Lac Carheil Graphite Project, Quebec (MLS 100%)

The Company’s flagship Lac Carheil Graphite Project is located in a major graphite province in eastern Quebec, Canada (see Figure 1).   The region is well accessed and local infrastructure includes hydroelectric power facilities.  The iron-ore mining town of Fermont is situated 20km to the north of the current resources and the advanced Lac Knife Graphite Project of Focus Minerals is located 15km west of the current Lac Carheil resoruces.

The Company recently announced exceptionally high-grade and widespread graphite sampling results. These results confirm Lac Carheil’s potential to be one of the world’s most significant high-grade graphite projects which is ideally located to supply battery grade graphite to North American markets.

Metallurgical test work has generated high-grade flotation concentrate results of up to 97% graphitic carbon (Cg). A bulk concentrate sample despatched to Germany has produced premium battery grade 99.96% Cg purity spherical graphite.  Electrochemical (battery charging and durability) tests have confirmed Lac Carheil battery grade (99.96% Cg) spherical graphite is premium-quality lithium-ion battery anode material with exceptional battery charging capacity and outstanding discharge performance and durability.

Further drilling and a development studies are planned, including a pre-feasibility study on flake-graphite production and an options study on premium spherical graphite production for lithium ion battery anodes.

The Company will fast-track both the additional drilling and the pre-feasibility studies required to accelerate the development of this potentially world-class battery grade graphite project.

Figure 1: Lac Carheil Graphite Project, key high-grade graphite trends with planned drilling locations

Lac Carheil Mineral Resources and Upside Potential

Lac Carheil hosts a high-grade JORC-2012 Mineral Resource of 13.3Mt @ 11.5% graphitic carbon (Cg) which includes a high-grade Indicated Resource of 9.6Mt @ 13.1% Cg and an Inferred Resource of 3.7Mt @ 7.3% Cg (see location, Figure 1).

The Mineral Resource is on the Carheil trend, in the southeast part of the property and represents a zone of only 1.6km that has been trenched and drilled to date, with immediate potential to increase the resource through drilling.

The graphitic zone includes two main, steeply-dipping high-grade graphite horizons that remain open at depth and along strike (see Figure 2, below).

Figure 2: Cross section through the Carheil graphite Mineral Resource zone.

The Company recently announced exceptionally high-grade and widespread graphite sampling results from 80 samples on 10 identified graphitic trends on the property.  The exceptional results include one sample that contains over 50% graphitic carbon (Cg).  This sample is from a large electromagnetic (EM) anomaly to the west of the existing Mineral Resource, which continues for over 6km from the West Carheil trend and includes a large number of >20% Cg rock chip results (see Figure 1).

The average grade of the 80 new samples is over 11% Cg and the combined strike-length of the identified high-grade graphitic zones is over 36km.  This compares with the only 1.6km strike-length of trenching and drilling that has been carried out on the property at the Carheil trend and represents graphite potential for an over 20-times multiple of the currently drilled and trenched strike-length which contains the existing Mineral Resources.

Drilling programs are planned to test the key, high-grade, graphitic trends targeting greatly expanded resource potential as well as an increased overall grade.

The objectives of the new drilling programs are:

1. To expand Lac Carheil’s Mineral Resource potential, focussing on the highest-grade graphitic trends identified, including the high-grade West Carheil Trend (see Figure 2).
2. To produce diamond core bulk-samples of high-grade graphitic material from which to generate flotation concentrate samples for further down-stream spherical graphite test work, and to provide to potential customers/off takers for evaluation and test work.

Metallurgical Testwork

Metallurgical test work has generated high-grade flotation concentrate results of up to 97.1% graphitic carbon (Cg), with up to 22.8% of the Lac Carheil graphite concentrate categorised in the large and jumbo flake size fractions and closed-circuit recoveries of over 95% Cg.

The Company completed a Scoping Study on flake-graphite production in 2020 which demonstrated strong cashflow potential at an operating cost estimate of US$433/t and over 100% cashflow margin at an average flake graphite concentrate price of US$885/t.  This is based on production of nearly 100kt per annum of 96.7% Cg flake graphite concentrate over a 14-year period and capital payback within four years.

A bulk flake-graphite concentrate sample despatched to Germany for downstream spherical graphite test work and battery test work by ProGraphite, produced premium battery grade spherical graphite, demonstrating:

• Exceptional Yield of 65% into battery quality spherical graphite (compared to industry average of ~40%) – potential to substantially enhance the economics of spherical graphite production.
• Excellent Tap Density of 0.97 kg/litre (packing qualities of spheroids in lithium-ion battery). Well above acceptable standard of 0.90 kg/litre which results in higher battery capacity.
• Premium Battery-Grade spherical graphite carbon (Cg) purity of 99.96% Cg achieved using the environmentally-sustainable, low-temperature alkaline purification method to reach battery grade with a final acid wash to reach premium battery grade.

Subsequent electrochemical (battery charging and durability) tests confirmed Lac Carheil battery grade (99.96% Cg) spherical graphite is premium-quality lithium-ion battery anode material with exceptional battery charging capacity and outstanding discharge performance and durability.

Having shown that Lac Carheil can generate high-quality spherical graphite with outstanding battery anode charging and durability qualities, the Company can now rapidly advance the project towards development.

Development Potential and Pre-Feasibility Study Planned

The Lac Carheil graphite project is strategically located in Quebec, Canada, close to the rapidly expanding electric vehicle (EV) and renewable energy battery market in the United States.  The US Government has declared a number of minerals ‘critical’, including graphite, and has passed the Inflation Reduction Act, which includes funding to source critical minerals projects outside China, primarily focussed on North America. Canada is considered “domestic” with respect to direct funding from the US Government for such projects.

Metals will commence a Pre-feasibility Study (PFS) on the development of mining and flake graphite concentrate production at Lac Carheil.  The proposed PFS for Lac Carheil will run at the same time as the drilling programs testing the greater resource potential and demonstrating to customers the potential long-life of the project. The PFS will investigate flake-graphite concentrate production potential as well as downstream processing to produce value added products, including premium spherical graphite to supply directly to the North-American lithium-ion battery market where demand for battery-grade graphite is growing rapidly.  The close proximity to these markets provides a strategic advantage over other projects globally.

Figure 3: Lac Carheil flake-graphite to battery anode flow sheet.