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Leading Edge Materials Corp. (TSXV:LEM) (OTCQB:LEMIF), (formerly, Flinders Resources Limited) acquired all of the issued and outstanding shares of Tasman Metals Ltd. via a plan of arrangement in August 2016. LEM is positioned with a unique portfolio of critical raw material assets in Europe, enabling it to facilitate the transition to a low-carbon economy by supplying graphite and rare earth elements used in the generation, storage and conservation of energy.
Key assets include the Woxna flake graphite deposit in central Sweden, which features a fully-permitted project currently in production-ready status. The merged company will focus on the value added graphite market, supplying materials such as high purity spherical graphite used in the production of lithium ion batteries and graphene for electrodes, barriers and coatings.
The second key asset is the Norra Karr Rare Earth Element (REE) deposit in southern Sweden. A preliminary feasibility study, published in 2015, confirmed that Norra Karr has the capacity to be a long term producer of the most critical heavy rare earth elements, plus other critical metals including zirconium and halfnium. Recent test work on nepheline/feldspar by-product from Norra Karr presents a potential opportunity to supply the industrial commodity to Europe’s large paint, building product, ceramic and glass markets.
“With a new name and an expanded view, Leading Edge Materials has the opportunity to play a strong role in the sustainable supply of critical raw materials. With core assets in Scandanavia, a region well recognized for its investment and success in innovation, we are excited about this next step in the company’s growth,’’ said Leading Edge President and CEO Blair Way.
- Positioned to become the first large scale producer of battery grade high purity spherical graphite outside of China.
- 100-percent owner of fully permitted Woxna graphite facility.
- 100-percent owner of Norra Karr rare earth element project
- Focused on graphite, lithium, cobalt, rare earth elements and tungsten.
- Poised to benefit from the opportunities provided by the accelerating shift to low-carbon energy supply and efficient energy storage.
- Ability to meet demand for a set of metals and materials that provide a higher level of performance.
- Catering to future demand for functional materials from environmentally and socially sustainable sources.
- Controls the only REE deposit of note within the European Union and provides the EU with the long term capacity to be independent of REE imports.
- Highly experienced management and operations team.
Woxma Graphite Mine
The Woxna Graphite Mine and processing facility is located a 3.5-hour drive north of Stockholm, Sweden. The mine operated between 1997 and 2002 until low grade graphite prices prompted a decision to close. In 2011, Leading Edge acquired a 100-percent interest in the mine and surrounding concessions which cover four known graphite deposits, as well as the adjoining exploration concessions which cover 146.7 hectares. The property benefits from excellent infrastructure, including road access, power, ports, water and mining services.
The site is currently permitted to feed 100,000 tons of graphic rock per year, which allows for production of approximately 10,000 tons of graphite concentrate.
Building Relationships in the European Market
The European Union accounts for 20-percent of global natural graphite consumption, but only produces the equivalent of under 0.3 percent of global supply. European graphite-end users are becoming increasingly interested in acquiring more sustainable, secure graphite sources outside China, which accounts for 60 percent of global supply. At full capacity, Woxna is expected to more than double the existing domestic graphite production.
Production restarted in 2014
Production resumed in July 2014 with the mill being fed by stockpiled graphitic rock. As there is no ready market for graphite, producers are reliant on their ability to meet the specific needs of end users in key industrial sectors such as battery manufacturing and energy storage. In keeping with that scenario, Leading Edge based its production strategy on how much it would need to produce in order to meet the demands of customers.
The plant was operated until the end of 2014 on stockpiled graphitic rock and the mining of graphitic rock commenced in the first quarter of 2015. The freshly mined graphitic rock was fed to the Woxna processing facility and operated at normal design capacity, producing a graphite concentrate inventory. This inventory was stockpiled instead of sold due to declining global flake graphite demand during 2015 that pushed prices to a four year low. So the decision was made to reduce production at Woxna and only supply larger volumes when graphite prices return.
On June 29, 2015, the company announced the decision to operate the plant on a production ready status until graphite market conditions improve. The company says the Woxna plant can be restarted in a matter of days once viable economics return to the graphite market.
That was just weeks after the company said measured and indicated graphite resources have increased from 2.8 million tons at 10.7 percent graphitic carbon (CG) to 7.7 million tonnes at 9.3 percent graphitic carbon.
On April 21, 2016, the company said the new so-called wonder material known as graphene has been produced for the first time using graphite concentrate from the Woxna Mine. That was about eight months after the company outlined its action plan (September 21, 2015) with respect to participation in the Svenskt Grafen, a Swedish government initiative for the production of graphene from Swedish sourced graphite. On April 21, 2016, the company said graphene has been produced for the first time using graphite concentrate from the Woxna Mine.
Graphene has a vast array of ground-breaking properties, including the highest strength of any material isolated, extraordinary conductivity, flexibility, and transparency. In fact, its initial discovery in 2004 won graphene pioneers Andre Geim and Konstantin Novoselov the 2010 Nobel Prize in Physics.
