Allkem Limited (ASX |TSX: AKE) (“
Allkem” or the
“Company”) is pleased to announce a project update
for its wholly owned James Bay Lithium Project (“
James
Bay” or the “
Project”) located in Québec,
Canada. This update builds on the recently announced Mineral
Resource update (11 August 2023) and the prior feasibility study
(“
FS”) results released on 21 December
2021.
HIGHLIGHTS
- Updated
Feasibility Study confirms a robust, high-value hard rock lithium
operation utilising renewable hydropower
- Material ~108%
increase in pre-tax Net Present Value (“NPV”) to
US$2.9 billion with a strong internal rate of return and short
payback period
Project Details
- Recently
announced Total Mineral Resource of 110.2 Mt at 1.30% Li2O,
including 54.3 Mt at 1.30% Li2O in the Indicated Category, and 55.9
Mt at 1.29% Li2O in the Inferred Category with further drilling
planned to test possible extensions to mineralisation
- Ore Reserve of
37.3 Mt at 1.27% Li2O provides a long life, low cost spodumene
operation and remains in line with permitting considerations
- Average annual
production of 311 ktpa of spodumene concentrate with an 18.8-year
mine life
- Shallow,
near-surface mineralisation ideal for open cut mining with a low
life-of-mine (“LOM”) strip ratio of 3.6:1
- 2 Mtpa process
plant design remains unchanged from 2021 FS, producing a 6.0%
Li2O spodumene concentrate with operational
flexibility to produce a 5.6% Li2O spodumene
concentrate
- Very similar
process design and flowsheet to that already successfully employed
at Mt Cattlin
- Low-cost,
sustainable source of hydropower now installed to site
- Strong
relationships with the Cree Nation of Eastmain, Cree Nation
Government and all stakeholders
Project Financials
- Increase of the
capital cost estimate (“CAPEX”) to US$381.5
million, representing a 33.8% increase on the December 2021 FS, in
line with inflationary conditions
- Cash operating
costs (FOB Montreal) of US$407 per tonne of 5.6% Li2O concentrate
also reflecting inflationary conditions
- Pre-tax NPV of
US$2.9 billion at an 8% discount rate and post-tax NPV of US$1.7
billion reflecting an increase in lithium price assumptions and
market outlook
- Pre-tax Internal
Rate of Return (“IRR”) of 62.2% and pre-tax
payback period of 1.4 years
- Post-tax
Internal Rate of Return (“IRR”) of 45.4% and
post-tax payback period of 1.7 years
Project Execution
- Detailed
engineering and procurement activities progressed at 80% supporting
the updated cost estimate and bringing the project ready for
approximately 19 months of construction once provincial
authorisation is obtained
- Impact and
Benefit Agreement (“IBA”) discussions and
Provincial Environmental and Social Impact Studies Review (COMEX)
are in final stages
- Further carbon
studies and initiatives underway to align the project to Allkem’s
target of net-zero emissions by 2035
Managing Director and Chief Executive Officer, Martin
Perez de Solay commented
“The Feasibility Study Update results confirm
the exceptional value that will be generated for all stakeholders
through the development of this project. Inflationary impacts on
operating and capital costs are within expectations and as seen at
other projects, however the project economics remain strong with an
increase of more than 100% in the pre-tax NPV to US$2.9 billion
reflecting an increase in lithium price assumptions and market
outlook.
“Pleasingly, there remains significant potential
for this resource to grow as we conduct further drilling to test
extensions of the recently upgraded resource of 110 million
tonnes.”
PROJECT BACKGROUND
The Project is located in northern Québec,
approximately 130 km east of James Bay and the Cree Nation of
Eastmain community as illustrated in Figure 1. The Company is
proposing to develop a spodumene mine located adjacent to the Billy
Diamond Highway (formerly the James Bay Highway) which provides
access to key infrastructure in the region.
The Company has updated the Feasibility Study
and technical report in accordance with NI 43-101 and S-K 1300
guidelines, in preparation for the proposed merger between the
Company and Livent.
GEOLOGY &
MINERALISATION
The Project is in the northeastern part of the
Superior Province and lies within the Lower Eastmain Group of the
Eastmain greenstone belt. This area predominantly consists of
amphibolite grade mafic to felsic metavolcanic rocks,
metasedimentary rocks and minor gabbroic intrusions.
The pegmatites delineated on the property to
date are oriented in a generally parallel direction to each other
and are separated by barren host rock of sedimentary origin
(metamorphosed to amphibolite facies). They form irregular dikes
attaining up to 60 m in width and over 300 m in length. The
pegmatites crosscut the regional foliation at a high angle,
striking to the south-southwest and dipping moderately to the
west-northwest.
Spodumene mineralisation at James Bay is coarse
grained, high grade and outcrops along strike, supporting excellent
recoveries, low strip ratio and open cut mining. No significant
deleterious lithium mineralisation has been identified to date.
In 2023, new pegmatite dykes were discovered to
the NW of known mineralisation which were incorporated into the
Inferred Category of an updated Mineral Resource announced on 11
August 2023.
