Big Picture – A Deep Dive Examination of Leading Edge Materials Corp
Leading Edge Materials Corp Snapshot
Leading Edge Materials Corp. (formerly, Flinders Resources Limited) acquired all of the issued and outstanding shares of Tasman Metals Ltd. via a plan of arrangement in August 2016. The Boards of the two companies recognised the synergies of the enterprises, and the benefits gained by bringing together two teams focused on critical raw materials.
Whilst a Canadian public company (TSX.v:LEM; OTCQB: LEMIF) the principal assets of Leading Edge Materials are in Scandinavia, a region well recognised for its promotion and investment in innovation. LEM’s core investments are matched to high growth markets, linked to the global shift to low-carbon energy generation and energy storage.
Our assets and research focus are towards the raw materials for Li-ion batteries (graphite, lithium, high purity aluminium); materials for high thermal efficiency building products (graphite, silica, nepheline); and materials that improve the efficiency of energy generation (dysprosium, neodymium, hafnium).
Leading Edge Materials is ideally placed to play a pivotal role in the sustainable supply of technology and energy critical materials.
Leading Edge Materials commenced graphite production at the Woxna Graphite project in July 2014.
Woxna is strategically located in central Sweden, on the doorstep of a diverse range of European graphite consumers. Woxna is a fully permitted site, with an open pit mine, graphite processing facility and tailings storage dam already constructed. The site is currently permitted to feed 100,000 ton of graphitic rock per year, which allows for the production of approximately 10,000 tons of graphite concentrate.
During 2014, stockpiled lower grade graphitic rock was used to test and commission the plant, and in the process produced commercial quantities of graphite concentrate with up to 92% carbon content. This commissioning product was sold by January 2015.
Mining commenced in early 2015 and fresh graphitic rock was extracted from the open pit. Despite the Woxna project producing graphite to grade and recovery specifications, the global flake graphite became increasingly challenging during 2015, with prices falling to four year lows of less than US$700/tonne. Given these weakening conditions, in July 2015 the Board elected to halt production until graphite prices recover.
The Woxna plant is now maintained on a production-ready basis while higher value graphite products are developed. The plant will not recommence meaningful production until market conditions improves. We invite enquiries at any time regarding immediate graphite sale opportunities.
Leading Edge Materials is now focussed on the value added graphite market, to supply materials to the emerging energy production and storage, thermal insulation and additive manufacturing markets. With access to a sustainable supply of commercial graphite from the fully permitted Woxna project, the Company is well positioned to aggressively develop products for these exciting markets, in partnership with European research groups and customers.
The Woxna project and surrounding areas are secured upon mining leases and exploration licences which cover 4 known graphite deposits within an area totalling 146.71 ha, located nearby the town of Edsbyn, Sweden (Table 2).
The four deposits, all of which lie on mining leases within trucking distance of the Woxna facility, provide a total Measured and Indicated Resources of 7.7 million tonnes of 9.3% graphitic carbon (Table 1). These mineral resources are calculated in accordance with Canadian Institute of Mining, Metallurgy, and Petroleum (“CIM”) guidelines and reported within two National Instrument 43-101 reports with effective dates October 11, 2013 and March 24, 2015.
Graphite mineralization at Woxna is developed in Precambrian metasedimentary and metavolcanic host rocks which have been metamorphosed to sillimanite grade and intruded by felsic units ranging from alkali pegmatite to granite. Two discrete tabular zones of graphite mineralization have been discovered, probably representing elevated carbon in pre-cursor sedimentary units. The mineral assemblage includes accessory prehnite and zoisite and the ubiquitous quartz-feldspar-chlorite-sericite assemblage indicating a lower grade of metamorphism. Contact metamorphism is believed to be the source of heat for the formation of graphite. The graphite deposits occur beneath a thin blanket of Quaternary age moraine deposits.
