 80 DRA Recovery Mill Throughput (Tonnes Mill Feed Yr 1=0.75m, Yr 2=1.0m, Yr 3-7=1.5m, Yr 8=2.25m Yr 9-LoM=3m Milled/y) Other
Slope Angles (°) 50 Assumption, based on preliminary analysis
Default Density (t/m3) 2.0 / 2.4 Default Density Waste / Default Density Mineralised
Note: 1,000 Li ppm cut-off applied.
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Parameter Units Value Comment
Geozoned Geological Losses applied as given in the block model by TMC.
16.13 Alternative Case Pit Optimisation Results The Whittle optimisation process producing an open pit, pit shell yielding the maximum NPV or maximum profit for a given lithium carbonate price; the method was used to determine a series of optimised pit shells, known as push backs or phases, based on the input parameters. The results were analysed with pit shell 18 chosen for the alternative case.
The results of the pit optimisation evaluation on the cases are summarised in Figure 16-9.
3,000 Alternative Case Pit by Pit Graph 200 180 2,500 160 2,000 140 120 1,500 100 80 1,000 60
500 40 (kt) Tonnages 20 0 0 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61 64 6770 73 76 79 82 85 88 91 94 97 Pit Shells Ore Tonnes
Discounted Cashflow ($M) CashflowDiscounted Waste Tonnes Open Cashflow Best $ disc Open Cashflow Specified $ disc Open Cashflow Worst $ disc
Figure 16-9 Alternative Case Whittle Optimisation Results
Mine planning pushback selection and conceptual production scheduling was undertaken the selected pit shells for the alternative case ramping up to 3Mt per annum process plant feed on the limited Falchani resource only The summary resource results of the alternative case scheduled option is shown in , Figure 16-11, Figure 16-12, and Figure 16-13.
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Base Case Mining Production Schedule
16.0 7.00
Millions 14.0 6.00 12.0 5.00 10.0 4.00 8.0 3.00 6.0
2.00 Strip Ratio (tw:to) 4.0
2.0 1.00
0.0 - Mineralised Mineralised Material Waste& (Mtpa) FY2023 FY2025 FY2027 FY2029 FY2031 FY2033 FY2035 FY2037 FY2039 FY2041 FY2043 FY2045 FY2047 FY2049 FY2051 FY2053
Year
Mineralization Waste Stripping ratio
Figure 16-10 Base Case Mining Production Schedule
The dilution and losses are the same as the Base Case
16.14 Alternative Case Mine Sequencing/Scheduling The Alternative Case Production ramp up and all design and operating methodology is the same as the Base Case except it does not exceed 3Mtpa of plant feed on a constrained Falchani Only resource area.
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Table 16-19 Alternative Case Conceptual LoM Production Schedule Summary Mineralised Mill Feed Mill Grade (Li Waste Strip Ratio Total Move LRT 1 Li LRT 1 Li LRT 2 Li LRT 2 Li LRT 3 Li LRT 3 Li Period (Mt) (Mt) ppm) (Mt) (tw:to) (Mt) (Mt) (ppm) (Mt) (ppm) (Mt) (ppm) Y1 0.97 0.75 3 474 6.38 6.60 7.34 0.51 3695 0.26 3312 0.20 3114
Y2 1.09 1.00 3 609 2.15 1.98 3.24 0.65 3838 0.32 3329 0.12 3129
Y3 1.71 1.50 3 596 2.90 1.70 4.60 0.84 3808 0.71 3439 0.16 3170
Y4 1.47 1.50 3 588 2.36 1.61 3.82 0.57 3803 0.76 3431 0.13 3584
Y5 1.91 1.50 3 544 2.89 1.51 4.80 0.70 3714 1.00 3382 0.21 3752
Y6 1.69 1.50 3 495 2.70 1.59 4.39 0.54 3675 0.92 3299 0.23 3849
Y7 1.76 1.50 3 463 2.90 1.65 4.67 0.38 3654 1.10 3233 0.28 3871
Y8 2.33 2.25 3 404 3.38 1.45 5.72 0.13 3608 1.66 3199 0.55 3734
Y9 3.07 3.00 3 366 4.92 1.60 7.99 0.09 3505 1.97 3191 1.00 3664
Y10 2.91 3.00 3 434 4.59 1.57 7.50 0.43 3630 1.36 3210 1.13 3634
Y11 3.21 3.00 3 529 4.28 1.33 7.50 1.40 3629 1.36 3434 0.45 3544
Y12 3.02 3.00 3 461 4.51 1.50 7.53 0.65 3566 1.73 3316 0.64 3761
Y13 3.01 3.00 3 410 4.88 1.62 7.89 0.16 3674 1.95 3210 0.90 3795
Y14 2.85 3.00 3 462 4.30 1.51 7.14 - 1.47 3164 1.38 3785
Y15 3.12 3.00 3 549 4.39 1.41 7.50 0.01 3675 0.64 3115 2.47 3662
Y16 3.07 3.00 3 587 4.72 1.54 7.80 1.45 3645 0.86 3439 0.77 3645
Y17 3.09 3.00 3 485 4.03 1.31 7.12 0.36 3105 1.29 3314 1.43 3736
Y18 3.11 3.00 3 212 3.91 1.26 7.03 1.92 3023 1.07 2764 0.12 2642
Y19 3.34 3.00 2 819 3.79 1.13 7.13 0.55 3131 2.64 2755 0.14 2781
Y20 3.22 3.00 2 910 4.42 1.37 7.63 0.14 2951 2.60 2921 0.48 2835
Y21 3.28 3.00 3 168 4.22 1.29 7.50 0.37 2885 0.64 2993 2.27 3264
Y22 2.69 3.00 2 916 3.74 1.39 6.43 1.67 2951 0.79 2333 0.23 2953
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Mineralised Mill Feed Mill Grade (Li Waste Strip Ratio Total Move LRT 1 Li LRT 1 Li LRT 2 Li LRT 2 Li LRT 3 Li LRT 3 Li Period (Mt) (Mt) ppm) (Mt) (tw:to) (Mt) (Mt) (ppm) (Mt) (ppm) (Mt) (ppm) Y23 3.18 3.00 2 744 3.72 1.17 6.90 1.22 3012 1.56 2469 0.39 3001
Y24 2.97 3.00 2 700 0.56 0.19 3.53 0.36 3072 1.65 2514 0.96 2876
Y25 0.91 3.00 2 813 0.41 0.45 1.31 - 0.07 2436 0.84 2958
Y26 0.47 2 767
TOTAL 62.97 62.97 3 262 91.05 1.45 154.01 15.12 3 390 30.36 3 068 17.49 3 487
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Alternative Case Mining Production Schedule
9.0 7.00 Millions 8.0 6.00 7.0 5.00 6.0 5.0 4.00
4.0 3.00 Strip Ratio (tw:to) 3.0 2.00
Tonnes Mined Tonnes Mined (Mtpa) 2.0 1.00 1.0 0.0 - FY2023 FY2025 FY2027 FY2029 FY2031 FY2033 FY2035 FY2037 FY2039 FY2041 FY2043 FY2045 FY2047 FY2049 FY2051 FY2053 FY2055 Year Mineralization Waste Stripping ratio
Figure 16-11 Alternative Mining Production Schedule
Alternative Case Plant Feed Schedule 3.5 4,000 3.0 3,500 Millions 2.5 3,000 2,500 2.0 2,000 1.5 1,500 1.0
1,000 Lithium Grade (ppm) 0.5 500 Plant Plant Feed (Mtpa) 0.0 - FY2023 FY2025 FY2027 FY2029 FY2031 FY2033 FY2035 FY2037 FY2039 FY2041 FY2043 FY2045 FY2047
Year Plant Feed Lithium (Li) ppm
Figure 16-12 Alternative Case Plant Feed Schedule
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Figure 16-13 Alternative Case Conceptual View Mine Progression
16.15 Alternative Case Production Fleet and Personnel The production fleet hydraulic excavators can be reduced in size slightly however all other equipment will remain the same however the number of trucks will reduce.
Alternative Case Only Production Fleet
12 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 8 8 8 8 8 8 8 8 8 6 6
4 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 23
2 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 Equipment Numbers 0 Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10 Y11 Y12 Y13 Y14 Y15 Y16 Y17 Y18 Y19 Y20 Y21 Y22 Y23 Y24 Y25 Year Drill Rigs Waste Excavator 8m³ Ore/Waste FEL 12m³ 100 Tonne RDT
Figure 16-14 Alternative Case Production Fleet
Table 16-20 Alternative Case Major Open Pit Equipment Estimate
Alternative Case Equipment Type No. of Units (max)
Primary Production Fleet
Drill Rigs (110mm to 140mm holes) 1
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Alternative Case Equipment Type No. of Units (max)
Backhoe Shovel (8m³ / 140t class) CAT 6015 or equivalent 1
Front End Loader (12m³ / 100t class) CAT 992K or equivalent 2
Haul Truck (90t) CAT 777 or equivalent 8 - 10
Auxiliary Support Fleet
Tracked Dozer D9 3
Motor Grader 1
Water Truck 30,000L 2
Fuel Truck 2
Service Truck 3
Lighting Plant 4
Light Vehicles 7
Total 34-36
Table 16-21 Open Pit Summary Personnel Table (Alternative Case)
Area of Operation Start(no.) Max at any time (no.)
Management 6 6
Operations 106 112
Technical Services 22 22
Engineering 26 26
TOTAL 160 166
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17 RECOVERY METHODS
17.1 Introduction The Acid Leach testwork discussed in Section 13 informed the development of the block flowsheet shown in Figure 17-1, the plant layout shown in Figure 17-2 and provided key design parameters (recoveries, reagent consumptions, temperatures) for the process design.
The Project consists of an open pit mine and an associated processing facility along with on-site and off-site infrastructure to support the operation. The Base Case design for the process plant is based on achieving a peak milled tonnage of 6Mtpa over three phases. An overview of the phased production strategy is presented inTable 17-1.
Table 17-1 Milling Rate and Expansion Phases – Base Case Description Years Milling Rate Phase I 1 - 8 1.5 Mtpa Phase II 8 - 13 3.0 Mtpa Phase III 13 - 33 6.0 Mtpa
A total of 2.1 million tonnes of lithium (minimum purity 99.5%) product is produced over life of mine at a lithium recovery of 80%.
The Falchani Lithium process plant consists of the following steps:
• Mineralised Material Handling; • Crushing & Grinding; • Acid Leaching; • Pre-neutralisation; • Neutralisation; • Softening; • Evaporation; • Ion Exchange; • Lithium Carbonate Precipitation and Product Handling; • Potassium / Sodium Sulfate Crystallisation; • Dry Stacked Filtered Tailings; • Services and Utilities.
17.2 Design Criteria The key Project design criteria are shown in Table 17-2.
Table 17-2 Falchani Lithium Design Criteria
Description Unit Value 33 (Base Case) Life of Mine Years 26 (Alternative Case)
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Description Unit Value
Plant Design Throughput (Phase I - Year 1 to 8) Tonnes / year 1,500,000
Plant Design Throughput (Phase II - Year 8 to 12) Tonnes / year 3,000,000 Plant Design Throughput (Phase III - Year 12 to 33) – Base Tonnes / year 6,000,000 Case ONLY Operating Hours Per Year Hours 8000
Lithium Head grade ppm 3380
Lithium Production (Phase 1) Tonnes / year 21,643
Leach Method Acid Leach
Acid Addition / tonne of mineralised material kg 396
Lithium Recovery - Leach % 85
Lithium Recovery - Overall % 80
17.3 Power and Water Consumption
The estimated average running load has been calculated using expected power draw from the equipment and factored (in certain cases) to tonnage throughput. A calculated unit power draw of 76.4 kWh/t mineralised material has been applied. An acid plant co-generation benefit of 18MW has been estimated which realizes a net surplus of power during plant operation and establishes the operation as self-sufficient.
As a contingency, an annual allowance of 5% of normal power consumption (excluding acid plant credit) has been applied to account for the start-up of the sulfur burning plant and this power will be sourced from the grid.
The raw water make-up requirement is 1.38m3/t of feed to the plant. This quantity takes into account the acid plant water requirement and the water recovered from filtering the tailings.
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17.4 Process Block Flow Sheet & Process Plant Layout
Figure 17-1 Acid Leach Block Flow Diagram
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Figure 17-2 Falchani Lithium Overall General Arrangement Plan – Process Plant Phase I
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17.5 Process Description
Mined lithium-bearing tuff mineralised material is stockpiled on the run-of-mine (RoM) pad. The mineralised material is first deposited in the mineralised material feed hopper using a Front End Loader (FEL). From there, the pre-crushed mineralised material passes over a scalping screen where the undersized particles fall through via a chute on to the fresh mineralised material feed conveyor. The scalping screen oversize is fed to the first stage jaw crusher where it is crushed. Both the crushed product and scalping screen undersize is conveyed to the mineralised material feed conveyor where it is combined with the secondary and tertiary cone crusher product to form a vibrating screen feed.
The vibrating screen feed is fed to a double deck screen with the oversize and middling being separately conveyed to the secondary and tertiary cone crusher respectively. Discharge from both the secondary and tertiary crushers reports back to the mineralised material feed conveyor for further screening. The double deck screen undersize falls through a chute and onto the crushed product conveyor where it is conveyed to the crushed mineralised material bin.
A conveyor feeder at the bottom of the crushed mineralised material bin controls and regulates the flow of mineralised material to the ball mill. With the aid of process water, the crushed mineralised material is ground in the mill. The ball mill slurry discharges into the ball mill cyclone hopper where it is subsequently pumped to the ball mill cyclone. In the ball mill cyclone, the undersize particles exit through the overflow to the acid leach feed tank while the larger, heavier particles exit through the cyclone underflow where it is recycled back to the ball mill feed hopper.
The milled slurry is pumped to the acid leach tanks where it is reacted with concentrated sulfuric acid for about 24 hours under atmospheric conditions. During the leach, lithium, among other elements are dissolved in solution. Unleached material remains in the solid phase.
The acid leach tank slurry discharge is then pumped to the pre-neutralisation tank where limestone slurry is added. Transfer of material between the pre-neutralisation tanks is via overflow weirs and launders.
In the pre-neutralisation tank, excess free acid is reacted with the limestone slurry to increase the pH of the slurry from <0 to 4. In doing so, certain salts start to precipitate from solution. The pre-neutralised slurry is then fed onto a pre-neutralisation belt filter to separate the solids from liquids. The lithium bearing filtrate is collected in the pre-neutralisation filtrate tank where it is pumped to the next stage of the process, Impurity Removal.
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The precipitated solids undergo a wash using process water to remove any entrained lithium that may still be present. This washate is collected and pumped to the process water tank. The washed solids are repulped with a small amount of process water and pumped to the tailings tank.
The pre-neutralised filtrate is then pumped to the first of three Impurity Removal (IR) tanks where slaked lime slurry is added. Transfer of material between each tank is done via overflow weirs and launders. In the tanks, the addition of the slaked lime slurry increases the pH from 4 to about 12. In doing so, more unwanted salts, particularly calcium and aluminium salts start to precipitate out. The IR slurry is then pumped to the IR clarifier where the precipitated salts can settle to the bottom of the clarifier.
The IR clarifier overflow gravity flows into the IR clarifier overflow tank where it is pumped to the next stage of the process, softening.
