Graphite and Rare Earth Materials for Expanding Markets
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Leading Edge Materials Corp. (TSXV:LEM) (OTCQB:LEMIF) is a Canadian company focused on becoming a sustainable supplier of a range of critical materials necessary in the global transition to a low-carbon energy future. Leading Edge Materials has a unique project portfolio in Scandinavia centered on critical specialty materials—including graphite, lithium, cobalt and rare earths— for various energy related markets including lithium-ion batteries, energy generation and storage, and thermal efficiency building products.
Europe is playing a leading role in the transition to low-carbon energy generation from renewable sources, and the efficient storage of that energy. Electric mobility (EV’s, HEV, PHEV’s) and stationary electricity storage are dependent on high purity graphite, lithium and cobalt, where Leading Edge Materials is an active European player. Lithium, graphite and cobalt have a strong and expanding market, due to the essential role they play in lithium-based batteries for the automotive, consumer product and stationary electrify storage industries.
In July 2017, Leading Edge Materials announced a partnership with Swedish battery manufacturer Northvolt AB as part of a large-scale Swedish based battery manufacturing project agreement with InnoEnergy, a leader in Europe’s sustainability energy movement. European nations like Sweden are taking a leadership role in the transition to a low-carbon energy generation economy. “This is an exciting time for the lithium ion battery market and we are very pleased to be a part of such an important project in the EU,” said Blair Way, Leading Edge Materials President and CEO. “It is an excellent opportunity to participate in a program such as this to demonstrate our ability to be an important part of the supply chain for large scale lithium ion battery manufacturing.”
Leading Edge Materials’ flagship asset is the Woxna Graphite production facility in central Sweden. Woxna is targeting the supply of high purity spherical graphite used in the production of lithium ion batteries and graphene for electrodes, barriers and coatings. Woxna is one of a few graphite producers in the western world and one of only two in Europe.
With a production-ready, fully permitted graphite mine and processing facility in Sweden, Leading Edge Materials is be positioned to become the first large scale producer of battery grade high purity spherical graphite outside of China. The company has also initiated re-permitting to facilitate future expansion.
Leading Edge Materials is a founding participant in an ongoing research project focused on the use of graphite and graphene in the aerospace and aeronautic industries. Under the project, funded by the Swedish government agency VINNOVA, Woxna graphene is being tested to develop polymeric composites that can withstand long-term exposure to high temperatures and humid environments.
Since its discovery in 2016, Leading Edge Material’s Bergby lithium project in central Sweden has quickly become a highly-ranked lithium project in the Nordic region. Following the success of the first drill program completed in 1H 2017, the company initiated a second drill program in Q3 2017 in order to further expand the known mineralization and collect samples for metallurgical testing.
Another significant asset for LEM is the Norra Karr Rare Earth Element (REE) deposit in southern Sweden. It has a 2015 preliminary feasibility study confirming the project 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.
“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 Way.
- With the flagship Woxna Graphite production facility LEM is 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, the Bergby lithium project, the Norra Karr REE project, and the Kontio cobalt project all located in Scandanavia—a world leader in low-cost renewable energy innovation.
- Optimization of Woxna flow sheet underway in preparation for producing battery-grade graphite.
- Second drilling program at high-grade Bergby lithium project initiated in August 2017.
- 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.
- Highly experienced management and operations team.
Flagship Project: Woxna Graphite Mine
The Woxna Graphite Mine and processing facility is located a 3.5-hour drive north of Stockholm, Sweden. The mine was originally commissioned in 1997 and has operated intermittently since then. Woxna was refurbished in 2014 and remains in a production-ready status, operating as required to produce test graphite materials. It is currently permitted to feed 100,000 tons of graphic rock per year, which will allow for production of approximately 10,000 tons of graphite concentrate.
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.
Woxna hosts measured and indicated resources of 7.7 million tonnes at 9.3 percent graphite. Under testing, Leading Edge Materials has successfully produced high purity graphite at Woxna and is currently optimizing the flow sheet in preparation for the production of battery-grade material.
Recent High Precision Coulometry (HPC) tests on 18650 battery cells—the industry standard for testing battery performance—which had anodes made with Woxna graphite concentrate—yielded positive results. “It is rewarding to see the progress made in the testing of our Woxna graphite for the lithium ion battery market,” said Way. “18650 cells were manufactured using over 4kg of Woxna high purity graphite, and provide the best test of graphite anode performance under real world conditions, well beyond the testing possible on smaller coin cells. The HPC test results are encouraging and I look forward to continuing this qualification process.”Leading Edge Materials is now working with graphite end users in the lithium-ion battery market to meet product specification requirements.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.
Key Project: Bergby Lithium Project
The wholly-owned Bergby lithium project covers 1,903 hectares of exploration licenses in central Sweden, less than 100 kilometers from the Woxna graphite mine. Important infrastructure including major roads, rail and power passes immediately adjacent to the property’s boundaries. A deep water port is located a mere 5 kilometers from the project site.
High grade lithium was first discovered in 2016 by the Leading Edge Materials’ geological team using Swedish Geological Survey data.
Leading Edge Material’s first drill program completed during the first half of 2017 yielded positive results for both lithium and tantalum with lithium oxide mineralized pegmatite intersected in 17 out of the 18 drilled holes—including high lithium grades, at shallow depths and mineralized intervals exceeding 16 meters of thickness. The holes lie along a 600-meter strike that follows a trend of lithium mineralized pegmatite outcrop and boulders.
Leading Edge Materials commenced its second drill program at Bergby in August 2017 with a focus on expanding the area of lithium mineralization through a target of 900 meters of drilling, and collecting samples for metallurgical testwork.
“Following our previous drill success, we have moved quickly to access the permits and the drill rig needed to advance this exciting prospect. The lithium mineralized pegmatite remains open in all directions, and the along strike and down dip potential will be well tested by this program,” said Way.
Key Project: 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 will be 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.
Mark Saxon — Director and Interim President and CEO
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.
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.
Filip Kozlowski — Director
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
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.
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