LEADING EDGE
MATERIALS CEO’S REPORT TO THE SHAREHOLDERS
Stockholm, March 30,
2023 – Leading Edge Materials
Corp. (“Leading Edge Materials” or the “Company”) (TSXV: LEM)
(Nasdaq First North: LEMSE) (OTCQB: LEMIF) (FRA: 7FL)
provides a letter from the Chief Executive Officer.
CEO’S REPORT TO THE SHAREHOLDERS
The past year has not been short of geopolitical
turbulence and macro-economic challenges. As the pandemic crisis
has subsided, the war in Ukraine, rising inflation and recent bank
failures have added to the tension. And of course, the impacts of
climate change remain a high priority on political agendas. Our
vision, materials for change, is right in the middle of these
societal challenges. A change in the energy system towards
renewables and energy storage, electrified mobility solutions and
resilient and sustainable supply-chains will need new materials and
new sources for those materials. This is where the projects we have
and the work we do on them becomes critically important.
Governments in the western world are launching
initiatives to support the development of domestic sources of
critical raw materials to reduce reliance on China, the European
Union being no exception, with the recently proposed EU Critical
Raw Materials Act.i
In brief, the proposed legislation is an
enormous effort to support current and stimulate future sustainable
supply chains of these deemed critical raw materials from within
the union. The impact on us and our activities cannot be
overstated: we are in Europe, it applies specifically to all the
materials we are exposed to, streamlined and predictable permitting
procedures for strategic projects, improved access to finance, etc.
Cautiously factoring in beneficial additional order effects and
improving public realisation of importance of sustainable access to
these materials, we have to conclude that it is about twenty years
since we felt such optimism for extractive industries.
Woxna - Graphite
Graphite is a key material to enable the energy
transition, where most lithium-ion battery chemistries use graphite
for the anode. As demand for lithium-ion batteries grows
exponentially, demand for graphite is expected to grow by a factor
of three by 2030ii. Currently production of graphite for batteries
is dominated by China.
Our Woxna graphite mine in central Sweden is one
of few already built and permitted graphite mines in the western
world. The Company’s strategy is to establish a vertically
integrated mine to anode material production unit which could offer
a secure and sustainable supply of anode materials for European
battery producers at the same time demand is expected to grow
significantly. During last year, we announced plans to consider
re-starting the mine. However, a change in the Company’s
executive management during the second half of the year delayed a
decision on this process.
A PEAiii issued in 2021 indicated the
potential viability of a Swedish operation producing battery grade
graphite anode material utilising the existing graphite mine and
concentrator with the addition of a value-add processing facility
offsite. The proposed process route in the PEA uses a thermal
purification process which, combined with access to low-cost
hydropower offers a low carbon footprint for the operation.
The PEA utilised only one of four deposits currently owned by Woxna
under granted exploitation concessions, where two of the other
deposits also have indicated and inferred mineral resource
estimates offering potential upside for further expansion in future
development or studies. Based on this, the PEA reports a Post-tax
Net Present Value (NPV) of $248m using an 8% discount rate and IRR
of 37.4%.
Norra Kärr - Heavy
Rare Earth Elements
Rare earth elements are needed to produce the
high strength permanent magnets that are critical for the motors
for electric vehicles and generators for wind turbines. As these
technologies are set to grow significantly, the market for magnet
rare earth oxides is forecast to increase five times by 2030iv.
Again, China is the dominant supplier of rare earth oxides and
permanent magnets.
Our Norra Kärr (NK) rare earth project is one of
the world’s most significant deposits for heavy rare earth elements
such as dysprosium and terbium, and the only deposit of its kind in
the European Union. It is identified as a critical project by the
European Parliament (ERECON study). Bringing the project into
production could be a key enabler for a European mine-to-magnet
value-chain.
Highlights of the Preliminary Economic
Assessmentv (PEA) completed on NK reported potential to
recover the industrial mineral Nepheline Syenite (NS), zirconium
oxide (Zr) and niobium oxide (Nb) in addition to the rare earth
oxide (REO) products, resulting in more than 50% of total mined
material planned to be sold as products. The PEA, in comparison to
previous studies, substantially reduced land area usage of the
Project by approximately 80% and results in no chemical process
tailing dams being required at Norra Kärr. These changes
considerably reduce the environmental risk profile of the Project
at Norra Kärr, including potentially reducing additional water
requirements by almost 100% and the elimination of discharge
requirements to local water bodies compared to if mine dewatering
is used solely for water supply. Financial highlights of the
PEA are a post-tax Net Present Value of $762M (using a 10% discount
rate) and an Internal Rate of Return of 26.3%.
We are currently in the process of undertaking
the Natura2000 environmental study for the project which is
expected to highlight the much-reduced environmental footprint of
the project as defined in the PEA. Current Swedish
legislation requires a Natura 2000 permit prior to the evaluation
of a mining lease. In addition to the Natura2000, the Company
is planning on commencing the Pre-feasibility Study for NK in the
second half of 2023.