A portion of the IR clarifier underflow is recycled back to the IR tanks to seed the subsequent precipitation reaction. The remaining underflow solids are pumped to the IR belt filter to separate the solids from liquids. Filtrate obtained from the IR belt filter is pumped back to the neutralisation tanks. The solids undergo a wash with process water to remove any entrained lithium that may still be present. The washate is collected and pumped to the process water tank. The washed solids are repulped with a small amount of process water and pumped to the tailings tank.
Prior to softening, the IR clarifier overflow is cooled using cooling water. The cooled overflow reports to the first of two softening tanks where it is mixed with sodium carbonate slurry. In the softening tanks, the reaction between the sodium carbonate slurry and the calcium in the solution forms insoluble calcium carbonate precipitates.
The resultant slurry is then pumped to the softening clarifier where the precipitated solids can settle. A portion of the softening clarifier underflow is recycled and pumped back to the first softening tank to act as a seed for the formation of further precipitates. The remaining underflow solids are pumped to the tailings tank.
The softening clarifier overflow gravity flows into the softening clarifier overflow tank where it is subsequently pumped to the next step of the process, Flouride Ion Exchange.
Water is boiled off from the softening clarifier overflow using an evaporator to not only reduce the volume of the solution, but to also increase the lithium concentration. Following evaporation, the solution is pumped to an ion exchange circuit in a lead-lag-lag configuration where trace fluoride impurities are removed using a La-loaded amino phosphonic resin (TP-260). The purified eluate solution is pumped to the next step in the process, Product Precipitation.The eluate is pumped to the first of three lithium carbonate precipitation tanks where it is reacted with sodium carbonate slurry to form insoluble lithium carbonate solid.
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The resultant slurry is then dewatered using a dewatering cyclone followed by a centrifuge. The cyclone overflow and centrifuge centrate report to the salt crystalliser feed tank. A portion of the centrifuge cake is repulped using the feed solution and recycled back to the lithium carbonate precipitation tanks to be used as seed for the reaction. The remaining portion of the lithium carbonate cake reports to the lithium carbonate dryer feed bin.
The lithium free solution in the salt crystalliser feed tank is fed to the salt crystalliser where it is cooled using a combination of cooling and chilled water. As the solution cools, potassium sulfate and sodium sulfate precipitate from the solution.
The potassium and sodium sulfate slurry is fed to the salt clarifier where it is allowed to settle. The salt clarifier underflow is pumped to a belt filter to separate the solids and liquids. The filtrate is collected in the barren solution tank while the washate is collected and recycled back to the evaporator circuit. The washed salt is conveyed to the salt dryer feed bin.
The clarifier overflow flows via gravity to the barren solution tank where a portion of it is pumped to the tailings tank. The remainder is recycled back to the softening circuit.
Wet lithium carbonate centrifuge cake is stored in the lithium carbonate dryer feed bin. From the feed bin, a dryer screw feeder controls and regulates the feed rate into the lithium carbonate dryer. In the lithium carbonate dryer, moisture is removed from the cake. The lithium carbonate dryer product discharges on to the lithium carbonate product conveyor where it is then conveyed to an air classifier. The underflow from the air classifier is compacted in a compactor prior to being micronized in a mill to the required product size. The mill discharge is combined with the air classifier overflow and fed to the bagging plant. The dried product is then bagged in 1 t bulk bags and stored, ready for sale.
Like the lithium carbonate centrifuge cake, the salt cake is stored in the salt dryer feed bin. A screw feeder controls the feed rate of salt from the dryer feed bin to the salt dryer. In the salt dryer, most moisture is removed. The salt dryer product discharges on to the salt conveyor where it is then conveyed onto a stockpile.
Waste slurry from the neutralisation, pre-neutralisation, softening circuits along with the barren solution bleed report to the first of two tailings neutralisation tanks where both limestone and slaked lime slurry are added to neutralise any remaining acid.
Once the tailings have been neutralised, the slurry is then pumped to the tailings filter to be dewatered. The filtrate and washate from the tailings filter are collected and pumped to the process water tank. The dewatered tailings solid is then conveyed away and deposited onto the tailings stockpile.
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Sulfur
Pelletized sulfur will be delivered to site in bulk and stored in the sulfur storage shed. A front-end loader will be used to fill the sulfuric acid plant’s feed hopper. The solid sulfur will then be converted to sulfuric acid in a double absorption sulfuric acid plant.
The ~98% sulfuric acid produced by the sulfuric acid plant is then pumped and stored in one of two sulfuric acid storage tanks. The storage tanks will hold a minimum of 1,700t of sulfuric acid, the quantity required to start the sulfuric acid plant. As required, the concentrated sulfuric acid will be pumped to the processing plant in a duty/standby configuration.
Sodium Carbonate
Solid sodium carbonate salt will be delivered to site in 1 t bulk bags. Each sodium carbonate bag will then be added to a mixing tank where it will be mixed with water to form a 20% sodium carbonate solution.
Once homogeneously mixed, the 20% sodium carbonate solution is transferred via a pump and stored in the sodium carbonate storage tank. Two sodium carbonate distribution pumps in a duty/standby configuration will continuously pump the slurry through a ring main. As required, actuated valves will control the flow of the sodium carbonate to both the softening and lithium carbonate precipitation circuit.
Limestone
Limestone rock will be delivered to site in trucks and stored on a concrete pad. A front-end loader will be used to fill the limestone feed bin from the limestone stockpile. A feeder at the bottom of the feed bin will control the feed rate of limestone into the dry limestone grinding mill. Once finely ground, the limestone powder is stored in a closed-top limestone storage bin. A screw feeder at the bottom of the storage bin directly feeds the limestone powder to the pre-neutralisation tank.
Quicklime
Quicklime powder will be delivered to site in bulk tankers. Once on site, the quicklime will be pneumatically pumped and stored in the quicklime silo. A feeder at the bottom of the silo controls the feed to the lime slaking mill.
Water is added to quicklime in the lime slaking mill. The quicklime and water react and form a 16% slaked lime slurry. The slaked lime is then pumped and stored in the slaked lime storage tank. Two slaked lime distribution pumps in a duty/standby configuration will continuously pump the slaked lime slurry through a ring main. As required, actuated valves will control the flow of slaked lime to both the neutralisation and tailings circuit.
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18 PROJECT INFRASTRUCTURE The MPA is located approximately 650km east south-east of Lima and about 220km by road from Juliaca to the south. The nearest towns to the MPA are Macusani (25km to the south-east) and Corani (14km to the north-west).
The Interoceanica Highway (IH) is a system of tarred/sealed roads that link the ports of Materani, Molendo and Ilo on the west coast of Peru over the Andes Mountains to the west side of Brazil. The IH passes within 10km to 15km to the east of the MPA. Two unpaved roads connect the Project to the IH and other unpaved roads, generally in good condition, connect the various sites within the MPA to one another. These roads are accessible during the dry season in two-wheel drive vehicles.
The closest airport to the MPA is located at Juliaca. The facility is in good condition and services daily flights from Lima and Cusco.
For the purposes of the PEA, the following infrastructure has been considered necessary for the Falchani site.
• Access road;
• Raw water supply;
• Power transmission line and sub-stations;
• Emergency power;
• General site services;
• Buildings;
• Tailings transportation and storage.
18.1 Access Road The existing connecting road between the highway and the Project site is not suitable for heavy vehicle transit. A significant upgrade would be necessary in order to comply with safety regulations in addition to addressing potential social conflict associated with noise and dust generation. Vice Versa Consulting7, a third-party consulting firm, have conducted a study on assessing alternative access route options with consideration to safety, social, environmental and economic metrics. A total of three options were considered and are described below:
7 Recycle streams and no lithium loss expected
Acceso al Proyecto Falchani, Nov 2019
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• Option 1: Starts at the diversion that is currently used to access the area of Project. This alternative takes advantage of the existing section of access to the town of Tantamaco, Isivilla and the accesses built for the communities of Quelccaya and Chaccaconiza.
• Option 2: Starts at the Huiquiza bridge. This alternative starts with an indirect routing to get near the town of Tantamaco.
• Option 3: Starts at the Huiquiza bridge. This alternative starts with a section of a straight tunnel with a route to the town of Tantamaco.
A qualitative analysis was conducted in order to determine a viable alternative access road solution. The outcomes of the analysis are presented in Table 18-1. The assessment utilizes a three-tier ranking system relative to the options considered. A green, orange or red rating has been allocated to each assessed category indicative of low risk, moderate risk and high risk.
Table 18-1 Access Roads Analysis – Outcomes Option Social Environmental Technical Economic Overall Capital
1 US$ 29m
2 US$ 32m
3 US$ 64m
Vice Versa Consulting identified Option 3 as the most viable alternative realizing the least social and environmental impact while demanding a higher capital outlay relative to Option 1 and 3. Option 1 was selected and modelled in order to assess the potential economic upside if social and technical challenges can be mitigated. A review and validation to this selection would be necessary as part of a follow-on study.
The map in Figure 18-1 shows the proposed route of the paved access road from the IH to site.
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Figure 18-1 Proposed Route of Access Road from the Interoceanica Highway to Site
18.2 Raw Water Supply Water is sourced from local river courses. In its 2014 Preliminary Economic Assessment (PEA) for Plateau Energy Metals’ uranium projects, GBM Mining Engineering Consultants Limited (GBM) was of the view that the area has access to sufficient water resources for the purposes of mining operations at a rate of 1Mt/y (Short et al, 2014). The availability of water has not been assessed during the PEA and it is recommended that the availability of suitable water be quantified in later stages of the Project’s development.
River water will be pumped to the Raw Water Tank in the plant from the river located in the valley close to the plant. The cost of a suitably sized pump station and pipeline is included in the cost estimate.
18.3 Power Supply
Under normal operation, the plant’s primary source of electrical power will be the steam turbine power generator at the acid plant.
The San Gaban II hydro generation station is approximately 40 kms (88 kilometers via the IH) to the north of the MPA and high voltage power lines run adjacent to the MPA. In order for a grid connection to be made an extension of the power line will be required to reach the project site and any connection will be subject to negotiation with the supply authority. An allowance has been made in the capital cost estimate for a
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transformer at the San Gaban powerline and one at the process plant switchyard. The cost of the powerline is assumed to be included in the tariff structure that the service provider will charge the Project.
The grid will provide back-up power for emergency lighting and for key process drives (for example, leach tank agitators, scrubber fans, thickener rakes). These matters will need to be taken into account as the project progresses. Connection to the grid will enable surplus electricity from the acid plant power station to be exported.
Diesel-fuelled generators will provide power for remotely located equipment (the raw water pumps at the river and equipment located at the tailings storage facility).
18.4 Site Services
Fuel will be delivered to site in road tankers and stored in a dedicated storage and dispensing facility.
Compressors will provide compressed and instrument air to the process plant.
A suitable potable water plant will be provided to supply water to the plant and employee housing.
18.5 Buildings
Suitably sized workshops and warehouses are included in the plant area.
An allowance for offices and office equipment is included in the capital cost estimate.
An allowance for a 300-person permanent village is included in the capital cost estimate.
18.6 Tailings Transportation and Storage Tailings from the plant will be pumped to a belt filter adjacent to the Tailings Storage Facility (TSF). The filtered tailings will be stacked in the TSF and the filtrate will be pumped back to the process water tank in
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the plant. Vice Versa Consulting8 have identified a number of suitable locations for the TSF that will be utilised throughout the life of the Project.
Figure 18-2 Tailings Storage Facility Options (Source: Vice Versa Consulting) The evaluation included consideration to capacity, geotechnical, economic, environmental and legal requirements. A total of six sites were proposed and evaluated on a capital outlay, operating cost and NPV basis. Capital outlay was based on transportation of slurry to the TSF, TSF construction, water reticulation systems and supporting infrastructure. The cost of a tailings thickening and filtration plant prior to deposition and local to the TSF, is excluded and has been captured under the process plant capital. An overview of capital cost estimates for each option is shown in Figure 18-3.
8 Report: Determinación de los Costos de Inversión para la Construcción de un Depósito de Relaves, PE-ING-005-2019-VC
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Figure 18-3 TSF Capital Cost Options A semi-qualitative analysis was conducted in order to determine an economically viable and practical TSF configuration over LoM. Consideration to social, environmental, technical and economic factors where considered and used to determine a ranking for each option. The outcome of this analysis revealed option 2 as a viable location for the initial phase of the Project. The installed cost for this option amounts to US$ 24m. The Base Case will utilize Option 2, Option 1 and Option 4 over LoM while the Alternative Case will utilize Option 2 and Option 1 over LoM based on capacity requirements.
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19 MARKET STUDIES AND CONTRACTS
19.1 Market Studies The Falchani Project is not currently in production and has no operational sales contracts in place. To evaluate the market for its product, Plateau Energy Metals commissioned Benchmark Mineral Intelligence (BMI) to undertake a lithium market overview and outlook study. BMI provided its updated report in November 2019, which describes the lithium supply chain, long-term supply forecasts for Lithium to 2040, long-term supply cost curves for lithium to 2035 and lithium supply price forecast. Forecast prices to the year 2040 for both for technical and battery grade lithium carbonate are also provided, and these have formed the basis for the economic analysis undertaken for the PEA.
19.2 Lithium and Battery Demand Outlook In this section BMI outline the key drivers for the growth in lithium demand, with a focus on the lithium-ion battery sector, where most of this growth will occur. The charts provided outline BMI’s expectations for the development of lithium demand from different end-use sectors.
Until recently, the bulk of global lithium supply was consumed in industrial applications unrelated to the battery sector. As recently as 2015, more than two thirds of lithium demand came from an assorted group of end uses, including glass, ceramics and lubricants. By contrast, in 2019 almost 60% of lithium demand— approximately 190Kt LCE—is estimated to come from the battery sector. Within the battery sector itself, NCM lithium-ion batteries have been the fastest growing contributor to the increase in demand over the last four years. Overall lithium demand from the battery sector has grown at a CAGR of more than 30% since 2019, while the CAGR growth rate for NCM batteries has exceeded 100%.
Looking ahead, BMI expect battery demand growth of almost 30% CAGR between 2019 and 2025, with almost all this growth stemming from the market for EVs. Technical demand is expected to grow at a rate slightly higher than BMI’s expectations for global GDP—around 2% compound per annum.
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Figure 19-1 Lithium-ion Battery Demand [Source: Benchmark Mineral Intelligence] Given that the prospects for lithium demand are heavily contingent on the development of the EV market BMI examined the key drivers for this market. The diagrams to follow outline the development of the EV market across various countries over time. As can be seen, the combined battery electric vehicle (BEV) and plug-in hybrid electric vehicle (PHEV) markets stood at roughly 2 million vehicles in 2018, approximately 2% of total passenger car and light-duty vehicle sales. Half of these sales occurred in China.
Figure 19-2 Global BEV and PHEV Vehicle Sales by Country 2011-2018 [Source: Benchmark Mineral Intelligence] There are three main factors driving the adoption of EVs to varying degrees in different markets. The first is emissions legislation: in all major vehicle markets there has been an ongoing tightening of limits for vehicle emissions for OEMs to meet with regards to fuel economy and CO2, as well as air quality issues around NOx and particulate matter. The European Union has generally led the world in formulating these standards, which are later adopted by legislators in other countries in various forms. China for instance is transitioning to China 6 (Euro 6 equivalent) in 2020.
The issue for OEMs has been that their two traditional technologies, diesel and gasoline engines, each perform well on one of these issues but not the other. Diesel technology performs well against fuel economy
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and CO2 standards, but poorly on NOx and particulate matter, necessitating significant technological intervention in the form of selective catalytic reduction that increases the cost of the vehicle.