Since then, graphene has been moving quickly from research laboratories to industrial applications. Leaders in industry and academia (including Samsung, Ford, IBM, Harvard, and MIT) consider graphene as a choice material for the future of electronics, energy storage, drug delivery, and composite materials.
“We have the necessary components to investigate the commercialisation of graphene, from Woxna concentrate, for high technology applications,’’ said Blair Way.
In March 02, 2016, the company announced that battery grade spherical graphite has been manufactured using graphite concentrate from Woxna. Due to the ongoing success of the high purity graphite research and widely reported anticipated increase in demand for battery grade graphite, the company has committed to a re-permitting process for the site to allow for an increase graphite production rate across the site and an expansion of the range of products that can be produced, including high purity materials.
Benchmark Minerals has indicated that natural flake battery grade spherical graphite products can fetch between US$3,000 and $4,500 per tonne, depending on specifications. That compares to less than $800 per ton for traditional natural flake graphite.
With a production-ready, fully permitted graphite mine and processing facility in Sweden, the re-permitting will enable Leading Edge Minerals to be positioned to become the first large scale producer of battery grade high purity spherical graphite outside of China.
However, the company advises that it has not based its production decision on a feasibility study of mineral reserves, demonstrating economic and technical viability, and, as a result, there may be an increased uncertainty of achieving any particular level of recovery of minerals or the cost of such recovery, including increased risks associated with developing a commercially minable deposit.
Update on Norra Karr Mining Leases
As disclosed by Tasman Metals, prior to the merger with Leading Edge, the mining leases for Norra Karr, along with other mining leases held by third parties in Sweden, are currently being reassessed by the Swedish Mines Inspectorate. The Inspectorate is considering all four mining lease applications to determine any information that is required to meet the Swedish Supreme Administrative Court. The company has been advised by Swedish legal counsel that the mining leases remain in force and are 100-percent owned by Leading Edge.
Norra Karr Mine
The Norra Karr rare earth element deposit is located in southern Sweden, approximately 300 kilometers southwest of Stockholm, and 15 kilometers northeast of a small town called Granna in a rural agrarian setting. The project consists of four claims covering 5,079 hectares, and is located close to the eastern shore of Lake Vattern, one of the largest lakes in Sweden. Norra Karr is one of the world’s principal heavy rare earth element resources with an unusual enrichment in the most critical REEs: dysprosium (Dy), terbium (Tb), and yttrium (Y). It is the only 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 Karr has the capacity to be a major supplier of hafnium (Hf), zirconium (Zr), and the industrial mineral nepheline, which is used in glass making, ceramics and pigments.
Development of the project will remove the EU’s need to import Chinese REEs that are produced under environmentally and socially unsustainable conditions. Norra Karr is surrounded by nearby infrastructure, services, electricity supplies and skilled labour.
A prefeasibility study for the project was published in March 2015. It indicated that the project now stands out as one of the very few advanced heavy REE projects globally, and the only one that can produce more than 200 tonnes per year of dysprosium oxide for at least 20 years, with a capital investment of under US$400 million.
Prefeasibility conclusions are supported by very extensive drilling, sampling, process test work and REE consumer discussions. 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 59 percent total rare earth oxides, constrained to provide 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. The PFS model provides for REE separation to individual saleable oxides by an external partner on a commercial basis
Based on current prices, 23 percent by volume and 74 percent 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 percent.
The project has low construction capital requirements due to its ability to leverage existing infrastructure and the presence of a nearby supplier of sulphuric acid. The on-site operating costs to produce a mixed REE-oxalate of US$20.59 per kilogram are mid-range within the heavy REE peer group. Refining costs, to pay for separation of mixed REE product into individual metals has been assumed to cost US$19 per kilogram.
Assuming a 10 percent discount rate, the after-tax Net Present Value is US$313 million. The after-tax IRR is 20-percent with a 4.9 year payback period. The total capital expenditure for the Norra Karr project is estimated at US$423 million. That amount would be spent on a 2-year design and construction phase.
Blair Way — CEO, President & Director
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 Materials 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.
Michael Robert Hudson — Non-Executive Chairman and Director
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).
Nick DeMare — CFO & Director
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 Columbia.
Mark Saxon — Director
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.
Mariana Bermudez — Corporate Secretary
Ms. Bermudez has more than 19 years of experience providing corporate secretarial, corporate governance and securities regulatory compliance services to public-listed companies and serves as corporate secretary to various reporting issuers. Ms. Bermudez has also been a legal secretary/assistant for two Vancouver law firms.
Mikael Ranggard — Indpendent Director
Mr. Ranggård holds a law degree from Uppsala University, Sweden, and has an extensive professional career working with foreign and local Swedish mining companies since 1990. In addition, Mr. Ranggård has experience as board member of various public and private companies and a wealth of knowledge in Canadian capital markets. From 2011 to 2015, Mr. Ranggård served as Chairman of the Company’s subsidiary, Woxna Graphite AB, and is Senior Legal Advisor to the Company.