NORRA KARR MINE
Leading Edge Materials is the 100% owner of the Norra Kärr rare earth element (REE) deposit. Norra Kärr is one of the world’s principal heavy REE resources, with an unusual enrichment in the most critical REEs: dysprosium (Dy), terbium (Tb) and yttrium (Y). Located in southern Sweden approximately 300km SW of Stockholm, Norra Kärr is the only heavy REE deposit of note within the European Union and provides the EU with the long term capacity to be independent of REE imports.
In addition to REEs, Norra Kärr has the capacity to be a major supplier of hafnium (Hf), zirconium (Zr) and the industrial mineral nepheline.
Development of the project will remove the EU’s need to import Chinese REE’s that are produced under environmentally & socially unsustainable conditions. The extensive existing infrastructure means REE production can be done with the lowest possible impact on the environment and with a low carbon footprint. Due to the high grades of heavy REEs, independence for the EU can be gained with an annual mining rate of less than 2% of Sweden’s largest operating mine.
Norra Kärr is surrounded by nearby infrastructure, services, electricity, supplies and skilled labour.
Geology and Mineralogy
The Norra Kärr peralkaline (agpaitic) nepheline-syenite intrusive complex is located in south central Sweden. The intrusion has been dated at 1,489 ± 8Ma, and intrudes older gneiss and granite of the Trans-Scandinavian Igneous Belt (dated at 1.81 – 1.76Ga) along a long-lived north trending regional fault. The intrusion covers an area some 450m x 1,500m in size, beginning below a thin soil cover and exceeding depth of drilling at 350m.
The Norra Kärr intrusion is enriched in zirconium (Zr), heavy REE’s, yttrium (Y), niobium (Nb) and hafnium (Hf) resulting in the presence of minerals that are uncommon on a global scale. Mineralogical studies show nearly all of the REE in Norra Kärr is found within the mineral eudialyte, with only trace britholite and mosandrite. Eudialyte at Norra Kärr is relatively rich in REEs compared to most other similar deposits globally, and also contains a very high proportion of high value heavy REEs. REE grade, mineral grain size and heavy REE/total REE% varies only slightly across the deposit in a concentric manner.
Large and Long Lived Resource
The Norra Kärr deposit is one of the world’s largest heavy REE resources, with the capacity to supply all of Europe’s heavy REE requirements for more than 20 years. Under a PFS published January 2015, the Mineral Resource has been optimized to allow production of 5,000 tonnes per year of separated REO (rare earth oxide) over a constrained mine life of 20 years. This production rate was chosen due to the globally significant output of dysprosium (approximately 15% of current demand), yttrium and terbium from Norra Kärr under this scenario. See tables 1 and 2 for Mineral Resource and Reserve estimates, and table 3 for REE distribution.
The Norra Kärr deposit has an unusually high percentage of the heavy and critical rare earths in its REE distribution, with a heavy REE/total REE ratio of 53%. This high % means capital and operating expenditure is directed toward high value critical metals (Dy, Tb, Y, Nd, Lu) not the over-supplied markets of Ce and La. Norra Kärr has the highest HREE ratio of the large REE deposits.
Simple Metallurgical Flowsheet with High Recovery
Extensive metallurgical testwork has been completed on representative samples from Norra Kärr. Mineralogy has shown that the only REE-bearing mineral with significant abundance at Norra Kärr is the zirconosilicate eudialyte. Eudialyte is weakly magnetic (paramagnetic) and dissolves rapidly in weak acid at low temperature. As a result, an uncomplicated flow sheet (see Figure 1) has been developed that can be achieved with standard mining/processing equipment and widely available chemicals. Ore is processed via a simple flowsheet, comprising crushing, grinding, magnetic separation, sulphuric acid leaching and precipitation of a purified mixed REE-oxalate which is calcined to form a mixed REO product.
Eudialyte beneficiates efficiently using Metso’s HGMS magnetic separation equipment, providing a clean and high recovery eudialyte-rich mineral concentrate. Beneficiation recovery higher than 90% is now anticipated and targeted.