The second factor, therefore, is that in the face of tightening standards for air quality it is now very difficult for OEMs to meet fuel economy and CO2 standards without adopting some form of electrification in their model line ups. As a result, OEMs have developed and made significant investments in electrification strategies in order to meet existing and future challenges. The chart that follows, outlines the investments being made by auto manufacturers to facilitate the development of EVs within their model line ups. It is important to point out, however, that not all OEMs are pursuing this strategy at the same pace, and many have an intermediate strategy of adoption of hybrid technology before moving to full electric later. The world’s largest OEM, Volkswagen, is leading the industry in terms of the scale and focus of its investments in the EV supply chain.
Figure 19-3 Major Auto-Manufacturer EV Plans [Source: Benchmark Mineral Intelligence] The third factor is that governments have been supporting these electrification efforts via incentives and subsidies for EV purchases and production. To date China has had one of the most generous subsidy programmes worldwide. Although this programme is now being wound down, it is being replaced by a VAT reduction and other fiscal incentives for new energy vehicles. In addition, governments in virtually every major vehicle market have some form of either direct subsidy or fiscal incentives to support incentives.
Owing to these investments and as the market builds scale, OEMs and battery makers will be able to significantly reduce the cost of EVs at a cell, battery pack and vehicle platform level, which will see price for EVs draw towards parity with ICE vehicles by the middle of the next decade. As a result, BMI expect that EV adoption levels will pick up sharply in the second half of the 2020’s. A further important point is that these investments, which BMI estimate at US$ 300 billion for vehicle and battery pack production, and a further
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US$ 160 billion in battery cell capacity investment by 2030, will need to be amortised over the next decade at least. This provides a very strong barrier to entry for rival battery and other zero-emissions technologies over the same period.
Figure 19-4 Global EV sales and penetration rate forecast, 2015-35 [Source: Benchmark Mineral Intelligence]
19.3 Lithium Quality In this section BMI discuss the significance of product quality, as it relates to grade and impurity levels, in lithium chemical product marketing. Lithium chemicals, particularly for battery-grade material, have tight specifications in terms of permissible levels of impurities. The table below outlines the impurity levels for battery-grade lithium carbonate at a range of major producers. For comparison purposes, the lithium carbonate quality achieved by ANSTO for the Project is shown in Table 13-21.
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Table 19-1: Battery Grade Lithium Carbonate Quality Parameters [Source: Benchmark Mineral Intelligence]
The implications for exceeding these limits are shown in the chart below, which breaks out the price premium achieved by battery-grade lithium carbonate materials versus technical grade. As can be seen, this premium can be in excess of 10% in periods of strong lithium pricing.
Figure 19-4 China ex-works Lithium Carbonate Pricing, Battery and Technical Grades, 2018 – YTD 2019 [Source: Benchmark Mineral Intelligence]
19.4 Lithium Supply Outlook At any time, there are several brownfield and greenfield lithium capacity projects announced and undergoing development. Some of that number will either never come to fruition and or else proceed at a faster or slower pace than projected.
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BMI designate projects as either ‘Highly probable’, ‘Probable’ or ‘Possible’, based on the criteria below. This is a subjective analysis that aims to identify the relative strengths of each Project at a given time, with factors subject to change.
The factors that determine how likely a project is to come online are often related, below, BMI group individual issues by type and show linkages between them. Utilising the detailed analysis conducted by BMI of both producers and projects, a capacity forecast has been constructed on a per-company basis to 2040. In the table and charts that follow BMI outline the greenfield and brownfield capacity expansions which are tracked by BMI and their ranking of each project.
The following chart details the geography and scale of the greenfield projects under development, it is BMI’s view that projects in strategic locations, those in regions where demand for battery cells will be highest such as North America and Europe, will be crucial in creating a sustainable supply chain for lithium-ion batteries, as key consumers will not want to be entirely reliant on supply from China. Battery cell manufacturers are planning capacity investments closer to where their key customers, automotive manufacturers, are located, and will wish to source at least part of their supply from local sources. This will cut down on lead times, which is increasingly important given the larger market share of lithium hydroxide that has a short shelf life, reduce freight costs and reduce default risks. There is also likely to be decreased jurisdictional risk by having less concentrated supply, which will aid more optimal and cost-efficient procurement practices within the value chain.
Figure 19-5 Greenfield Lithium Capacity Forecast to 2035 [Source: Benchmark Mineral Intelligence] There are also several brownfield capacity expansions underway or planned, particularly in South America. It is BMI’s view that there is potential for further development at these sites as demand begins to rise dramatically.
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Figure 19-6 Brownfield Lithium Capacity Forecast to 2035 [Source: Benchmark Mineral Intelligence] Another key source of future supply will come from recycling of end-of-life batteries. The chart that follows illustrates BMI’s expectations for this supply. It is important to note that the recycling of lithium-ion batteries for raw material extraction is in its infancy, and technologies have not yet reached a commercial stage at present. Further, supply from this source will only begin to have a significant impact when the first generation of EVs begin to come off the road at the end of the 2020s.
Figure 19-7 Recycled Lithium Supply [Source: Benchmark Mineral Intelligence]
19.5 Lithium Supply Demand Balance Forecast In the following charts BMI outline their base-case supply/demand forecast based on the analysis in the previous section, and their assumptions for market demand. In recent years relatively high prices for lithium, coupled with increased awareness of the prospects for lithium-ion battery technology has led to increased
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investment activity in new lithium supply. As a result, based on a pipeline of projects coming online over coming years, the market is likely to remain in relatively modest surplus through 2024.
In practice not all the possible projects will come online, which will mitigate some, if not all, of the surplus. In 2025, for example, BMI believe that lithium market will be roughly balanced only if all ‘probable’ and some ‘possible’ supply comes into operation.
Figure 19-8 Medium-Term Supply Forecast [Source: Benchmark Mineral Intelligence]
As the following chart shows, however, the market moves into clear deficit from 2025 onwards, even under the most optimistic of supply scenarios. As such, there will be an ongoing need for capacity investment for lithium. This has profound implications for their price forecast.
The analysis completed here appears to assume that traditional forms of project financing will be available to help grow capacity (which historically has not been readily available).
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Figure 19-9 Long-Term Supply Forecast [Source: Benchmark Mineral Intelligence]
19.6 Lithium Chemical and Battery Cathode Demand And Capacity Outlook The chart below outlines BMI’s view on the outlook for lithium demand by chemical product. As has been discussed previously, most future demand growth will be for batteries for EVs. As the market for EVs expands and the balance of chemistry will shift towards high-nickel cathodes, and cathode manufacturers will increasingly move towards the use of lithium hydroxide. This preference for lithium hydroxide for the manufacture of nickel-rich cathodes results from the faster degradation of hydroxide versus carbonate in the cathode manufacturing process, which requires less energy and is therefore more cost efficient.
Lithium hydroxide also allows for improved material crystallinity, greater structural purity and less mixing of lithium and nickel in the lithium layer relative to lithium carbonate. When using lithium hydroxide, lithium content is incorporated within the structure of the NCM hydroxide, while use of lithium carbonate results in excess free lithium, leading to an increase in material pH that can cause gelling of the cathode slurry and swelling of the cell upon cycling.
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Figure 19-10 Lithium Demand by Chemical Product [Source: Benchmark Mineral Intelligence] This, coupled with the number of hard-rock projects due for commissioning in coming years, sees the market move clearly into majority hard rock supply before 2020, as outlined in the chart below. There are several factors driving near-term growth in hard rock supply, including Australia’s relative proximity to latent conversion capacity in China, and the fact it is generally easier from a technical perspective to produce consistent-quality concentrate from hard rock resources than brines.
Figure 19-10 Brine and Hard Rock Lithium Supply Forecast, 2015-2040 [Source: Benchmark Mineral Intelligence] As discussed earlier, the lithium market is forecast to go into surplus until around 2025. However, this does not account for the difficulties new battery grade refiners will face in bringing such a large volume of production to market. Many are first time operators and will take time to make the correct quality in the volumes stated in their capacity forecast. This results from a lack of operational expertise at a technical and
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managerial level, as well as lead times for material qualification with top-tier supply chains, and notwithstanding the significant challenges around raising enough capital to fully develop capacity.
Looking at the next stage in the supply chain—cathode production—BMI perceive a need for sustained investment in capacity over coming years. In the period to 2023 for example, BMI expect the market to require a further 440 kMT-LCE of cathode capacity to be added. Some of this will come from integrated production of battery cell manufacturers. Northvolt in Sweden, for example, plans to produce its own cathodes. Despite this, there is a pronounced risk of deficit in cathode supply in the coming years.
Another consideration is the geographic split of cathode supply, with China heavily dominant both now and in the future. It seems likely that cell manufacturers, as well as OEMs, will look to locate new capacity in regions closer to consumption, namely Europe and North America, and this will benefit raw materials projects that are well located to serve these geographies, including Falchani.
19.7 Long-term Supply Cost Curves for Lithium to 2035 Lithium is sourced from either brine operations or those generically described as hard rock, with the balance of supply moving towards the latter over time. Most of the world’s brine capacity is in Latin America, with some production from China; hard rock supply is more widely spread geographically, with Australia a major supplier.
Total cash costs for lithium production range from US$ 2,000 per tonne LCE to US$ 8,000 per tonne LCE over the forecast period, with hard rock resources generally dominating the lowest-cost portion of the curve. Most of the new capacity coming online in the forecast period is expected to have production cost in excess of US$ 5,000 per tonne—which broadly puts it in the third and fourth quartiles of the cost curve.
For the most part, this will also be hard rock capacity; BMI expect some of the more expensive suppliers of this type to have production costs ranging from around US$ 6,000-8,000 per tonne in 2025. By that time, brine productions should see a relative improvement in their cost position versus new, hard rock market entrants. BMI expect brine producer’s costs to be solidly anchored within the middle of the global cost curve by 2025, and by 2030 to constitute the bulk of the global cost curve’s second quartile.
Towards the latter part of the forecast period there is a marked requirement for additional lithium capacity to come onstream to meet rising demand. Where this capacity will be commissioned is not certain, but as noted above, BMI foresee the bulk of new supply coming from hard rock sources. BMI expect that lithium prices will remain in a range needed to stimulate this new investment, given that geological constraints are not an issue. To cover the difference in the demand and supply forecasts BMI have added a 'potential' supply scenario in the data pack, costs for this supply are not included in the following cost curves.
For reference, however, for new brownfield capacity BMI assume that cost levels will be the same as BMI’s current outlook, necessary unplanned greenfield supply for lithium is assumed to come on at a mid-operating cost level, based on the proposed operating expenditure (opex) of projects that have already been announced and how BMI expect this to develop over time.
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BMI use a bottom-up cost modelling analysis to reach their industry costs for lithium, and cross-references these with top-down down information sources, including company financial reports and primary research utilising their network of industry contacts and mining and chemical processing engineers.
In order to arrive at a representative ‘Total Cost’ figure for each operation under review BMI consider the following factors:
Cash/Opex – This includes Mine site, General and Administration, Sustaining Capex, Energy, Labour, shipping costs to point of processing and Reagent costs
Capital Charge – BMI employ an annuity calculation for unit capital costs over a mine life of “25 or 30” years. Interest is charged at each operations weight average cost of capital (WACC), plus a risk premium depending on the asset jurisdiction and profile
Tax and royalty charges – Returns for investors are net of taxes, BMI therefore make a consideration for each operation’s marginal corporate tax rate in the jurisdiction as well specific royalty charges for each resource
Figure 19-11 Long Term Supply Cost Curves for Lithium Carbonate -2019 [Source: Benchmark Mineral Intelligence]
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Figure 19-12 Long Term Supply Cost Curves for Lithium Carbonate -2025 [Source: Benchmark Mineral Intelligence]
Figure 19-13 Long Term Supply Cost Curves for Lithium Carbonate -2030 [Source: Benchmark Mineral Intelligence]
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Figure 19-14 Long Term Supply Cost Curves for Lithium Carbonate -2035 [Source: Benchmark Mineral Intelligence]
19.8 Lithium Price Forecast BMI’s medium and long-term price forecast methodology for lithium considers the following factors:
Balance of supply and demand – Based on their analysis of the development of demand over time, and their understanding of the pipeline of new greenfield and brownfield capacity, BMI are able to make an assessment of the extent of over and under supply in the market over time, and how this is likely to impact prices
Production costs for the marginal cost producer – Long run pricing in commodity markets is often determined by the level at which the highest cost producer needed to supply the market can continue to operate; for lithium this would be at a cash cost level of around US$ 8,000 per tonne LCE. For the forecast BMI expect this will be less of a factor, and due to the ongoing need to incentivise new projects the price will be well above this level
Incentive pricing for new greenfield and brownfield capacity investment – As stated, there will be an ongoing requirement for new greenfield capacity over the course of the forecast period. BMI have conducted an Internal Rate of Return (IRR) analysis for a ‘Typical’ greenfield lithium project, which suggests that at a price level of US$ 13,000 per tonne LCE the IRR would be 35%. This is approximately the level that junior miners are using for their assessment of project economics and reflects the fact that as the lower cost new supply comes online there will be a need for the development of higher capex projects over time.
In order to better illustrate the pricing dynamics for lithium over time BMI have broken down their price forecast into three key pricing phases, as described below:
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Phase I: 2015 – 2018
Lithium prices have risen sharply since 2015, on the back of rising demand for battery raw materials and a number of years of tight supply. There has also been some upward momentum in pricing from speculative buying on the back of a perceived ongoing supply shortage
Nevertheless, these higher prices have stimulated investment in new green and brownfield capacity expansions, and in 2018 the market was in moderate oversupply. This saw prices correct in the later part of the year.
Phase II: 2019 – 2027
BMI expect prices to remain under pressure as new supply enters the market, with hydroxide price moves lower lagging carbonate by 3-6 months.
Nevertheless, this decreasing trend might stop during the 2021-2022 timeframe due to delayed expansions. BMI also expect a rapid surge in demand as energy storage becomes massive due to decrease in cost of LIB production.
Price falls will be limited by the need to constantly stimulate new investment however, and it is likely that many projects in BMI’s possible and probable categories will be delayed until the market comes back into balance in the 2024-2025 timeframe.
With respect to the price difference between lithium carbonate and lithium hydroxide, the premium of producing lithium hydroxide will start to gradually disappear as more spodumene concentrate is used as raw material instead of lithium carbonate instead of brine. The extra cost of producing hydroxide from carbonate will be avoided as production of carbonate/hydroxide from spodumene concentrate is an integrated process.
Phase III: 2028-2040
As the forecast period develops the level of visibility for new capacity projects both planned and coming online is reduced. However, based on the pipeline of currently announced projects BMI do expect that the market will begin to tighten again in the period to 2026 as demand surges ahead. BMI expect that a pipeline of new currently unannounced projects will begin to come through over the coming decade to meet this demand and that ultimately prices will settle into close a long-term average of $13,100 per tonne FOB Antofagasta for lithium carbonate. At this price IRRs provide enough incentive for investment over the forecast period.
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Figure 19-15 Lithium Carbonate Price Forecast, Battery Grade, Spot Material [Source: Benchmark Mineral Intelligence]
19.9 BMI Research Findings Based on the findings of the research for the report, BMI make the following key observations for the outlook for the market for lithium, and the prospects for the Falchani Lithium Project as a supplier of hard rock lithium.