Bihor Sud, Cobalt-Nickel Exploration
Project
The Bihor Sud exploration license perimeter
covers a 25 square kilometre area in the Northern Apuseni Mountains
in Romania. Located approximately 90 km south-east from
Oradea, which is the administrative capital of Bihor County, the
Project lies within the Upper Cretaceous and Neogene Carpathian
magmatic arcs which extend from Turkey to Hungary and are host to
several well-known mines and mineral deposits such as the
Timok-Bor-Majdanpek copper-gold zone, Skouries and Chelopec.
The Northern Apuseni Mountains have documented high grade skarn and
carbonate replacement mineral deposits and historic production of
Cu, Mo, Ag, Au, Zn, U and Pb. Within the License area, there
is a significant amount of historical mine works including a
substantial former underground uranium and polymetallic mine which
stopped production in the 1990s.
After receiving the exploration license for
Bihor Sud in May 2022, the Company has commenced field work on the
property which it holds through its 51% (potentially to be
increased to 90%) owned Romanian subsidiary, LEM Romania SRL
(“LEMR”). Initial work focused on field mapping to
investigate petrographic, structural, alteration, and
mineralisation data with the latter especially located in a
carbonate lithology.
Over the last couple of months, LEMR’s team of
geologists have performed geological mapping work from the
established exploration camp in the Leucii Zone in the
south-western area of the license perimeter. Entrance to this
area is facilitated by an existing forestry road and grants the
exploration team and consultants a base for accessing gallery
openings G7 and G4 in the Leucii Zone, and G Dibarz in the Dibarz
Zone. This area was prioritized based on results from
previous work done and sampling of historical mined material during
the prospecting permit, with samples assaying up to 28% nickel,
6.8% cobalt and 17.75 ppm gold.
During this mapping work the carbonate level has
been identified precisely in several new locations extending
previous knowledge of the extent of the carbonate lithology.
Alteration and mineralization zones associated with major fault
zones have also been outlined. Additional findings have been
several previously unknown historical mining galleries, believed to
be from exploration work performed by Soviet geologists in the
1950-60s. These newly identified mining works are two hidden
gallery mouths, eight prospecting trenches as well as a number of
drilling locations, including discarded drill cores on the
ground. These discoveries will aid to better understand the
extent of historical exploration work done on the project.
Since having received permission to enter the
underground galleries in January, we have continued advancing
rapidly. Results have not disappointed: in the first target gallery
G7 we have encountered visual Co-Ni mineralisation over 135 m.
Additionally, further extensive Co-Ni mineralisation has been
identified in G4, 50 m above and in the cross-cut and raise
connecting these two galleries. This indicates that we are
potentially encountering sizeable systems with good potential.
Immediate focus is on finishing the five exploration trenches,
mapping and sampling the mineralised zones inside the galleries. A
drill program is planned for the second half of this year.
We are grateful for the support of all our
shareholders. In the recently closed first fiscal quarter of 2023
we saw continuing support from insiders through the exercise of
warrants for proceeds of C$1.3m. Looking forward, we are committed
to develop our assets and thereby realising shareholder value.
On behalf of the Board of
Directors,Leading Edge Materials
Corp.
Eric Krafft, Interim CEO
For further information, please contact the Company
at:info@leadingedgematerials.com
www.leadingedgematerials.com
Follow usTwitter:
https://twitter.com/LeadingEdgeMtlsLinkedin:
https://www.linkedin.com/company/leading-edge-materials-corp/
Qualified Person
Martin S. Oczlon, PhD Geo, CEng MIMMM, a consultant to Leading
Edge Materials and Qualified Person as defined in NI 43-101, has
read and approved all technical and scientific information related
to the Company’ projects contained in this news release.
About Leading Edge Materials
Leading Edge Materials is a Canadian public
company focused on developing a portfolio of critical raw material
projects located in the European Union. Critical raw materials are
determined as such by the European Union based on their economic
importance and supply risk. They are directly linked to high growth
technologies such as batteries for electromobility and energy
storage and permanent magnets for electric motors and wind power
that underpin the clean energy transition towards climate
neutrality. The portfolio of projects includes the 100% owned Woxna
Graphite mine (Sweden), Norra Karr HREE project (Sweden) and the
51% owned Bihor Sud Nickel Cobalt exploration alliance
(Romania).
Additional Information
The information was submitted for publication through the agency
of the contact person set out above, on March 30, 2023, at 1:00 pm
Vancouver time.
Leading Edge Materials is listed on the TSXV under the symbol
“LEM”, OTCQB under the symbol “LEMIF” and Nasdaq First North
Stockholm under the symbol "LEMSE". Mangold Fondkommission AB is
the Company’s Certified Adviser on Nasdaq First North and may be
contacted via email CA@mangold.se or by phone +46 (0) 8 5030
1550.