Hydrometallurgical research has been completed by ANSTO Minerals in Australia. Sulphuric acid was chosen due to its low cost and widespread availability in Sweden. Leaching is undertaken at ambient temperature and pressure – high temperature roasting is not required. Sulphuric acid consumption per tonne of ore has fallen to only 85 kg/tonne. A heavy REE enriched, low impurity oxalate has been precipitated by ANSTO with a grade of approximately 45% REE. This oxalate can be easily calcined to a high grade REE-oxide subject to customer requirements.
Pre-Feasibility Study January 2015: Leveraged to the Magnet Industry
In March 2015, Tasman published a comprehensive Pre-Feasibility Study (PFS) for the Norra Kärr project. The project now stands out as one of very few advanced heavy REE projects globally, and the only one that can produce more than 200 tonnes per year of dysprosium oxide for more than 20 years with a capital investment of less than US$400 million.
PFS conclusions are supported by very extensive drilling, sampling, process testwork and REE consumer discussions. The PFS is a complete study, addressing in addition to mining and processing, all required on site and off site infrastructure, land access, reagent and fuel transport and storage, power access, water recycling and purification, waste rock and tailings storage, and final closure. Engineering work focused on applying the lowest risk process solutions using commercially available technology.
The PFS and economic assessment is based on conventional open pit mining at an average annual rate of 1.18 million tonnes and a grade of 0.59% total REO, constrained to provide for a 20-year mine life. Ore is processed via a simple flowsheet, comprising crushing, grinding, magnetic separation, sulphuric acid leaching and precipitation of a purified mixed REE-oxalate which is calcined to form a mixed rare earth oxide product. An average annual REO output of 5,120 tonnes is forecast, reflecting the recommendations of a market study for the most critical REE’s. The PFS model provides for REE separation to individual saleable oxides by an external partner on a commercial basis. Such REE separation facilities operate within Europe today.
Based on current prices, 23% by volume and 74% by value of the REE output shall be supplied to the permanent magnet industry. Dysprosium, which is consumed in high temperature magnets in the automotive, wind energy and engineering sectors is the largest revenue contributor at 42%.
Pre-Feasibility Study January 2015: Existing Infrastructure Means Low Cap-Ex
The Norra Kärr project has the lowest construction capital requirements among its peers of large/long mine-life heavy REE projects, due to the projects unique ability to leverage existing infrastructure (road, rail and power), and the presence of a nearby supplier of sulphuric acid. Tasman’s on-site operating costs to produce a mixed REE-oxalate of US$20.69/kg are mid-range within the heavy REE peer group. Refining costs, to pay for the separation of mixed REE product into individual metals has been assumed to cost of US$19/kg, being at the higher end of the peer group assumption, though toll separation charges are higher for heavy REE than light REE.
Assuming a 10% discount rate, the after-tax NPV is US$313 million. The after-tax IRR is 20% with a 4.9 year payback period. Financial information is provided in Tables 4 to 6.
Norra Kärr’s unique location in Europe surrounded by well-developed infrastructure and in close proximity to the large European population, along with the very clean character of the rock allows the supply of bulk by-product materials to be considered.
Summary: An REE Industry Leader
Leading Edge Materials presents a clear, industrially relevant and low risk business model to be a leader in the expanding western REE industry. The flagship Norra Kärr deposit will be a major producer of the most critical REE’s, and is the only project that can produce more than 200tpa of Dy oxide for more than 20 years with low start-up capital expenditure. With European customers on the doorstep, and daily driving access to the deepest and most intact REE industry outside of China, Leading Edge Materials has the capacity to be a long term, secure and sustainable REE supplier.
NI 43-101 Compliance
A technical report supporting the PFS is available in its entirety, on the SEDAR website at www.sedar.com or the Company’s website at www.tasmanmetals.com. The PFS was prepared by GBM under the guidance of Michael Short, Principal Consultant for GBM who is a “Qualified Person” in accordance with NI 43-101.