There is an ongoing need for capacity investments in lithium raw material extraction, chemical processing and cathode manufacturing throughout the life of the BMI forecast to 2040. Given the direction of travel and level of investment in the downstream of the electric vehicle supply chain, at an auto-manufacture and battery cell level, there is an impending shortfall in all areas of the upstream supply chain which needs to be addressed.
The level of financing needed to bridge this gap is relatively small compared to the investment being made in vehicle and battery cell manufacturing, so BMI feel that is highly likely that actors in these areas of the supply chain will take steps to ensure supply availability, as has started to happen already.
As a result of this BMI expect that despite recent weakness in lithium pricing, prices will recover in order to incentivise investment in both raw material and chemical processing capacity. For lithium carbonate and hydroxide BMI forecast long-term pricing to settle in the region of US$ 13,000 per tonne.
Lithium raw material projects in stable jurisdictions close to areas of future high demand, namely Europe and North America, are at a distinct advantage in terms of potential for development. This arises from an imbalance in the geography of lithium raw material supply towards Asia, including Australia.
Battery cell manufacturers are planning capacity investments closer to where their key customers, automotive manufacturers, are located, and will wish to source at least part of their supply from regional sources to cut down on lead times, freight costs and default risks.
The outlook for the battery cathode chemistry mix indicates a move towards high-nickel NCM technologies, which favours the use of lithium hydroxide in the production of these cathodes. Production of lithium
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hydroxide is more economic from hard rock lithium sources, which again favours the Falchani Lithium Project as a lithium rich tuff resource.
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20 ENVIRONMENTAL STUDIES, PERMITTING & SOCIAL OR COMMUNITY IMPACT
20.1 Introduction Detailed environmental permitting and social impact considerations are not within the scope of a PEA but follow in later stages of a project’s development. The following section provides an overview of the environmental requirements and the legislation that may apply to the project depending on the level of its assessed environmental impact.
20.2 Project Permitting Requirements9 10 11 Peru has many environmental laws and regulations that apply to resources sector. These are arranged in a general framework of laws, legislative decrees, supreme decrees, legislative resolutions, ministerial resolutions and decisions. Key among these are: the General Environmental Law (28611-2005) (GEL); the Environmental Impact Assessment (EIA) Law (27446-2001); the Environmental Impact Assessment Regulation (Supreme Decree 019-2009); the Environmental Regulation on Exploration Activities (020-2008- EM) (EREA); the Environmental Regulation for mining exploration activities (020-2008-EM); and the Regulations on the Protection and Environmental Management for exploitation, operation, general labor, transportation and storage (040-2014-EM). The competent environmental authority for the approval of the environmental certificate will be determined by the level of environmental impacts that the activity could generate. Depending on the environmental impacts, the competent authorities are the following: The National Environmental Certification Service for Sustainable Investments (Servicio Nacional de Certificación Ambiental para las Inversiones Sostenibles, SENACE) of the Ministry of the Environment (Ministerio del Ambiente, MINAM) which approves the Detail Environmental Impact Assessment (EIA-d); The Ministry of Energy and Mines which approves the Semi-detail Environmental Impact Assessment (EIA-sd); and, The Regional Government which approves the Environmental Impact Statement (DIA). For mining and mineral exploration, the relevant authority is the Ministry of Energy and Mines (Ministerio de Energía y Minas (MINEM)) through the General Directorate of Mining Environmental Affairs (Dirección General de Asuntos Ambientales Mineros (DGAAM)), Supervisory Agency for Investment in Energy and Mining (Organismo Supervisor de la Inversión en Energía y Minas, OSINERGMIN) and the Environmental Assessment & Control Agency (Organismo de Evaluación y Fiscalización Ambiental, OEFA) are the entities in charge of supervising the development of energy and mining activities. MINEM has monitoring and sanctioning powers over mining activities regarding technical matters whilst OEFA has the same powers regarding the supervision of environmental matters. MINEM plays a major role in the policy making of the energy and mining sector; along with other authorities it also leads the environmental certificate approval procedure. In
9 Environmental Legislation Handbook (Manual de Legislación Ambiental) http://www.legislacionambientalspda.org.pe/. Website accessed 4 March 2020.
10 Environmental Overview Commentary, https://minehutte.com/jurisdiction/peru/ Website accessed 4 March 2020.
11 Ministry of Environment, https://www.gob.pe/minam#normas-legales Website accessed 4 March 2020.
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addition, specific regulations have been approved regarding EIA procedures, comprehensive procedures for citizen participation, and detailed regulations for closure certifications.
Prior to commencing mine development and operation, Peruvian Environmental Regulations require an EIA- d to be carried out. The EIA-d must be approved by SENACE before mining activities may commence. The environmental impact assessment has to comply with the requirements set out in the Ministerial Resolution N° 092-2014-MEM-DM and Supreme Decree N° 005-2016-MINAM, which includes a very detailed description of all aspects of the project that should be considered to ensure that the environment is adequately protected. This includes a public consultation process involving all interested and affected parties and communities. The project description used as the basis for the environmental impact assessment should be developed to at least feasibility level and must include all aspects of the project including off-site facilities such as electric power source, product transport and shipping. Construction of the project must be initiated within three years after the approval of the environmental impact assessment; otherwise it is deemed invalid and will need to be redone (Peruvian Law No. 27446 and Supreme Decree No. 019-2009- MINAM). Twelve months following the approval of the environmental impact assessment, a detailed closure plan must be submitted for approval and a closure bond must be surrendered within one year of the approval of the closure plan. Following the approval of the environmental impact assessment, the concession holder must demonstrate they have secured the surface rights required to carry out the project. At the same time, the concession holder must also apply for all other necessary regulatory permits and approvals.
20.3 Environmental Baseline A baseline environmental study (Baseline Study) started by ACOMISA, a Lima-based environmental consulting company, and continued in collaboration with Anddes is ongoing. The Baseline Study was expanded to include each of the Falchani Lithium Project and Macusani Uranium Project areas and now covers the affected areas belonging to the communities of Isivilla, Tantamaco, Corani, Chimboya, Paquaje and Chacaconiza. This expanded Baseline Study was accepted by SENACE and built on previous environmental monitoring that was started by the Company in 2010. The Baseline Study has recently progressed into an EIA that includes community relations and impacts of future development, as well as flora, fauna, water, air and noise sampling and comprehensive archaeological studies.
EIA work continues as a whole for the part of the plateau marked with geological resources. For the Quelccaya exploration area, where a new occurrence of lithium-mineralization was discovered, an exploration permit is being elaborated at this stage, but advancement is dependent on market conditions.
The Falchani Lithium Project lies outside of the Corani-Macusani Area of Cultural and Archaeological Significance (Archaeological Area of Interest). With the assistance of the Ministry of Culture of Peru, the Company has spent the past three years conducting a professional archaeological study, which is still on- going. Archaeological studies completed as part of the exploration program permitting and recent EIA study work have shown that to date, there are no sites of cultural or archaeological significance affecting the Falchani Lithium Project. The local landscape, landforms, higher elevation and rock weathering style at the project was not conducive for hosting, or preservation of, sites of archaeological significance.
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20.4 Social, Community and Environmental Impacts
In January 2001, MEM published guidance on the management of relations between companies and local communities (Guía de Relaciones Comunitarias). It describes the Social Impact Study (Estudio de Impacto Social) now required as a part of the EIA. The Social Impact Study consists of an analysis of the impacts on persons, interpersonal relationships, economy and culture in the communities living in the area of influence, resulting from the mining operation. The plan also includes mitigation measures to reduce such impacts.
Regarding public participation in the EIA approval process, the law requires a single public hearing to take place and makes the EIA a public document, meaning the applicant must make it available to the public.
An environmental study is required to be completed to fully understand the potential social and environmental impacts due to the implementation of the project. Details of some potential impacts are briefly described in this section.
Positive Impacts of Plateau Energy Metals in The Macusani Region
Plateau is working to engage and develop the local community and has undertaken various community programs over the years including:
• Annual comprehensive medical & nutritional campaign for inhabitants of the five communities of the District of Corani, Carabaya Province, Puno
• Employment of local community members (members from Isivilla, Tantamaco, Chaccaconiza, Quelccaya, Chimboya, Pacaje and Corani)
• Hygiene programs (water sanitation)
• Sports development and sponsorship (community project cooperation and training for the completion of an all-weather football field)
• Alpaca Fiber to Market Program (trained and assisted local neighbourhoods with refurbishment and machine maintenance and connected the weavers with a market in Lima where their products are now sold)
• Monthly milk program contribution; and
• Schools training programs and sponsorship.
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Health of Workers
20.4.2.2.1 Altitude Sickness
Altitude sickness is a health concern for persons at the given Project altitudes. It is anticipated that locally sourced labour or those living and/or working at high altitude will require minimal if any acclimatisation. However, personnel living at low altitudes who stay at low altitudes for significant time between rotations will require acclimatisation for each period spent at site.
20.5 Rehabilitation and Closure An allowance of US$30 million is included in the capital cost estimate for closure and rehabilitation costs. A preliminary closure management plan should be prepared in the future to detail the requirements and better define costs of rehabilitation and closure. The following describes considerations that were used for cost estimation of rehabilitation and closure.
• Dust control measures would be incorporated in the Project design. Any potential dust on and around the site may require attention during site rehabilitation.
• Allowance has been made to cover the solid tailings with topsoil and /or waste rock.
• The access roads from the IH to the site would remain in place for local community use. All other access and haul roads would be ripped and regraded, where required, to blend in with local topography. Safety berms and drainage infrastructure will be removed or graded, where applicable.
• For the purpose of this PEA, it is assumed that open pits and waste rock dumps will remain as permanent features with egress routes maintained in the event of entry and stormwater diversions maintained around these features. All plant, infrastructure or facilities are to be removed and ingress blocked. Limited re-grading has been allowed for to promote re-vegetation.
• Passive re-vegetation is proposed to promote soil stability and return of local species.
20.5.1 Post-Closure Monitoring and Maintenance
An allowance for routine monitoring including personnel costs and laboratory fees is included within the estimate. A closure management plan, including monitoring plan and time frame, will allow for improved accuracy of the rehabilitation and closure estimate. The monitoring system will also provide an early warning system to identify unforeseen issues post-closure.
20.6 Green Project Initiatives The development of the Project will include the following Green Initiatives:
• Water Efficiency: Use of filtered tailings enables recycling of up to 90% of process water
• Environmental and Personnel Safety: Use of environmentally responsible dry stacking tailings technology
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• Clean Energy Generation: The sulfuric acid plant on site produces sufficient clean energy to power entire process plant and provide excess power
• Future development work to evaluate opportunities such as:
o electric mine fleet with excess clean energy storage on site
o rainwater run off storage and additional water recycling
o low CO2 transport and logistics for consumables.
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21 CAPITAL AND OPERATING COSTS
21.1 Capital Costs
A priced mechanical equipment list is the foundation of the capital cost estimate for the processing plant. Factors were applied to the equipment cost to derive costs for bulk materials, freight, installation and for Project indirects. Initial capital estimates are identical for both the Base Case and Alternative Case.
The cost estimate was generated from information from the following sources:
• Current and historical cost information from DRA databases;
• Quotations from equipment suppliers / external consulting firms;
• Rates from local service providers, and;
• Data from earlier studies for the Macusani Uranium Project.
Quotations from suppliers have accounted for approximately 80% of total equipment costs.
Both capital and operating cost estimates were prepared in mixed currencies and reported in United States dollars (US$). The currency exchange rates used for the cost estimate are presented in Table 21-1 and are based on data from XE.com, dated 24 April 2019.
Table 21-1 Currency Exchange Rates
Exchange Value
US$:EUR 0.89
US$:AUD 1.43
The prepared estimate is classified by DRA as a Class 4 estimate with a +40 % / -40 % accuracy, similar to an AACE International Class 4 (+50 % / -30 %) and deemed suitable for a PEA level study.
The following assumptions underlie this estimate:
• The design is as detailed in the relevant sections of this report;
• Suitably qualified and experienced construction labour will be available at the time of execution of the Project;
• All geotechnical design data was assumed due to the lack of geotechnical information at the proposed plant site and access road corridor;
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• Capital costing detailing the TSF and access roads received by Vice Versa Consulting, an external consulting firm, has not been interrogated in detail and it is assumed to be an accurate and representative estimate falling within the requirements of a PEA level study;
• A capital provision has been included to account for costs associated with plant closure and rehabilitation;
• The Project currently assumes additional land acquisition and surface rights will be obtained in the future to accommodate proposed infrastructure such as access roads, powerline and water servitudes as well as the processing facilities themselves. The potential costs of such an acquisition are not included within the estimate.
The PEA economic model includes an allowance for annual sustaining capital of 0.5% of capital expenditure.
The following items are specifically excluded from the estimate at this level of study:
• Owner’s Costs prior to Project approval;
• Exploration drilling;
• Permits, licences or legal and administrative costs associated with government mining and environmental regulations. This includes reporting requirements during operation and related administrative costs;
• Cost escalation;
• Currency fluctuations;
• Finance charges and interest during construction;
• Sunk costs;
• Insurance;
• Container demurrage costs;
• Containment, monitoring or treatment of waste rock in the event that acid rock drainage or metal leaching are applicable;
• Hydrogeological monitoring, dewatering or stormwater control measures;
• Allowances for special incentives (schedule, safety or others);
• Force majeure issues;
• Future scope changes;
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• Costs for community relations and services;
• Relocation or preservation costs, delays and redesign work associated with any antiquities and sacred sites;
• All duties and taxes;
• All costs associated with weather delays including flooding or resulting construction labour stand- down costs;
• All other costs not explicitly mentioned in this report.
Contingency is defined by AACE International as “a specific provision for unforeseeable elements of cost within the defined scope of work; particularly important where previous experience relating to estimates and actual costs has shown that unforeseeable events that will increase costs are likely to occur”. The contingency is not used for scope changes but for unforeseeable events such as:
• Inaccuracy of material quantities (particularly relevant in early stage studies due to the inherent lack of engineering definition);
• Inaccuracy of material and construction unit rates;
• Buried services ;
• Industrial relations issues;
• HSE issues;
• Approval delays;
• Performance of suppliers and contractors;
• Freight and handling issues;
• Commissioning and start-up delays;
• Inclement weather over and above average weather conditions.
An 11% contingency, relative to total process plant cost and exclusive of non-process infrastructure, has been allocated to the direct and indirect costs. The contingency is a weighted average obtained by applying different contingency percentages, ranging from 7.5% to 20%, to the different cost elements of the capital estimate based on the level of detail of the quotes received. A 15% contingency allowance has been included for non-process infrastructure which is inclusive of the TSF and access roads.
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A contractor-operated fleet has been adopted for the purposes of this Project. The scope of the contract will include all aspects of mining relating to RoM pad re-handle, maintenance, technical services, welfare and all required infrastructure.
Capital outlay has been allowed for pre-stripping, mobilisation, bush clearance and topsoil stripping. The estimate consists of the contractor site establishment cost and the predevelopment cost to reach a product capacity of 1.0Mtpa.
Initial mining fleet comprises of a blasthole drill rig, primary excavator, wheel loaders, and eight haul trucks. In addition, there is an ancillary mobile fleet including dozers, water trucks, grader and a compactor. Pre- production waste stripping includes 6.3 million tonnes of waste and the site establishment cost of the mining contractor.
Total mining capital amounts to US$ 19m of which pre-stripping accounts for 80%. Table 21-2 provides a breakdown of mining costs.