RESOURCE & RESERVE
ESTIMATE
The Mineral Resource and Ore Reserve estimates
set out below have been prepared in accordance with
the Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves 2012 (JORC), the CIM Definition
Standards for Mineral Resources and Mineral Reserves (2014) and the
CIM Estimation of Mineral Resources and Mineral Reserves Best
Practice Guidelines (2019). Mineral Resources and Ore Reserves are
classified using the JORC Code. The confidence categories assigned
under the JORC Code were reconciled to the confidence categories in
the CIM Definition Standards. As the confidence category
definitions are the same, no modifications to the confidence
categories were required.
Although Ore Reserves are referred to in this
announcement, they are analogous to Mineral Reserves as described
in NI 43-101 Standards for Disclosure. Competent Persons (JORC) are
analogous to Qualified Persons (NI 43-101).
Mineral Resource Estimate
An updated Mineral Resource Estimate
(“MRE”) was announced on 11 August 2023 and was
based on a total of 104,000 m of drilling and channelling from 655
drill holes, with a drill hole database cut-off date of 19 May
2023. This updated MRE includes an additional 37,500 m of drilling
conducted since the previous feasibility study.
The resource estimation work was completed
by SLR Consulting (Canada) Ltd. (“SLR”), an
independent consulting firm based in Toronto, Canada. The pegmatite
dykes have been classified based on a 40 m to 50 m spacing for
Indicated Mineral Resources, and approximately an 80 m spacing for
Inferred Mineral Resources.
The tonnages and grade of the updated Mineral
Resource are shown in Table 1.
Table 1: James Bay Mineral Resource
Estimate – Effective date 30 June 2023
Category |
Tonnage |
Grade |
Contained lithium oxide/LCE |
Mt |
% Li2O |
(‘000) t
Li2O |
(‘000) t LCE |
Measured |
- |
- |
- |
- |
Indicated |
54.3 |
1.30 |
706 |
1,746 |
Measured + Indicated |
54.3 |
1.30 |
706 |
1,746 |
Inferred |
55.9 |
1.29 |
724 |
1,790 |
Total Mineral Resource |
110.2 |
1.30 |
1,430 |
3,537 |
Notes:
- The Independent Competent Person, as
defined by the JORC Code 2012, responsible for the preparation of
this MRE is Mr. Luke Evans, P.Eng, a full-time employee of SLR. Mr.
Evans is a member of L’Ordre des Ingénieurs du Québec, a Recognised
Professional Organisation defined by the JORC Code 2012. The
effective date of the mineral resource is the 30th June 2023
(erroneously identified as Aug. 9, 2023 in the earlier news
release).
- The Mineral Resource Estimate has been
reported within a conceptual pit shell at a cut-off grade of 0.50%
Li2O
- The Mineral Resources are Inclusive of
Ore Reserves.
- The conceptual pit shell used to
constrain the MRE has been defined using a spodumene concentrate
price of US$1,500 per tonne, an exchange rate of CAD:US$ of 1.33, a
total ore-based cost of CAD33.92 per tonne, a mining cost of
CAD4.82 per tonne, a concentrate transport cost of CAD86.16 per
tonne, and a metallurgical recovery of 70.1%.
- The statements of Mineral Resources
conform to the Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves (the JORC Code) 2012
edition.
- Mineral Resources are not Mineral
Reserves, as they do not demonstrate economic viability.
- The Competent Persons are not aware of
any problem related to the environment, permits or mining titles,
or related to legal, fiscal, socio‐political, commercial issues, or
any other relevant factor that could have a significant impact on
this MRE.
- The number of tonnes has been rounded
to the nearest 100,000 tonnes, with any discrepancies observed in
the totals due to rounding effects.
- All tonnages reported are dry metric
tonnes.
Ore Reserve Estimate
The Ore Reserve of 37.3 Mt at an average grade
of 1.27% Li2O was prepared by SLR and remains virtually unchanged
since the previous feasibility study (Table 2).
Table 2: James Bay Ore Reserve –
Effective date 30 June 2023
Category |
Tonnage |
Grade |
Contained Metal |
Mt |
% Li2O |
(‘000) t
Li2O |
Proven |
- |
- |
- |
Probable |
37.3 |
1.27 |
474 |
Proven + Probable |
37.3 |
1.27 |
474 |
Notes:
- The Independent
Competent Person, as defined by the JORC Code 2012, responsible for
the preparation of the Ore Reserve estimate is Mr. Normand Lecuyer,
P.Eng., an employee of SLR. Mr. Lecuyer is a member of L’Ordre des
Ingénieurs du Québec (License No. 34914), a Recognised Professional
Organisation defined by the JORC Code 2012. Effective date of the
estimate is June 30th, 2023.
- Ore Reserves are
estimated using the following metal prices (Li2O Conc =
US$ 1,500/t Li2O at 6.0% Li2O) and an exchange rate of
CAD/US$ 1.33.
- A minimum mining width
of 5 m was used.
- A cut-off grade of
0.62% Li2O was used.