The Mineral Resource and Mineral Reserve estimates were completed by Wardell Armstrong International Limited under the supervision of Greg Moseley and Mark Mounde, who are both “Qualified Persons” in accordance with NI 43-101. The process for the integrated processing plant for the PFS was completed by GBM under the supervision of Thomas Apelt who is a “Qualified Person” in accordance with NI 43-101. The infrastructure design and cost estimation for the PFS was completed by GBM under the supervision of Michael Short who is a “Qualified Person” in accordance with NI 43-101. The environmental and social section and the permitting review for the PFS was completed by Golder Associate Oy under the supervision of Gareth Digges La Touche who is a “Qualified Person” in accordance with NI 43-101.
Mr Blair Way<
Mr. Way has over 25 years management experience within the resources and construction industry throughout Australasia, Canada, the United States and Europe. Prior to joining Leading Edge Mr. Way was VP Project Development for Ventana Gold (TSX) advancing projects in Colombia.
As well Mr. Way served as President & Project Director, Oceanagold Philippines overseeing the Philippine business unit including in country exploration activities and construction of the Didipio gold copper project , Project Manager Non Ferrous Group with Hatch Associates (Brisbane) and Project Director for BHP’s Major Projects division in Townsville, Queensland.
Mr. Way holds a Science (Geology) from Acadia University in Nova Scotia, Canada, a MBA from the University of Queensland, Australia, and is a Fellow of the Australasian Institute of Mining and Metallurgy
Mr Mark Saxon
B.Sc.(Hons) GDipAppFin, MAusIMM, MAIG
Mr. Saxon has 20 years of experience in exploration and resource geology. He graduated from the University of Melbourne in 1991 with a First Class Bachelor of Science (Honours) in geology, and is a fellow of the Australasian Institute of Mining and Metallurgy. Mr Saxon has worked for Pasminco Australia Ltd in Australia and South America.
Mr Saxon has considerable experience and practical knowledge of the geology, prospectivity and operating environments of Australia, Northern Europe and South America. Mr Saxon was the President & CEO of Tasman Metals Ltd from 2009 to 2016, until the acquisition of Tasman by Leading Edge Materials. Mr. Saxon is also a director or advisory board member of other publicly-listed companies
Mr. Kozlowski is based in Stockholm and has 15 years of experience in various capital market roles, including as an investment manager for private funds, a market trader with a global tier one investment bank, and as an advisor to smaller boutique investment firms. Mr. Kozlowski has initiated investments across numerous business sectors, with an emphasis on the resources and specialty industrial segments. Mr. Kozlowski holds a M.Sc. Business Administration with a major in Finance from the Stockholm School of Economics.
Mr Nick DeMare
Mr. DeMare, a chartered professional accountant, has been President of Chase Management Inc. since 1991, providing accounting, management, securities regulatory compliance and corporate secretarial services to private and public-listed companies.
Mr. DeMare also serves as an officer and/or director of a number of public-listed companies. Mr. DeMare holds a Bachelor of Commerce degree from the University of British Columbia and is a member in good standing of the Institute of Chartered Accountants of British Columbi
Mr Michael Hudson
Non-Executive Chairman and Director
B.Sc.(Hons) GDipAppFin, FAusIMM, MSEG, MAIG
Mr Hudson, B.Sc. (Hons) GDipAppFin, FAusIMM, MSEG, MAIG, is an explorationist and entrepreneur. He graduated from the University of Melbourne in 1990 with a B.Sc. (Hons 1st). He started his career working as a mine and exploration geologist in Australia, Pakistan and Peru. Over the last 15 years he has developed and financed mineral exploration properties on four continents, with a major focus in the Nordic Countries. Since 2004, he co-founded and has lead Mawson Resources Ltd (TSX:MAW), a gold exploration company in Finland and Sweden. Mr. Hudson is also a co-founder and director of Mawson Resources Limited (TSX: MAW).
Leading Edge Materials Corp
Suite 1305, 1090 West Georgia Street, Vancouver, BC Canada V6E 3V7
Phone: +1 604 685 9316
Phone: +1 604 699 0202