Table 21-2 Mining Costs
Plant Area mount US$ % of Total
Pre-Strip* 15,295,649 80
Mobilisation 3,750,000 20
Bush Clearing** 32,500 0
Topsoil Stripping*** 117,000 1
Total 19,195,149 100
*Pre-Strip volume equals first year of waste mined, but can be optimised
**Bush Clearing hectares calculated for first year of mining requirement
***Topsoil calculated with bush clearing hectares X 300mm depth
Note: Rates and allowances based on database and benchmarked information
Table 21-3 provides a breakdown of direct costs for the process plant. Capital costs associated with the outlay required for reagents, notably the acid plant, form the largest single cost driver accounting for 46% of total direct costs. Capital required for the construction of a sulfuric acid plant has been included in this total.
Table 21-3 Process Plant Direct Costs
Plant Area mount US$ % of Total
100 - Crushing 6,542,936 2
200 - Milling 7,201,595 2
400 - Leaching 22,536,906 7
500 - Pre-neutralisation 7,354,131 2
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Plant Area mount US$ % of Total
600 - Neutralisation 7,249,888 2
700 - Softening 2,542,365 1
900 - Product Precipitation 84,590,551 25
1000 - Product Drying and Packaging 15,692,538 5
1100 - Tailings 13,556,311 4
1200 – Reagents (including acid plant) 158,116,775 46
1300 - Water Services 6,820,332 2
1400 - Steam Generation 2,226,005 1
1500 - Cooling Water System 4,295,407 1
1600 - Air Services 1,727,841 1
1700 - Fuel Facility 563,199 <1
1800 - Waste Water Treatment 469,318 <1
Total – Directs 341,486,098 100
Process plant infrastructure includes capital associated with a permanent village, workshop, buildings, communications and other minor storage and service-related requirements. The bulk of process plant infrastructure costs resides with establishment of a 400-bed permanent village (including associated services) accounting for 39% of total process related infrastructure. Table 21-4 provides a breakdown of all process plant infrastructure costs.
Table 21-4 Process Plant Infrastructure Costs
Plant Area US$ % of Total
Buildings & Services - Permanent Village & Services 11,938,960 39
Buildings & Services - Workshop (including equipment) 2,920,129 10
Buildings & Services - Communications 2,100,000 7
Buildings & Services - Administration 1,985,688 7
Buildings & Services - Warehouse 1,868,883 6
Buildings & Services - Laboratory Building 1,051,247 3
Buildings & Services - Sulfur Shed 934,442 3
Buildings & Services - Change House 817,636 3
Buildings & Services - Access Gates and Fencing 700,000 2
Buildings & Services - Emergency Power 681,277 2
Buildings & Services - Emergency Services 467,221 2
Buildings & Services – Security Office & Gate House 233,611 1
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Plant Area US$ % of Total
Equipment - Mobile Plant and Light Vehicles 2,500,000 8
Equipment - Laboratory Equipment Allowance 1,550,000 5
Equipment - Weighbridge 560,000 2
Total 30,309,094 100
Indirect costs include all temporary installations, on-site vendor support, initial spares, first fills and EPCM costs. Owners costs are excluded from this estimate. Total indirect costs amount to US$ 91m of which EPCM costs account for 51%. Table 21-5 provides a breakdown of indirect costs.
Table 21-5 Indirect Costs
Plant Area mount US$ % of Total
Temporary Camp and Services (600 bed) 9,237,547 10
Temporary Messing 5,773,467 6
Vendor Support 1,427,137 2
Commissioning Works 3,139,701 3
Spares and First Fills 4,852,266 5
Temporary Facilities and Services 19,939,760 22
EPCM Labour and Consulting Services 47,039,039 51
Total – Directs 91,408,917 100
The Engineering Procurement and Construction Management (EPCM) costs have been estimated at US$ 47m. Estimated construction costs are not included within the EPCM estimate but are accounted for as part of the direct capital costs. EPCM was selected as the method of the Project delivery due to the current level of scope definition. It should be noted that the Project could be executed as an Engineering Procurement Construction (EPC) project with Plateau or their representative acting as a Project Management Contractor (PMC). Assuming all other things are equal, if the Project delivery method chosen is an EPC / PMC model it may be more expensive when compared to an EPCM due to the additional margins of the EPC contractor required to cover the additional risk.
Other Indirect Costs
This estimate includes allowances for:
• IT hardware, software and training;
• Construction power;
• Construction camp costs (600 bed, includes messing);
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• Commissioning;
• Spares;
• First fill;
• Vendor support;
• Independent project consultants used for verification such as engineers, geotechnical consultants and surveyors.
The TSF has been designed based on the capacity requirements over LoM. An installed cost for the initial TSF has been estimated to be US$ 24m inclusive of a 15% contingency.
The existing connecting road between the highway and the Project site is not suitable for heavy vehicle transit. A capital estimate of US$ 29m (inclusive of a 15% contingency) has been included for a new access road which starts at the Huiquiza bridge. This option starts at the diversion that is currently used to access the area of Project. This alternative takes advantage of the existing section of access to the town of Tantamaco, Isivilla and the accesses built for the communities of Quelccaya and Chaccaconiza.
The capital estimates have been presented in the tables below and cover the Base Case and Alternative Case. The initial capital outlay is identical for both cases considered and amounts to US$ 587m of which direct costs constitute 58% of total costs. Table 21-6 shows the initial capital cost summary for the Project by area.
Table 21-6 Project Initial Capital Cost – Base Case and Alternative Case
Area US$ % of Total
Mining Capital, Pre-strip 19,195,149 3
Process Plant, Direct Costs 341,486,098 58
Process Plant, Infrastructure 30,309,094 5
Process Plant, Indirect Costs 91,408,917 16
Process Plant, Contingency 50,952,452 9
Tailings and Bulk Infrastructure (incl. contingency) 53,615,798 9
Total (Phase I) 586,967,508 100
Table 21-7 shows the estimated initial capital costs by commodity and expresses each cost as a percentage of the direct costs. It is noted that the percentages are skewed from what one may expect due to the inclusion of the sulfur-burning acid plant which was offered on a turn-key basis.
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Table 21-7 Initial Capital Cost Summary – By Commodity (Base Case and Alternative Case)
Major Commodity Description US$ % of Direct Costs
Mining 19,195,149 6
Civils - Site Development 6,643,719 2
Structural - Concrete 32,567,122 10
Structural - Steelwork 16,333,291 5
Building - Architectural 10,278,857 3
Building - Modular 11,938,960 3
Mechanical - Platework 22,198,498 7
Mechanical - Plant Equipment (including acid plant) 224,924,567 66
Piping 21,407,308 6
Valves and Special Fittings 3,657,126 1
Electrical - Equipment 10,735,026 3
Instrumentation and Control 5,074,912 1
Electrical - Cable-way 2,207,544 1
Electrical - Cable 3,128,262 1
External Site Works (TSF, Access Road) 54,315,798 16
Temporary Facilities and Services 34,950,774 10
Construction Indirects 4,566,838 1
Professional Services (EPCM) 47,039,039 14
Spares & First Fill 4,852,266 1
Contingency (Process Plant) 50,952,452 15
Total (Phase I) 586,967,508 -
21.2 Capital Cost Phasing – Base Case The Base Case design for the process plant achieves a peak milled tonnage of 6Mtpa over three phases. Target processing rates for Phase I, II and III is 1.5Mtpa, 3Mtpa and 6Mtpa respectively. The process plant capital expenditure for Phase II (3Mtpa) and Phase III (6Mtpa) is modelled on a straight-line method referenced to Phase I capital de-rated at 20%. A de-rating factor has been applied due to the expectation that cost reductions will be realised for plant infrastructure, earthworks and other common areas. Similarly, bulk infrastructure capital expenditure for subsequent phases is modelled using a de-rating factor of 75%. A higher de-rating factor has been applied due to the expectation of bulk infrastructure requirements for the mine being established up-front. Capital outlay required for tailings disposal and storage has been based on an estimate provided by Vice Versa Consulting, a third-party consulting firm. A 2-year construction period is assumed for all Project phases. An overview of the capital phasing strategy over LoM for each phase is presented in Table 21-8.
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Table 21-8 Capital Cost Phasing – Base Case Phase I (Initital), Phase II, Phase III, Total Capital Area US$’000 US$’000 US$’000 (LoM), US$’000 Mining Capital, Pre-strip 19,195 - - 19,195
Process Plant, Direct Costs 341,486 273,189 546,378 1,161,053
Process Plant, Infrastructure 30,309 24,247 48,495 103,051
Process Plant, Indirect Costs 91,409 73,127 146,254 310,790
Process Plant, Contingency 50,952 40,762 81,524 173,238 Tailings and Bulk Infrastructure (incl. 53,618 7,321 112,113 173,049 contingency) Closure - - - 30,000
Total Project Capital Cost 586,968 418,646 934,763 1,970,377
Note: Costs for closure capital have been estimated.
21.3 Capital Cost Phasing – Alternative Case In contrast, the Alternative Case design for the process plant achieves a peak milled tonnage of 3Mtpa over two phases. Target processing rates for Phase I and II is 1.5Mtpa and 3Mtpa respectively. A similar capital estimation approach to the Base Case was adopted for the Alternative Case. An overview of the capital phasing strategy over LoM for each phase is presented in Table 21-9.
Table 21-9 Capital Cost Phasing – Alternative Case Phase I (Initital), Phase II, Total Capital (LoM), Area US$’000 US$’000 US$’000 Mining Capital, Pre-strip 19,195 - 19,195
Process Plant, Direct Costs 341,486 273,189 614,675
Process Plant, Infrastructure 30,309 24,247 54,556
Process Plant, Indirect Costs 91,409 73,127 164,536
Process Plant, Contingency 50,952 40,762 91,714 Tailings and Bulk Infrastructure (incl. 53,618 54,535 108,153 contingency) Closure - - 30,000
Total Project Capital Cost 586,968 465,860 1,082,829
Note: Costs for closure capital have been estimated.
21.4 Operating Costs
The operating cost estimate has been completed from a zero base and presented in US$. Costs associated with power, labour, materials, consumables and general and administration have been included in this estimate. The basis of the estimate has been defined in the sub-sections below.
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Both capital and operating cost estimates were prepared in mixed currencies as per the capital cost estimate. The currency exchange rates used for the cost estimate are presented in Table 21-10 and have been based on data from XE.com, dated 24 April 2019.
Table 21-10 Currency Exchange Rates
Exchange Value
US$:EUR 0.89
US$:AUD 1.43
The prepared estimate is classified by DRA as a Class 4 estimate with a +40 % / -40 % accuracy, similar to an AACE International Class 4 (+50 % / -30 %) and deemed suitable for a PEA level study.
A contingency of 0% has been applied to the Project operating costs due to the level of scope definition.
The estimate includes all site-related operating costs associated with the open pit mining activities. The mining operating costs are based on a benchmarked contractor operated fleet of equipment to meet the mine production schedule, including maintaining haul roads and work areas, re-handle mineralised material from the RoM pad to the process plant and maintaining the equipment.
The labour complement is based on labour rates provided by PEM and shift rosters planned by DRA. The labour cost estimate is based on three crews of shift workers working 10-hour shifts; on a two-shift rotation.
Operational staff have a 15% burden included to personnel, which include coverage for overtime and leave, sick leave, annual leave, and training. It has been assumed that all workers are based in-country. No allowances are included for expatriate staff and travel to and from their country of origin.
The benchmarked all-inclusive mining contractor and diesel costs are presented in Table 21-11. These are exclusive of pre-development costs which are capitalised in the estimate.
Table 21-11 Mining OPEX – Key Input Parameters
Description Unit Value
Diesel US$/L 0.80
Drill US$//t mined 0.05
Blast US$/t mined 0.46
Load US$/t mined 0.31
Haul US$/t mined 0.61
Doze US$/t mined 0.14
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Description Unit Value
Engineering US$/t mined 0.50
Maintenance US$/t mined 0.23
Other US$/t mined 0.10
The estimate covers costs associated with the process plant operation and includes power, reagents, labour and consumables. Costs have been based on a combination of market pricing, client input and DRA database information for similar projects.
Reagents
Table 21-12 presented below provides a summary of the expected nominal reagent consumption rates, based on results obtained from test work, vendor specifications and mass balance outcomes. Unless otherwise specified, reagent unit supply costs shown in Table 21-12 include all clearance charges and taxes that may be incurred.
Table 21-12 Process Plant OPEX – Reagents Nominal Consumption, Unit Supply Cost, Supply Price Description kg/t mineralised material US$/t Source Reagent Freight (Lime) - 20 Plateau
Reagent Freight (Other) - 50 Benchmarked
Sulfur 127 80 Benchmarked
Sodium Carbonate 28 150 Market price
Limestone 196 27 Plateau
Quicklime 88 95 Plateau
Flocculant 0.08 4,000 Benchmarked
Dryer Fuel 0.04 1,154 Plateau
Grinding Media 0.43 1,100 Benchmarked
Power
The estimated average running load has been calculated using expected power draw from the equipment and factored (in certain cases) to tonnage throughput. A calculated unit power draw of 76.4 kWh/t mineralised material has been applied. An acid plant co-generation benefit of 18MW has been estimated which realizes a net surplus of power during plant operation and establishes the operation as self-sufficient.
As a contingency, an annual allowance of 5% of normal power consumption (excluding acid plant credit) has been applied to account for the start-up of the sulfur burning plant.
The opportunity to explore alternative options for surplus power usage would need to be further investigated to quantify potential upside. Back-up and plant start-up power has been based on supply from the national grid at a unit rate of 0.07 US$/kWh. A summary is presented in Table 21-13.
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Table 21-13 Process Plant OPEX – Power
Description Unit Value Source
Power Supply Cost US$/kWh 0.07 2019 Osinergmin tariffs kWh/t mineralised Power Draw 76.4 Calculated material Acid Plant Power Factor % 5.0 Estimated
Labour
Plant labour costs have been based on the organogram developed for the processing plant broken down into operations, maintenance and laboratory services. Labour costs were based on the GBM study (2016). The costs presented in Table 21-11 are the total costs to the employer for each employee. The model is largely based on 2 shifts of 12 hours per day with certain positions requiring 8 or 12 hour single shifts only. Labour requirements for the progressive capacity increase over LoM has been factored to allow for additional labour resourcing. An overview of the labour breakdown for Phase I is presented in Table 21-14.