Reader Advisory
Certain information in this news release may
constitute forward-looking statements or forward-looking
information within the meaning of applicable Canadian securities
laws (collectively, “Forward-Looking Statements”). All statements,
other than statements of historical fact, addressing activities,
events or developments that the Company believes, expects or
anticipates will or may occur in the future are Forward-Looking
Statements. Forward-Looking Statements are often, but not always,
identified by the use of words such as “seek,” “anticipate,”
“believe,” “plan,” “estimate,” “expect,” and “intend” and
statements that an event or result “may,” “will,” “can,” “should,”
“could,” or “might” occur or be achieved and other similar
expressions. Forward-Looking Statements are based upon the opinions
and expectations of the Company based on information currently
available to the Company. Forward-Looking Statements are subject to
a number of factors, risks and uncertainties that may cause the
actual results of the Company to differ materially from those
discussed in the Forward-Looking Statements including, among other
things, the Company has yet to generate a profit from its
activities; there can be no guarantee that the estimates of
quantities or qualities of minerals disclosed in the Company’s
public record will be economically recoverable; uncertainties
relating to the availability and costs of financing needed in the
future; competition with other companies within the mining
industry; the success of the Company is largely dependent upon the
performance of its directors and officers and the Company’s ability
to attract and train key personnel; changes in world metal markets
and equity markets beyond the Company’s control; the possibility of
write-downs and impairments; the risks associated with uninsurable
risks arising during the course of exploration; development and
production; the risks associated with changes in the mining
regulatory regime governing the Company; the risks associated with
tenure to the Norra Karr property; the risks associated with the
various environmental regulations the Company is subject to;
rehabilitation and restitution costs; the Woxna project has never
defined a mineral reserve or a feasibility study and the associated
increased risk of technical and economic failure in case of
restarting production; risks relating to the preliminary and
non-binding nature of the MOU with Sicona. On June 9, 2021, Leading
Edge announced the results of an independent preliminary economic
assessment for the development of Woxna (the "2021 Woxna PEA"), the
full details of which are included in a technical report entitled
"NI 43-101 Technical Report – Woxna Graphite" prepared for Woxna
Graphite AB with effective date June 9, 2021 and issue date July
23, 2021, available on Leading Edge's website
www.leadingedgematerials.com and under its SEDAR profile
www.sedar.ca. The 2021 Woxna PEA is preliminary in nature, it
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. Mineral resources that are not mineral
reserves do not have demonstrated economic viability. On July 22,
2021, Leading Edge announced the results of an independent
preliminary economic assessment for the development of Norra Karr
(the "2021 Norra Karr PEA"), the full details of which are included
in a technical report titled “PRELIMINARY ECONOMIC ASSESSMENT OF
NORRA KARR RARE EARTH DEPOSIT AND POTENTIAL BY-PRODUCTS, SWEDEN"
prepared for Leading Edge Materials Corp. with effective date
August 18, 2021 and issue date August 19, 2021, available on
Leading Edge's website www.leadingedgematerials.com and under its
SEDAR profile www.sedar.ca. The 2021 Norra Karr PEA is preliminary
in nature, it 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. Mineral resources
that are not mineral reserves do not have demonstrated economic
viability. On March 11, 2020, the World Health Organization (“WHO”)
declared the novel coronavirus outbreak identified as “COVID-19”,
as a global pandemic. In order to combat the spread of COVID-19
governments worldwide have enacted emergency measures including
travel bans, legally enforced or self-imposed quarantine periods,
social distancing and business and organization closures. These
measures have caused material disruptions to businesses,
governments and other organizations resulting in an economic
slowdown and increased volatility in national and global equity and
commodity markets. The Company has implemented safety and physical
distancing procedures, including working from home where possible
and ceased all travel, as recommended by the various governments.
The Company will continue to monitor the impact of the COVID-19
outbreak, the duration and impact which is unknown at this time, as
is the efficacy of any intervention. It is not possible to reliably
estimate the length and severity of these developments and the
impact on the financial results and condition of the Company and
its operations in future periods.
i
https://ec.europa.eu/commission/presscorner/detail/en/ip_23_1661ii
https://www.spglobal.com/commodity-insights/en/market-insights/latest-news/energy-transition/021622-feature-graphite-supply-a-concern-in-meeting-growing-battery-demandiii
See National Instrument 43-101 report entitled “NI 43-101 Technical
Report – Woxna Graphite” prepared for Woxna Graphite AB with
effective date June 9, 2021 and issue date July 23, 2021. See
Leading Edge Materials Corp.’s SEDAR profile on www.sedar.ca
or www.leadingedgematerials.com for report and more
information. The PEA is preliminary in nature, it 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 PEA will be realized.iv
https://www.mining.com/magnet-rare-earth-oxides-market-to-increase-fivefold-by-2030-report/v
See National Instrument 43-101 report titled “PRELIMINARY ECONOMIC
ASSESSMENT OF NORRA KÄRR RARE EARTH DEPOSIT AND POTENTIAL
BY-PRODUCTS, SWEDEN” prepared for Leading Edge Materials Corp. with
effective date August 18, 2021 and issue date August 19, 2021. See
Leading Edge Materials Corp.’s SEDAR profile on www.sedar.ca
or www.leadingedgematerials.com for report and more
information. The PEA is preliminary in nature, it 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 PEA will be realized.
- 20230330 LEM AGM Press Release - CEO Letter
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