Stockholm, March
28, 2022
– 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
Pandemic, war and climate change - the
world as we know it is changing dramatically. 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.
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 2030i. Currently production of graphite for
batteries is dominated by China.
Our Woxna graphite mine 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.
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 forecasted to increase five times by
2030ii. China is again the dominant supplier of rare earth oxides
and permanent magnets.
Our Norra Karr 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. In addition, the project has the
potential to supply by-products such as the industrial mineral
nepheline syenite, zirconium and niobium. Bringing the project into
production could be a key enabler for a European mine-to-magnet
value-chain.
As we entered last year, we were
working on 4 main objectives; demonstrate the economic potential of
our Woxna graphite mine to anode material project, redesign the
Norra Karr rare earth project to improve the conditions for a
granted mining lease, focus our resources on the two main Swedish
projects, and get the exploration license in Romania granted.
- We successfully completed the preliminary economic assessment
for the Woxna graphite anode projectiii (the “Woxna PEA”) with
exceptional economic figures for the project with a post-tax
NPV(8%) at US$248m and a post-tax internal rate of return of 37.4%.
Using the inputs and outputs from the Woxna PEA we commissioned
UK-based consultancy firm Minviro Ltd. to perform an ISO-compliant
life-cycle assessment on the project, which demonstrated a
potential 85-90% reduction in CO2 footprint of anode material to be
produced from Woxna compared with current Chinese supply
alternativesiv. Lastly, we signed a non-binding heads of agreement
with the Australian company Sicona Battery Technologies Pty Ltd for
the establishment of a Sweden based 50/50 joint venture targeting
the production of advanced natural graphite and
silicon-graphite-carbon composite anode materialsv;
- The redesign of the Norra Karr project resulted in the release
of a preliminary economic assessment reportvi (the “Norra Karr
PEA”) delivering strong financial results with a post-tax NPV(10%)
of US$762m and post-tax IRR of 26.3%. More importantly, the
redesign presented a revised flowsheet where operations at the
deposit site only includes mining and physical beneficiation
whereas chemical leaching and recovery of the rare earth oxides is
moved to a more suitable off-site location. The benefits of this
new flowsheet are a significant improvement in resource
utilization, the removed need for wet chemical tailings dams and an
80% reduction in land area usage at site. All changes are expected
to improve the conditions for a granted mining lease for the
project;
- We completed the sale of our Swedish lithium exploration
projectvii;
- The granting of the exploration license for our nickel-cobalt
project in Romania unfortunately continued to be evaluated with no
news.
The fundamental drivers underpinning
our vision and strategies continue to be supportive. Increasing
demand coupled with ongoing supply side issues such as a global
power crunch and shipping disruptions have led to significant price
increases over the last 12 months. Graphite prices in Europe,
including spherical purified graphite (being the anode material
feedstock), are recently reportedviii to be up almost 40-50%
compared to the same period last yearix. Key magnet rare earth
oxide prices are up between 27 and 150% year on yearx.
Governments in the western world
launching initiatives to support the development of domestic
sources of critical raw materials to reduce reliance on China, the
European Union being no exception. The European Raw Materials
Alliance released its action plan on rare earth elementsxi
including a proposed bridge fund of up to €200m per year to fund
projects, the European Parliament adopted a European strategy for
critical raw materialsxii and more recently the EU leaders
addressed strategic dependencies on critical raw materials in the
Versailles Declarationxiii as a response to the Russian invasion of
Ukraine.
Considering the improved graphite
market conditions, we are evaluating the potential restart of
production of flake graphite concentrate at Woxna and we will
update on this in the near future. This is in parallel, but
ultimately connected to our anode material development project
where we are producing bulk samples of material together with our
preferred suppliers. This material will be further refined by
Sicona and subsequently tested internally and provided to potential
customers for evaluation. Subject to a successful outcome of this
test program we will then negotiate the formal joint venture and
decide on the establishment of a commercial demonstration
plant.
For Norra Karr we are continuing our
work with our consultants to update our mining lease application
based on the new plans for the project. A recent decision by the
Swedish government to grant a mining lease on a separate project in
Swedenxiv might positively influence the scope of assessment
required for a mining lease compared with the subsequent
environmental permit application process.
We continue to work with our Romanian
joint venture partner in preparation of a hopefully positive
outcome on our exploration license application. Should this
materialize we have a prepared exploration program that we look
forward to putting into motion to test the potential for high-grade
nickel and cobalt mineralizations. Both nickel and cobalt prices
have risen sharply over recent months making the opportunity for
this project even more attractive lately.
None of this work would have been
possible without the support of our shareholders, which we thank
you for. In the recently closed first fiscal quarter of 2022 we saw
continuing support from long-term shareholders through the exercise
of options and warrants for proceeds of C$1,665,500, with many
warrants and options still outstanding with exercise prices deep in
the money. During fiscal 2021 our share price increased by 120%,
and as of this letter’s date it is up 479% from May 4, 2020, when
the new Board of Directors joined the Company, and I was given the
opportunity to lead the Company as the CEO. Looking forward, we are
committed to do our utmost to uphold this track-record of
delivering shareholder returns.
On behalf of the Board of
Directors,Leading Edge Materials
Corp.
Filip Kozlowski, 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 The
scientific, technical and economic information related to the Norra
Karr project has been reviewed and approved by Dr. Rob Bowell of
SRK Consulting (UK) Ltd, a chartered chemist of the Royal Society
of Chemistry, a chartered geologist of the Geological Society of
London, and a Fellow of the Institute of Mining, Metallurgy and
Materials, who is an independent Qualified Person under the terms
of NI 43-101 for REE deposits.
The scientific, technical and economic
information related to the Woxna Graphite project has been reviewed
and verified by Christopher Stinton of Zenito Limited, BSc (Hons),
CEng MIMMM, an independent Qualified Person as defined by NI
43-101.
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 28, 2022, 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://www.spglobal.com/commodity-insights/en/market-insights/latest-news/energy-transition/021622-feature-graphite-supply-a-concern-in-meeting-growing-battery-demandii
https://www.mining.com/magnet-rare-earth-oxides-market-to-increase-fivefold-by-2030-report/iii
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://leadingedgematerials.com/wp-content/uploads/2022/03/2021-Woxna-Graphite-LCA-report-by-Minviro.pdfv
https://leadingedgematerials.com/leading-edge-materials-announces-proposed-joint-venture-plans-for-advanced-anode-materials-business-with-sicona/vi
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.vii
https://leadingedgematerials.com/leading-edge-materials-completes-sale-of-100-of-the-bergby-lithium-project/viii
https://www.indmin.com/Article/5089795/Graphite/Strong-demand-in-China-tightening-supply-support-graphite-markets.htmlix
https://www.indmin.com/Article/3978011/Graphite-LatestNews/GLOBAL-GRAPHITE-SNAPSHOT-Prices-stable-but-freight-costs-new-material-sources-add-uncertainty.htmlx
https://treo.substack.com/p/trust-is-no-entitlement-russia-ukraine?s=rxi
https://erma.eu/european-call-for-action/xii
https://www.europarl.europa.eu/doceo/document/TA-9-2021-0468_EN.pdfxiii
https://www.consilium.europa.eu/media/54773/20220311-versailles-declaration-en.pdfxiv
https://www.regeringen.se/pressmeddelanden/2022/03/regeringen-beviljar-bearbetningskoncession-for-kallak-k-nr-1/
- 20220328 LEM CEO report press release
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