Table 21-14 Process Plant OPEX – Labour (Phase I) Cost, US$/t Position No. Staff Total Cost, US$/a mineralised Source material Operations -
General Manager 1 78,860 0.05 Plateau
Plant Manager 1 75,860 0.05 Plateau
Chief Metallurgist 2 97,720 0.07 Plateau
Senior Plant Metallurgist 1 36,860 0.02 Plateau
Metallurgist 8 211,300 0.14 Plateau
Control Engineer 12 316,950 0.21 Plateau
Control Room Operator 24 263,279 0.18 Plateau
Plant General Foreman 1 34,725 0.02 Plateau
Shift Foreman 12 416,700 0.28 Plateau
Shift Supervisor 12 316,950 0.21 Plateau
Operator - Crushing 12 131,640 0.09 Plateau
Operator - Milling 12 131,640 0.09 Plateau
Operator - Pre-Leach 0 - - Plateau
Operator - Leaching 8 87,760 0.06 Plateau
Operator - Pre-neutralisation 8 87,760 0.06 Plateau
Operator - Neutralisation 8 87,760 0.06 Plateau
Operator - Softening 8 87,760 0.06 Plateau
Operator - Salt Recovery 0 - - Plateau
Operator - Product Precipitation 8 87,760 0.06 Plateau
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Cost, US$/t Position No. Staff Total Cost, US$/a mineralised Source material Operator - Product Drying and Packaging 4 43,880 0.03 Plateau
Operator - Tailings 4 43,880 0.03 Plateau
Operator - Reagents and Services 20 219,400 0.15 Plateau
Operator - Steam Generation and Cooling 8 87,760 0.06 Plateau
Operator - Bobcat / FEL driver 8 87,760 0.06 Plateau
General Plant Labourer 8 77,957 0.05 Plateau
Subtotal 190 3,111,920 2.07 -
Maintenance -
Maintenance Engineer 1 48,860 0.03 Plateau
Maintenance Planner 1 33,735 0.02 Plateau
Maintenance Supervisor 4 105,650 0.07 Plateau
Maintenance Foreman 1 27,764 0.02 Plateau
Mechanic / Shift Mechanic 16 175,520 0.12 Plateau
Boilermaker/Fitter 12 131,640 0.09 Plateau
Trades Assistant 12 70,620 0.05 Plateau
Instrumentation and Automation Technician 4 43,880 0.03 Plateau
Electrician 12 131,640 0.09 Plateau
Electrical Superintendent 1 33,735 0.02 Plateau
High Voltage Electrician 1 10,970 0.01 Plateau
Junior Engineer 1 26,413 0.02 Plateau
Subtotal 66 840,426 0.56 -
Laboratory -
Chief Chemist 4 182,940 0.12 Plateau
Chemist 8 211,301 0.14 Plateau
Laboratory Technician 8 87,760 0.06 Plateau
Laboratory Assistant 12 116,933 0.08 Plateau
Subtotal 32 598,934 0.40 -
Total 288 4,551,280 3.03 -
Maintenance
An annual maintenance allowance has been included and is based on a capital factor referenced to the initial direct equipment costs. The capital factors have been derived from benchmarking to similar operations based on DRA’s in-house project database. A detailed breakdown of each process area and capital factors applied is presented in Table 21-15.
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Table 21-15 Process Plant OPEX – Maintenance
Process Area Capital Factor
Crushing 4.0%
Milling 4.0%
Leaching 7.0%
Pre-neutralisation 7.0%
Neutralisation 7.0%
Softening 7.0%
Product Precipitation 7.0%
Product Drying and Packaging 7.0%
Tailings 1.0%
Reagents & Acid Plant 4.0%
Water Services 1.0%
Steam Generation 2.0%
Cooling Water System 2.0%
Air Services 1.0%
Fuel Facility 1.0%
Waste Water Treatment 1.0%
Crusher and Mill Liners
The replacement rates for crusher and mill liner replacement has been benchmarked to similar operations based on DRA’s in-house expertise. The annual liner replacement rate is estimated to be 6, 16 and 1 for the jaw crusher, cone crusher and ball mill respectively. Unit replacements costs are show in Table 21-16.
Table 21-16 Process Plant OPEX – Liner Consumption
Description Annual Consumption Unit Cost, US$/liner
Jaw Crusher 6 27,361
Cone Crusher 16 9,601
Ball Mill 1 177,500
Laboratory
Laboratory costs are based on a proposal submitted by Quality Laboratory Services. The estimate covers all laboratory consumables needed to carry out analyses on 1,250 samples per month. An annual fixed cost allowance of US$ 386,996 has been assumed. The variable cost component has been recalculated and referenced to mineralised material tonnage over LoM. An overview of fixed and variable costs associated with sample analysis is presented in Table 21-17.
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Table 21-17 Process Plant OPEX – Laboratory
Description Unit Value Source
Lab Fixed Cost US$/annum 386,996 Assumed US$/t mineralised Lab Variable Cost 0.04 QLS quote material
Mobile Equipment
Operational expenditure associated with diesel consumption and maintenance of light vehicles, mobile equipment, generators and small engines has been included in the estimate. A diesel supply cost of US$ 0.8/L has been used to calculate a total allowance of US$ 274,000 per annum.
Tailings Handling and Storage
All-inclusive operational expenditure associated with the filtration plant, tailings dam, compaction of the filtered tailings and water reticulation systems has been included in the estimate. These costs have been estimated by Vice Versa Consulting and are provided for each storage facility used over LoM.
Table 21-18 Process Plant OPEX – Tailings Handling and Storage
Description Unit Cost, US$/t mineralised material Source
TSF #1 0.90 Vice Versa Consulting
TSF #2 0.83 Vice Versa Consulting
TSF #3 (Base Case ONLY) 1.12 Vice Versa Consulting
General and administration costs include allowances for administrative personnel, general office supplies, safety and training, travel (both on site and off site), independent contractors, insurance, permits, fuel levies, security, camp power, camp costs, ICT, relocation and recruitment. These costs have been estimated to be US$ 5,000,000 per annum for Phase I and then factored for the phased capacity increases over LoM.
The overall plant operating cost estimate is presented in Table 21-19 for the Base Case. The breakdown shows all the costs associated with mine and plant operation covering costs for contractor mining, labour, power, maintenance, reagents, consumables and general administration. The reduction in unit operating costs, relative to Phase I, are realised due to economies of scale. Key cost drivers for both options reside with the process plant of which reagents constitute the largest single cost category overall.
Table 21-19 Operating Costs – Base Case % of Total Description Unit Phase I Phase II Phase III LoM (LoM) Total Material Milled tonnes 11,500,000 16,500,000 117,453,660 145,453,660 -
LCE Produced tonnes 173,096 240,269 1,666,748 2,080,113
Mining Costs
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% of Total Description Unit Phase I Phase II Phase III LoM (LoM) Mining Cost (Mineralised material) US$’000 38,125 35,981 274,983 349,089 4
Mining Cost (Waste) US$’000 54,717 52,231 217,796 324,744 4
Total Cost US$’000 92,842 88,212 492,779 673,832 8
Mining Unit Cost US$/t Milled 8.07 5.35 4.20 4.63 -
Mining Unit Cost US$/t LCE 536 367 296 324 -
Processing Costs
Process Labour US$’000 38,056 32,108 157,358 227,522 3
Process Power US$’000 3,073 4,410 31,389 38,872 0
Process Maintenance US$’000 74,857 71,384 381,777 528,018 6
Process Reagents: Sulfur US$’000 182,754 262,212 1,866,529 2,311,495 28
Process Reagents: Sodium Carbonate US$’000 63,968 91,780 653,326 809,073 10
Process Reagents: Limestone US$’000 106,171 152,333 1,084,368 1,342,872 16
Process Reagents: Quicklime US$’000 116,403 167,013 1,188,865 1,472,280 18
Process Reagents: Flocculant US$’000 3,614 5,186 36,913 45,713 1
Process Reagents: Dryer Fuel US$’000 428 614 4,368 5,410 0
Grinding Media US$’000 5,709 8,192 58,312 72,213 1
Crusher and Mill Liners US$’000 3,797 5,448 38,782 48,028 1
Other Consumables US$’000 9,852 14,135 100,622 124,610 2
Mobile Equipment US$’000 2,133 1,871 9,447 13,451 0
Laboratory US$’000 3,556 2,595 12,438 18,589 0
Product Transport US$’000 8,655 12,013 83,337 104,006 1
Total Cost US$’000 623,026 831,293 5,707,833 7,162,152 87
Process Unit Cost US$/t Milled 54.18 50.38 48.60 49.24 -
Process Unit Cost US$/t LCE 3,599 3,460 3,425 3,443 -
G&A Costs
Total Cost US$’000 42,000 37,000 178,000 257,000 3
G&A Unit Cost US$/t Milled 3.65 2.24 1.52 1.77 -
G&A Unit Cost US$/t LCE 243 154 107 124 -
Tailings Disposal Costs
Total Cost US$’000 10,335 14,828 115,261 140,425 2
Tailings Disposal Unit Cost US$/t Milled 0.90 0.90 0.98 0.97 -
Tailings Disposal Unit Cost US$/t LCE 60 62 69 68 -
Total Operating Costs
Total Operating Costs US$’000 768,203 971,334 6,493,873 8,233,409 100
Overall Unit Operating Cost US$/t Milled 66.80 58.87 55.29 56.60 -
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% of Total Description Unit Phase I Phase II Phase III LoM (LoM) Overall Unit Operating Cost US$/t LCE 4,438 4,043 3,896 3,958 -
The overall plant operating cost estimate is presented in Table 21-20 for the Alternative Case over LoM.
Table 21-20 Project Operating Cost – Alternative Case
Description Unit Phase I Phase II LoM % of Total (LoM)
Total Material Milled tonnes 11,500,000 51,466,280 62,966,280 -
LCE Produced tonnes 173,090 706,804 879,895
Mining Costs
Mining Cost (Mineralised material) US$’000 31,031 120,088 151,119 4
Mining Cost (Waste) US$’000 46,393 156,925 203,318 5
Total Cost US$’000 77,424 277,013 354,437 9
Mining Unit Cost US$/t Milled 6.73 5.38 5.63 -
Mining Unit Cost US$/t LCE 447 392 403 -
Processing Costs
Process Labour US$’000 37,862 106,637 144,499 4
Process Power US$’000 3,073 13,754 16,828 0
Process Maintenance US$’000 74,857 237,653 312,509 8
Process Reagents: Sulfur US$’000 182,754 817,883 1,000,636 26
Process Reagents: Sodium Carbonate US$’000 63,968 286,277 350,244 9
Process Reagents: Limestone US$’000 106,171 475,152 581,324 15
Process Reagents: Quicklime US$’000 116,403 520,941 637,344 17
Process Reagents: Flocculant US$’000 3,614 16,175 19,789 1
Process Reagents: Dryer Fuel US$’000 428 1,914 2,342 0
Grinding Media US$’000 5,709 25,551 31,261 1
Crusher and Mill Liners US$’000 3,797 16,994 20,791 1
Other Consumables US$’000 9,852 44,091 53,943 1
Mobile Equipment US$’000 2,133 6,318 8,451 0
Laboratory US$’000 3,556 9,025 12,581 0
Product Transport US$’000 8,655 35,340 43,995 1
Total Cost US$’000 622,832 2,613,705 3,236,537 85
Process Unit Cost US$/t Milled 54.16 50.78 51.40 -
Process Unit Cost US$/t LCE 3,598 3,698 3,678 -
G&A Costs
Total Cost US$’000 42,000 124,000 166,000 4
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Description Unit Phase I Phase II LoM % of Total (LoM)
G&A Unit Cost US$/t Milled 3.65 2.41 2.64 -
G&A Unit Cost US$/t LCE 243 175 189 -
Tailings Disposal Costs
Total Cost US$’000 10,335 45,039 55,374 1
Tailings Disposal Unit Cost US$/t Milled 0.90 0.88 0.88 -
Tailings Disposal Unit Cost US$/t LCE 60 64 63 -
Total Operating Costs
Total Operating Costs US$’000 752,591 3,059,758 3,812,348 100
Overall Unit Operating Cost US$/t Milled 65.44 59.45 60.55 -
Overall Unit Operating Cost US$/t LCE 4,348 4,329 4,333 -
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22 ECONOMIC ANALYSIS
22.1 Introduction The PEA financial evaluation presents the determination of the net present value (NPV), payback period (time in years to recapture the initial capital investment), and the internal rate of return (IRR) for the Project. Annual cash flow projections were estimated over the life of the mine based on the estimates of capital expenditures, production cost, and sales revenue. The analysis has been conducted in real terms with no consideration given to inflation or escalation of costs or prices over the life of the Project.
Revenues are based on the production of a lithium carbonate product (battery grade) for export on an FOB basis from Latin America. The estimates of capital expenditures and site production costs have been developed specifically for this Project and have been presented in earlier sections of this report.
The economic analysis is prepared on a 100% equity project basis and does not consider financing scenarios. Financing related costs such as interest expense, and Peru withholding taxes on dividends and interest income, are excluded from the economic model.
The analysis has been presented for both the Base Case and Alternative Case in order to illustrate the economic value of both scenarios. The underlying distinction between these scenarios reside with the production schedule, mining concessions and resultant costs used in the financial model.
A sensitivity analysis was conducted in order to ascertain the impact on Project value due to potential variability in significant Project variables. These include capital expenditure, LCE selling price, operating costs, sulphur price, lime and limestone price.
Key input parameters have been summarised in Table 22-1 and cover the Base Case and Alternative Case. These inputs are further unpacked in the sub-sections to follow.
Table 22-1 Economic Model – Key Inputs
Description Units Base Case Alternative Case
Life of Mine years 33 26
Processing Rate PI / PII / PIII Mtpa 1.5 / 3.0 / 6.0 1.5 / 3.0 / NA
Average Throughput (Phase I) tpa 1,437,500 1,437,500
Average Throughput (LoM) tpa 4,407,687 2,421,780
Li2CO3 Produced (average LoM) tpa 63,034 33,842
Phase I Li2CO3 Production (steady state) tpa 22,678 22,731
Phase II Li2CO3 Production (steady state) tpa 44,227 41,252
Phase III Li2CO3 Production (steady state) tpa 85,230 n/a
LCE Produced (total LoM) tonnes 2,080,113 879,895
Unit Operating Cost (OPEX) PI US$/LCE tonne 4,438 4,348
Unit Operating Cost (OPEX) LoM US$/LCE tonne 3,958 4,333
Capital Cost (CAPEX) PI US$m 587 587
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Description Units Base Case Alternative Case
Capital Cost (CAPEX) LoM US$m 1,970 1,082
Sustaining Capital Costs (undiscounted) US$m 119.6 66.4
The outcome of the financial model and sensitivity analysis for the Base Case has been presented in the sub-sections to follow. A summary of the Alternative Case is presented at the end of the Economic Analysis in Section 22.12.
22.2 Mine Production Profile Mine production is reported as mineralised material and waste from the open cast mining operation. The mine schedule over life of mine for the Base Case is presented in Figure 22-1. Over life of mine, a total of 145 million tonnes of mineralized material is delivered to the processing facility, with 142 million tonnes of waste removed over the same period, equivalent to a strip ratio of 0.97. The average grade over life of mine is estimated at 3,388ppm Lithium.
Further detail covering the mining schedule can be sourced from subsequent sections of this report.
Figure 22-1 Mine Schedule – Base Case
22.3 Process Production Profile The Base Case design for the process plant is based on achieving a peak milled tonnage of 6Mtpa over three phases. A ramp-up to full production of 50% and 67% has been included for year 1 and year 2 of production respectively, whilst 75% is assumed for the first year in all subsequent expansion phases. An overview of the phased production strategy is presented in Table 22-2.
Table 22-2 Milling Rate and Expansion Phases – Base Case
Description Years Milling Rate
Phase I 1 - 8 1.5 Mtpa
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Description Years Milling Rate
Phase II 8 - 13 3.0 Mtpa
Phase III 13 - 33 6.0 Mtpa
A total of 2.1 million tonnes of lithium (minimum purity 99.5%) product is produced over life of mine at a lithium recovery of 80%. The annual Base Case production schedule is presented in Figure 22-2.
Figure 22-2 Production Schedule – Base Case
22.4 Capital Expenditure The total initial capital estimate for the Base Case project, which includes pre-stripping for mine development, construction, direct cost, indirect costs and contingency is estimated to be US$ 587m. A detailed breakdown of the capital cost is discussed in Section 21.1 and is summarised in Table 22-3. Mining will be performed using contract mining. All initial mining capital costs, apart from pre-stripping, is included in the mining contractor’s rate. The process plant capital expenditure for Phase II (3Mtpa) and Phase III (6Mtpa) is also presented in Table 22-3.
Table 22-3 Capital Expenditure – Base Case Phase I (Initital), Phase II, Phase III, Total Capital Area US$’000 US$’000 US$’000 (LoM), US$’000 Mining Capital, Pre-strip 19,195 - - 19,195
Process Plant, Direct Costs 341,486 273,189 546,378 1,161,053
Process Plant, Infrastructure 30,309 24,247 48,495 103,051
Process Plant, Indirect Costs 91,409 73,127 146,254 310,790
Process Plant, Contingency 50,952 40,762 81,524 173,238 Tailings and Bulk Infrastructure (incl. 53,618 7,321 112,113 173,049 contingency) Closure - - - 30,000
Total Project Capital Cost 586,968 418,646 934,763 1,970,377
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Phase I (Initital), Phase II, Phase III, Total Capital Area US$’000 US$’000 US$’000 (LoM), US$’000 Note: Costs for closure capital have been estimated.
22.5 Operating Costs The operating costs over life of mine include mine operations, process plant operations, estimate for general and administrative costs, product transport costs to port and estimate for tailings disposal and tailings management. The cost reported excludes the cost of capitalized mine pre-stripping. Table 22-4 shows the estimated total and unit operating cost by area for the Base Case. The reduction in unit operating costs, relative to Phase I, are realised due to economies of scale. A detailed breakdown of the operating cost is discussed in Section 21.2.
Table 22-4 Operating Costs – Base Case
Description Units Phase I Phase II Phase III Life of Mine
Total Operating Cost US$ '000 768,203 971,334 6,493,873 8,233,409
Mining Costs US$/LCE tonne 536 367 296 324
Processing Costs US$/LCE tonne 3,599 3,460 3,425 3,443
G&A Costs US$/LCE tonne 243 154 107 124
Tailings Handling US$/LCE tonne 60 62 69 68
Unit Operating Cost US$/LCE tonne 4,438 4,043 3,896 3,958
22.6 Revenue and Lithium Carbonate Pricing Project revenue is based on producing saleable battery grade lithium carbonate, as it relates to grade and impurity levels, with no consideration for any by-product revenue. Annual revenue is determined by applying two price scenarios to the annual lithium carbonate production estimates for each operating year.
Two price scenarios have been considered and presented, namely a static price over life of mine and lithium carbonate forecast prices. The static price scenario has been based on an approximate rounded three year trailing average price of US$ 12,000/t battery grade lithium carbonate (FOB South America) providing a pricing approach falling below the long-term consensus pricing. The second pricing scenario has been based on a market study conducted by Benchmark Mineral Intelligence (BMI). BMI provided its updated report in November 2019, which included forecast pricing to the year 2040 for battery grade lithium carbonate. BMI expect a higher long-term average pricing of US$ 13,100/t relative to the trailing average price scenario of US$ 12,000/t. Further detail on the BMI report can be found in Section 19 of this report.
22.7 Sustaining Capital The PEA economic model includes an allowance for annual sustaining capital of 0.5% of capital expenditure.
22.8 Salvage Value No allowance for salvage is included in the model.
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22.9 Reclamation and Closure The model is based on an assumed closure cost of US$ 30m at the end of life of mine. This value requires confirmation by the appointed environmental consultant going forward.
22.10 Taxation The tax model used should be regarded as conceptual but is deemed to be suitable for a PEA level study. Value added tax (VAT) refunds and exemptions have not been considered in the economic model, despite some reagent supply costs including VAT. Any other tax or levy, not described below, has not been considered in the model.
Depreciation was calculated using the following asset class assumptions for both initial and phased capital (excluding sustaining capital):
• Mine Development: 3-year straight line method;
• Process Plant and Equipment: 5-year straight line method;
• Buildings: 20-year straight line method;
• Other: 10-year straight line method.
No sunken exploration and Project development costs have been considered in the depreciation calculations. Depreciation is deemed as a deductible from operating income.
The modified mining royalty (MMR) tax is applied to the operating profit at weighted average rates ranging from 1% to 6.6% based on the operating margin (operating profit divided by revenue), subject to a minimum tax of 1% of revenue, which is applicable regardless of the operating margin.
A labour profit-sharing tax is based on pre-tax profit, after deductions for the MMR and SMT, and is assessed on a rate of 8%.
A mining pension rate of 0.5% on net income before taxes is payable.
Income taxes are assessed on pre-tax profits at a rate of 29.5%, after the deduction for the SMT, MMR, workers participation tax and pension fund contribution.
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22.11 Economic Outcomes – Base Case The economic analysis is prepared on a 100% equity project basis and does not consider financing scenarios. An 8% real discount rate has been used in the analysis. An average throughput rate of 4,407,687tpa producing 63,034tpa of product is projected for the Base Case. Two pricing models, a three- year trailing average price and forecast based price, have been assessed in the model.
The total capital cost over LoM is estimated to be US$ 1.97bn, inclusive of mine rehabilitation and closure costs, with an initial capital expenditure of US$ 587m allocated for Phase I. Mining and processing costs are estimated to be US$ 324/t LCE and US$ 3,443/t LCE on average, respectively over LoM. General and administration costs begin at US$ 5m ramping up to US$ 9m and then tapering down to US$ 7m during the last year of production. The analysis has revealed a post-tax Net Present Value (NPV) of US$ 1.55bn with an internal rate of return (IRR) of 19.7% and a post-tax payback period of 4.7 years based on a trailing average LoM price of US$ 12,000/t. The BMI price forecast model realises an improved Project value with a post-tax NPV of US$ 1.98bn with an IRR of 23.4% and a post-tax payback period of 3.6 years. The outcomes of the analysis is summarised and presented in Table 22-5.
Table 22-5 Discounted Cashflow Summary – Base Case Trailing Average LoM Price BMI LoM Price Description Units US$ 12,000/t Forecast Financial Outcomes (PRE-TAX)
NPV (8%) US$ '000 2,712,690 3,374,013
IRR % 24.2 28.9
Payback Period (undiscounted) years 4.3 3.2
Financial Outcomes (POST-TAX)
NPV (8%) US$ '000 1,554,461 1,978,007
IRR % 19.7 23.4
Payback Period (undiscounted) years 4.7 3.6
The resultant economic metrics were calculated from annual projected cash flows covering revenue, capital costs, operating costs, sustaining capital, royalties and taxation. A summary of the life of mine cash flows for the Base Case is presented in Table 25-3 and Table 25-4 for both pricing scenarios.
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Table 22-6 Discounted Cashflow – Base Case (US$ 12,000/t)
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Table 22-7 Discounted Cashflow – Base Case (BMI Pricing Model)
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22.12 Alternative Case Assessment
The Alternative Case represents less than 50% of the combined Falchani and Ocacasa 4 concession. Over life of mine, a total of 63 million tonnes of mineralized material is delivered to the processing facility, with 91 million tonnes of waste removed over the same period, equivalent to a strip ratio of 1.45. The average grade over life of mine is estimated at 3,262ppm Lithium. The mine schedule for the Alternative Case is presented in Figure 22-3.
Figure 22-3 Mine Schedule – Alternative Case
The Alternative Case adopts a two phase production schedule achieving a peak milled tonnage of 3Mtpa. A total of 880 thousand tonnes of lithium (minimum purity 99.5%) product is produced over life of mine at a lithium carbonate recovery of 80%. The annual Alternative Case production schedule is presented in Figure 22-4.
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Figure 22-4 Production Schedule – Alternative Case
The Alternative Case shares the identical initial capital outlay as per the Base Case while realizing a reduction in LoM capital requirements due to the reduced throughput and plant capacity. A summary of the capital requirements is presented in Table 22-8.
Table 22-8 Capital Expenditure – Alternative Case Phase I (Initital), Phase II, Total Capital Area US$’000 US$’000 (LoM), US$’000 Mining Capital, Pre-strip 19,195 - 19,195
Process Plant, Direct Costs 341,486 273,189 614,675
Process Plant, Infrastructure 30,309 24,247 54,556
Process Plant, Indirect Costs 91,409 73,127 164,536
Process Plant, Contingency 50,952 40,762 91,714 Tailings and Bulk Infrastructure (incl. 53,618 54,535 108,153 contingency) Closure - - 30,000
Total Project Capital Cost 586,968 465,860 1,082,829
Note: Costs for closure capital have been estimated.
The operating cost breakdown for the Alternative Case is presented in Figure 22-3.
Table 22-9 Operating Costs – Alternative Case
Description Units Phase I Phase II Life of Mine
Total Operating Cost US$ '000 752,591 3,059,758 3,812,348
Mining Costs US$/LCE tonne 447 392 403
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Description Units Phase I Phase II Life of Mine
Processing Costs US$/LCE tonne 3,598 3,698 3,678
G&A Costs US$/LCE tonne 243 175 189
Tailings Handling US$/LCE tonne 60 64 63
Unit Operating Cost US$/LCE tonne 4,348 4,329 4,333
The economic outcomes of the Alternative Case is presented in Table 22-10. An average throughput rate of 2,421,780tpa producing 33,842tpa of product is projected for the Alternative Case. As with the Base Case, two pricing models, a three-year trailing average price and forecast based price, have been assessed in the model.
The Alternative Case considers a ramp up profile to a peak milled tonnage of 3Mtpa over a LoM of 26 years. The analysis has revealed a post-tax NPV of US$ 844m with an IRR of 18.8% and a post-tax payback period of 4.6 years based on a trailing average LoM price of US$ 12,000/t. The BMI price forecast model realises and improved Project value with a post-tax NPV of US$ 1.14bn with an IRR of 23.0% and a post-tax payback period of 3.6 years.
Table 22-10 Discounted Cashflow Summary – Alternative Case Trailing Average LoM Price BMI LoM Price Description Units US$ 12,000/t Forecast Financial Outcomes (PRE-TAX)
NPV (8%) US$ '000 1,514,083 1,972,281
IRR % 23.5 28.7
Payback Period years 4.2 3.1
Financial Outcomes (POST-TAX)
NPV (8%) US$ '000 843,766 1,144,548
IRR % 18.8 23.0
Payback Period years 4.6 3.6
A summary of the life of mine cash flows for the Alternative Case is presented in Table 22-11 and Table 22-12 for both pricing scenarios.
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Table 22-11 Discounted Cashflow – Alternative Case (US$ 12,000/t)
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Table 22-12 Discounted Cashflow – Alternative Case (BMI Pricing Model)
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22.13 Sensitivity Analysis A sensitivity analysis has been conducted assessing the impact of variations in capital cost, operating cost lithium carbonate selling price and reagent pricing (lime, limestone and sulphur). The results of the sensitivity analysis for the Base Case project both before taxes and after taxes are shown in Figure 22-5. Key insights and outcomes would be similar for both the Base Case and Alternative Case. Each variable is assessed in isolation to determine the impact on NPV and IRR.
Figure 22-5 Sensitivity Analysis Summary – Base Case
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23 ADJACENT PROPERTIES The only other explorer of significance within the region is Fission 3.0 Energy Corporation (Fission), whose portfolio of properties in the Macusani area resulted from a spin-out from Strathmore Minerals in 2007 (Fission Energy Corporation, 2010). In April 2013, Fission announced the arrangement whereby Denison Mines Corporation acquired all the outstanding common shares of Fission and the spin-out of certain assets into a new exploration company, Fission Uranium Corporation. In November 2013, certain properties and assets of Fission Uranium, including the Macusani, Peru property, became properties and assets of Fission 3.0 Corp. Nine claim blocks encompassing 51km2 are held in the Macusani area (Fission 3.0 Uranium Corporation, 201420).
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24 OTHER RELEVANT DATA AND INFORMATION
24.1 Introduction Plateau Energy Metals has identified the potential continuation of lithium mineralization in the MPA to the south-west of the current Mineral Resource area, in an area known as Tres Hermanas. On the basis of its proximity to the current Mineral Resource area, and the apparent similarity in style of mineralization, TMC’s QP considers it appropriate to discuss this area as a target for further exploration, as described in the NI43- 101.
As required by the NI43-101, the potential quantity and grade of the target for further exploration has been expressed as a range.
24.2 Basis for determination of the target for further exploration at Tres Hermanas
The Tres Hermanas area has three prominent ridges, which are interpreted to be outcropping Lithium-rich Tuff. Based on a combination of field mapping and review of satellite imagery, the potential extent of the outcropping Lithium-rich Tuff has been defined. This extent is shown in Figure 24-1.
The potential volume of the exploration target was derived by modelling a floor of the target, based on the elevation of the outcrop extents, and by modelling a topographic surface, based on 0.5m surface contours. The resulting approximate thickness of the exploration target area is shown in Figure 24-1, and ranges from 10m to 60m.
No exploration drilling has been carried out within the exploration target, however, two approximately 120m long trenches have been sampled within the area, with each trench sample being 2.5m in length. The statistics for the trench samples which were logged as either breccia or tuff are provided in Table 24-1.
Table 24-1 Statistics for trench samples at Tres Hermanas Lowest grade Highest grade Number Total sampled Average grade in breccia or in breccia or of length in breccia of breccia and tuff tuff samples or tuff (m) tuff (ppm Li) (ppm Li) (ppm Li) Trench 1 27 68 660 4 411 3 174
Trench 3 23 95 649 4 686 3 303
It should be noted that the representivity of the trench samples is not clear at this stage, and neither is the relationship between the orientation of mineralization and the orientation of sampling. However, the range of grades and average grades align well with those of the Mineral Resource estimates, and hence it is reasonable to use the lowest and highest grades of the Mineral Resource estimates as defining the lower and upper grade ranges for the exploration target.
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24.3 Potential quantity and grade of the target for further exploration The potential target for future exploration at Tres Hermanas is provided in Table 24-2. It is noted that a potential target for future exploration is not a Mineral Resource estimate, is conceptual in nature, and relates to an area where there has been insufficient exploration to define the target as a Mineral Resource and where it is uncertain if further exploration will result in the target being defined as a Mineral Resource.
Table 24-2 Tres Hermanas exploration target potential
Category Tonnes (Mt) Grade (ppm Li)
Exploration Target 7.5 – 12.5 1 250 – 3 650
TMC’s QP is of the opinion that there is sufficient information available to describe the Tres Hermanas area as a potential target for future exploration. This is supported by:
• the local geology in the exploration target area being similar to the Mineral Resources area
• the close proximity to, and interpretation of, the area as a possible southwest extension of the Mineral Resource area
• analyses from trench samples indicating the presence of lithium in grade ranges similar to the Mineral Resource area
It is recommended that detailed geological mapping be carried out within the exploration target area to increase geoscientific confidence, in particular an understanding of the structural complexity of the exploration target area. It is recommended that Plateau Energy Metals commission a drilling campaign to further test the extents of this lithium occurrence hence determining any constraints on the potential within the exploration target area.
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Figure 24-1 Tres Hermanas target for further exploration
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25 INTERPRETATION AND CONCLUSIONS The PEA for the Falchani Project is based upon limited and time-sensitive information, such as lithium carbonate, fuel and reagent pricing. Changes in the understanding of the Project such as access to water, power, social/environmental issues, the ability to convert Mineral Resources to Mineral Reserves and market demand conditions could have significant effects on the Project’s overall economic viability. However, as can be seen from the preliminary financial modelling, the Falchani Project has the potential to be a long-life project, with significant cash flows, strong margins and project flexibility.
25.1 Geology and Resources A significant proportion (61% to 70%) of the mining inventory Mineral Resources are classified as Inferred Resources. Inferred Resources are considered speculative with regards to geological structure, grade and lithology and as such upgrading these Inferred Resource areas is critical to progressing the Falchani Lithium Project to the next stages of study and getting investor confidence going forward.
25.2 Mining Based on work to date, the Base Case and Alternative Case deposits appear highly amenable for development by open pit mining methods and specialized mineralised material processing methods.
Significant assumptions have been made in the process of deriving slope angles. While the assumptions made, are in DRA’s opinion valid and appropriate, for further studies a comprehensive geotechnical investigation and study should be completed.
Preliminary haulage distances have been estimated for the Project based on preliminary locations for TSF, RoM pad, process plant, EEM workshops, contractor offices, owner offices and waste dump locations. Order of magnitude level estimates for these distances have been used to estimate truck numbers and operating costs for the Project.
Low-resolution topography (Google Earth) has been used to determine the PEA-level topography and this may not be to the required level of accuracy for future studies.
The government approvals for the mineral rights application by Plateau Energy Metals of the Ocacasa 4 resource area are still outstanding.
The planned Base Case mining, processing and support works allow for a total of 145Mt of mineralised material processing by the processing plant feed and 141Mt of waste stripping dumping and pit backfilling (0.97t waste:1t mineralised material overall strip ratio) over a 34-year mine life, (including two-year construction and one-year pre-production). The mining inventory contains 70% Inferred Mineral Resources and is based on preliminary geotechnical designs and metallurgical test work by others.
The planned Alternative Case mining, processing and support works allow for a total of 63Mt of mineralised material processing by the processing plant feed and 90Mt of waste stripping dumping and pit backfilling (1.42t waste:1t mineralised material overall strip ratio) over a 27-year mine production life (including two-
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year construction and one-year pre-production). The mining inventory contains 61% Inferred Mineral Resources and is based on preliminary geotechnical designs and metallurgical test work by others.
The study has been based on recent benchmarked mining contractor budget cost of $2.40/t moved which include an allowance for high altitude mining.
The current PEA has considered only lithium-rich bearing tuffs, namely LRT1, LRT2, and LRT3, three of five geological units. Upper and lower breccia units (UBX and LBX) have been excluded from the optimisation owing to low grades and to optimise revenue.
The UBX and LBX have been modelled in the mineral resources, therefore there is an opportunity to consider these units in any future updated geological model options.
Only lithium has been considered in the Falchani Lithium Project and DRA is aware of additional mineralised content which maybe of economic significance to the Project.
25.3 Metallurgy and Processing The work on several different metallurgical recovery methods for lithium, as highlighted in Section 13 by Tecmmine in Peru and by ANSTO in Australia, identified that lithium is extractable through various recovery methods whether using mechanical, temperature and/or various acid reagents to leach the mineralized material. It can be concluded that lithium is readily extractable in each and every one of these instances. Following the testwork results it was determined by ANSTO, working with Plateau and DRA that three specific recovery methods yielded superior results in terms of percentage recoveries and precipitation of low impurity, battery quality lithium carbonate. DRA conducted a techno-economic trade-off study evaluating these three routes - namely, 1) Sulfuric Acid Atmospheric Leach (Acid Leach), 2) Chloride Salt Roast (Salt Roast), and 3) Sulfation Bake - and determined after applying high level capital and operating cost build- ups and using the test work results that Option 1 – Acid Leach provided the better balance between capital and operating costs at this stage. DRA believes that there remain opportunities to optimize Option 1 and additional test work on Option 3 is warranted before ruling it out.
A substantial body of metallurgical testwork has been carried out on the Falchani lithium-bearing tuff material, the results of which informed the design criteria on which the plant design and costing were based. Where data was not available, reasonable assumptions were made based on industry practice, the experience of the study team and / or input from service providers and equipment vendors. It is recommended that additional testwork be carried out to validate assumptions made during the PEA. The additional testwork is detailed in Section 26.
The opportunity exists to recover potentially high-value elements and minerals as by-products from the process and it is recommended that work be undertaken prior to or during the PFS to assess the techno- economic benefits of this opportunity.
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25.4 Cost Estimates Both capital and operating cost estimates were prepared in mixed currencies and reported in United States dollars (US$). The prepared capital cost estimate is classified by DRA as a Class 4 estimate with a +40 % / -40 % accuracy, similar to an AACE International Class 4 (+50 % / -30 %) and deemed suitable for a PEA- level study.
The total Base Case project capital cost for Phase I is US$ 587m, including a contingency of US$ 51m for the process plant. The total LoM capital cost is US$1.97 billion, the costs are summarised in Table 25-1.
Table 25-1 Capital Expenditure – Base Case Phase I (Initital), Phase II, Phase III, Total Capital Area US$’000 US$’000 US$’000 (LoM), US$’000 Mining Capital, Pre-strip 19,195 - - 19,195
Process Plant, Direct Costs 341,486 273,189 546,378 1,161,053
Process Plant, Infrastructure 30,309 24,247 48,495 103,051
Process Plant, Indirect Costs 91,409 73,127 146,254 310,790
Process Plant, Contingency 50,952 40,762 81,524 173,238 Tailings and Bulk Infrastructure (incl. 53,618 7,321 112,113 173,049 contingency) Closure - - - 30,000
Total Project Capital Cost 586,968 418,646 934,763 1,970,377
Note: Costs for closure capital have been estimated.
The operating costs over life of mine include mine operations, process plant operations, estimate for general and administrative costs, product transport costs to port and estimate for tailings disposal and tailings management. The cost reported excludes the cost of capitalized mine pre-stripping. Table 25-2 shows the estimated total and unit operating cost by area for the Base Case.
Table 25-2 Operating Costs – Base Case
Description Units Phase I Phase II Phase III Life of Mine
Total Operating Cost US$ '000 768,203 971,334 6,493,873 8,233,409
Mining Costs US$/LCE tonne 536 367 296 324
Processing Costs US$/LCE tonne 3,599 3,460 3,425 3,443
G&A Costs US$/LCE tonne 243 154 107 124
Tailings Handling US$/LCE tonne 60 62 69 68
Unit Operating Cost US$/LCE tonne 4,438 4,043 3,896 3,958
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25.5 Economic Outcomes – Base Case The economic analysis is prepared on a 100% equity project basis and does not consider financing scenarios. An 8% real discount rate has been used in the analysis. The analysis has revealed a post-tax Net Present Value (NPV) of US$ 1.55bn with an internal rate of return (IRR) of 19.7% and a post-tax payback period of 4.7 years based on a trailing average LoM price of US$ 12,000/t. The BMI price forecast model realises an improved project value with a post-tax NPV of US$ 1.98bn with an IRR of 23.4% and a post-tax payback period of 3.6 years. The outcomes of the analysis is summarised and presented in Table 25-3.
Table 25-3 Discounted Cashflow Summary – Base Case Trailing Average LoM Price BMI LoM Price Description Units US$ 12,000/t Forecast Financial Outcomes (PRE-TAX) NPV (8%) US$ '000 2,712,690 3,374,013 IRR % 24.2 28.9 Payback Period (undiscounted) years 4.3 3.2 Financial Outcomes (POST-TAX) NPV (8%) US$ '000 1,554,461 1,978,007 IRR % 19.7 23.4 Payback Period (undiscounted) years 4.7 3.6
25.6 Economic Outcomes – Alternative Case The Alternative Case represents less than 50% of the combined Falchani and Ocacasa 4 concession. Over life of mine, a total of 63 million tonnes of mineralized material is delivered to the processing facility, with 91 million tonnes of waste removed over the same period, equivalent to a strip ratio of 1.45. The average grade over life of mine is estimated at 3,262ppm Lithium.
The analysis has revealed a post-tax NPV of US$ 844m with an IRR of 18.8% and a post-tax payback period of 4.6 years based on a trailing average LoM price of US$ 12,000/t. The BMI price forecast model realises and improved project value with a post-tax NPV of US$ 1.14bn with an IRR of 23.0% and a post-tax payback period of 3.6 years. The outcomes of the analysis is summarised and presented in Table 25-4.
Table 25-4 Discounted Cashflow Summary – Alternative Case Trailing Average LoM Price BMI LoM Price Description Units US$ 12,000/t Forecast Financial Outcomes (PRE-TAX) NPV (8%) US$ '000 1,514,083 1,972,281 IRR % 23.5 28.7 Payback Period years 4.2 3.1 Financial Outcomes (POST-TAX) NPV (8%) US$ '000 843,766 1,144,548 IRR % 18.8 23.0 Payback Period years 4.6 3.6
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26 RECOMMENDATIONS The financial model shows that the Falchani Project has the potential to have a long life, with significant cash flows, strong margins and project flexibility. It is recommended that a Pre-feasibility Study (PFS) be completed to demonstrate the Project’s technical and economic viability and to provide a greater degree of confidence in the capital and operating cost estimates. Further definition of the Project is required to allow a PFS to be completed and the following is recommended to further develop the Project and reduce its technical uncertainty and risk:
• Infill drilling to upgrade the category of the Mineral Resources;
• Mineralised material characterisation (to better define the design data for the crushing and milling circuits)
• Mineralised material variability (to understand how variability across the orebody may impact on plant performance and to make design allowances accordingly)
• Process optimisation testwork (to optimise operating parameters and reagent consumptions)
• Equipment Sizing (to allow equipment vendors to size their equipment and provide performance guarantees)
• By-product Recovery (to define the design conditions for the recovery of valuable by-products)
• Engage with equipment vendors to carry out testwork (for example, thickeners, filters, crystallisers) to allow them to offer performance guarantees;
• Engage with vendors of the major packages to better define their scope and investigate possibilities for build, own, operate commercial arrangements.
The estimated cost of completing these activities is shown in Table 26-1.
Table 26-1 Estimated Schedule and Costs of Recommended Activities Activity Estimated Duration, Estimated Cost, months US$ Drilling (In-fill, metallurgical testwork, geotechnical, 12 4,000,000 sterilisation) Metallurgical Testwork (mineralised material characterisation, mineralised material variability, by- 8 1,000,000 product recovery, process optimisation, equipment vendor) Geotechnical (testwork, reporting) 6 500,000
Environmental Studies 12-18 500,000
Hydrology / Hydrogeology Studies 12 500,000
Topography Survey (mine site, access road, powerline) 1 250,000
Pre-feasibility Study 8 750,000
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26.1 Geology and Resources Geological drilling to upgrade the mineral resources to a minimum of indicated and measured resource category in the current planned pit shell zones should be done before any further study phases. This should include sterilization drilling to ensure no infrastructure placements impede access to future economic resources.
Geological drilling samples should also be used to upgrade the process recovery test work and metallurgical variability test work for lithium and any other minerals that occur that could be of any economic significance to support future study phases.
26.2 Mining
Additional studies are required to confirm the PEA results once the Project risks, opportunities and recommendations have been addressed.
Highly volatile Lithium market supply and demand conditions could have significant effects on the projects overall economic viability.
70% of the conceptual production schedule mineral resources are classified as inferred resources which could pose significant risks if they cannot be converted to indicated resource at similar grades and tonnages.
Future studies should involve reputable local mining contractors and consider the use of electric excavators and potential use of crushing and conveying of mineralised material and waste as this could decrease safety risks, decrease mining costs and enhance operational efficiencies.
Future studies will re-evaluate the Lithium grade cut-off economics in the mineral resources and should market demand and pricing grow as predicted there could be significant upside to future business case.
It has been reported that there are other mineralisation contents which maybe of economic significance in future studies.
A total site wide detailed topographic survey and detailed block plan should be completed and integrated into the upgraded geological model.
A total site wide detailed hydrogeological study needs to be completed to determine the ground water levels and how these may impact on water inflows into the pits, geotechnical stability issues and potential impacts on site wide infrastructure.
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Geological drilling to upgrade the mineral resources to a minimum of indicated and measured resource category in the current planned pit shell zones should be done before any further study phases. This should include sterilization drilling to ensure no infrastructure placements impede access to future economic resources.
Geological drilling samples should also be used to upgrade the process recovery test work and metallurgical variability test work for Lithium and any other minerals that occur that could be of any economic significance to support future study phases.
Pit slope analysis geotechnical drilling, test work and pit slope / dump design site investigation should be completed for any further stages.
Geotechnical investigations should be done on all planned infrastructure areas for future studies
Detailed design of waste dumps, optimisation of waste pit backfilling, RoM pad location optimisation, crushing and conveying of waste and mineralised material trade-off studies and detailed design of TSF sites should be done in the next study phase with advanced destination scheduling to optimise materials handling capital and operating cost estimates.
26.3 Environmental Detailed environmental permitting and social impact considerations are not within the scope of a PEA but will follow in later stages of the Project’s development. An environmental impact study (EIA) is currently underway and it is recommended that it continue as planned.
26.4 Metallurgy & Processing
Although a substantial body of metallurgical testwork has been carried out on the Falchani lithium-bearing tuff material, additional testwork is required to better inform the subsequent study phases. The following testwork is recommended:
• Mineralised material characterisation (to better define the design data for the crushing and milling circuits)
• Mineralised material variability (to understand how variability across the orebody may impact on plant performance and to make design allowances accordingly)
• Process optimisation testwork (to optimise operating parameters and reagent consumptions)
• Equipment Sizing (to allow equipment vendors to size their equipment and provide performance guarantees)
• By-product Recovery (to define the design conditions for the recovery of valuable by-products)
• Site water (to determine the quality of the water).
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It is recommended that Plateau engage with the vendors of the major items of capital expenditure (for example, the sulfuric acid plant, the evaporators and crystallisers) to discuss beneficial commercial models or terms (for example, build, own, operate (BOO)).
Detailed lithological and mineralogical domains should be defined to inform the development of a geometallurgical model, which in turn will provide input to the mine development plan. The geometallurgical model should be updated and refined as the Project develops.
26.5 Infrastructure It is recommended that the final route for the access road and powerline be identified and surveyed so that more accurate pricing be provided for these items in the next phase of the Project.
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27 REFERENCES
[1] GBM, “NI 43-101 Report - Preliminary Economic Assessment. 0539-RPT-004 Rev 4,” GBM Minerals Engineering Consultants Limited, 2016.
[2] ANSTO Minerals, “Lithium Recovery From the Macusani Deposit - C1568,” ANSTO, 2018.
[3] J. Riordan, “Plateau Energy Metals Falchani Lithium Trade-off Study Report,” DRA, Perth, 2019.
[4] The Mineral Corporation, “MINERAL RESOURCE ESTIMATES FOR THE FALCHANI LITHIUM PROJECT IN THE PUNO DISTRACT OF PERU - C-MYI-EXP-1727-1134,” TMC, 2019.
[5] Benchmark Mineral Intelligence, “Lithium Market & Pricing Report for Plateau Energy Metals,” BMI, November 2019.
[6] Vice Versa, “Determinación de los Costos de Inversión para la Construcción de un Depósito de Relaves, PE-ING-005-2019-VC,” Vice Versa, Lima, 2019.
[7] “Environmental Legislation Handbook,” [Online]. Available: http://www.legislacionambientalspda.org.pe/. [Accessed 4 March 2020].
[8] ANSTO Minerals, “Optimisation of Sulfuric Acid Extraction of Lithium From The Macusani Deposit - C1630,” ANSTO, 2019.
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