- The bulk density of
ore is variable, is outlined in the geological block model, and
averages 2.7 g/cm3.
- The average strip
ratio is 3.6:1.
- The average mining
dilution factor is 8.7% at 0.42% Li2O.
- Numbers may not add
due to rounding
Details of data collection and resource and
reserve estimation techniques, methodology and material assumptions
are provided in the JORC Table 1 checklist set out in Appendix
A.
MINING AND PROCESSING
Mining
Mine engineering was performed by SLR and a
summary of the key physicals are displayed in Table 3 below.
Table 3: Summary of LOM Physicals for an
estimated 19-year mine life
Key Physicals |
UoM |
Feasibility Study |
|
Mined material grade (after mining dilution) |
% Li2O |
1.27 |
|
Strip ratio |
X : 1 |
3.6 |
|
Spodumene Concentrate Produced (total after transport losses) |
kdmt |
5,846 |
|
Spodumene Concentrate Produced (annual average) |
kdmt |
311 |
|
Recovery (LOM average) |
% |
68.9 |
% |
Spodumene Concentrate Grade |
% Li2O |
5.6 |
|
The pegmatite deposit will be mined by
conventional open pit methods. All material will require drilling
and blasting and will be removed using mining excavators and haul
trucks. The preliminary pit design extends approximately 2km NW/SE
along the strike of the pegmatite mineralisation and has an average
width of 500 m. The design is divided into three pits with depths
of 160 m, 170 m and 260 m.
Mining is scheduled to achieve low waste
stripping in the initial years with a gradual increase later in the
mine life. The average strip ratio for the LOM plan is 3.6:1. Waste
rock will be hauled to multiple Waste Rock and Tailings Storage
Facilities (“WRTSF”) and run of mine
(“ROM”) feed material will be hauled to the ROM
pad, located to the northeast of the pits.
Figure 2 is based on the preliminary mine plan /
LOM schedule and shows the mine plan tonnages by year with
pre-strip activities commencing two years prior (Y-2 and Y-1) to
first production (Y1). Mining covers 19 years of production with
132.7 Mt of waste rock, and 37.3 Mt of ROM feed material for a
total of 170.0 Mt of material mined.
In the pre-production period, the ROM material
generated will be stockpiled for processing during production
years. Site preparation including tree clearing, grubbing and
peat/topsoil removal will occur during the Project construction
phase.
Figure 2: Annual mined material and
stripping ratio
Surface mining equipment requirements are based
on mining 10 m benches. Conventional excavator and truck fleet will
be sized to meet the planned tonnage requirements to feed the
concentrator at 2Mtpa. Haul trucks are required to transport
tailings from the plant to the proposed waste rock and dry stacked
tailings stockpile areas.
Processing
Process Plant engineering was performed by Wave
International (“Wave”), an Australian-based
engineering company with global development experience.
The process design is based on an annual
throughput of 2Mt of ore to produce a final product grade of 6.0%
Li2O, with operational flexibility to produce a concentrate grade
of 5.6% Li2O. The selected process incorporates a similar flowsheet
to the Mt Cattlin Mine and is based on crushing and dense medium
separation (“DMS”).
Processing involves a conventional three-stage
crushing circuit, followed by a DMS plant (Figure 3).
Similar to Mt Cattlin, crystal sizes are coarse and therefore
grinding and flotation methods are not necessary, contributing to
low operating costs. Other sub processes include:
- Dewatering and
dry stack tailings disposal system (combined with waste rock
disposal);
- Water, air and
ancillary services; and
- Spodumene
concentrate stockpile and dispatch system
The ROM ore will be fed to a three-stage
crushing plant consisting of a primary jaw crusher, a secondary
crusher and tertiary crusher. Prior to feeding the DMS cyclones,
the material will be mixed with a ferrosilicon slurry, which acts
as a densifying medium to enhance the gravity separation of the
spodumene. The process flowsheet is illustrated in Figure 3
below.
Figure 3: James Bay process
flowsheet
Final Product Grade
Metallurgical test work was conducted by SGS
Canada Inc. and Nagrom to determine optimal plant operating
recoveries. For a final spodumene concentrate grading 5.6% Li2O,
modelling indicates that a recovery of 69.6% in the early years and
66.9% in later operating years is a reasonable assumption.
In line with this market demand, project
economics are based on the production and sale of a 5.6% Li2O final
product grade. This product grade yields higher recoveries and
revenues associated with higher concentrate production.
James Bay will produce an average of 311 ktpa of
spodumene concentrate for 19 years and retains ultimate flexibility
to produce final product grade consistent with market and customer
demand. Allkem’s final product specification will ultimately be
determined in consultation with its customers.
INFRASTRUCTURE
Waste Rock and Tailings Storage facility
engineering was performed by WSP Ltd. (“WSP”) and
site infrastructure engineering was performed by G Mining Services
Inc.
Mine Infrastructure
The site infrastructure will include:
- ROM pad
- Crushed ore
covered stockpile
- Four Waste Rock
Tailings Storage Facilities
- Overburden and
peat storage area (“OPSF”)
- Two Water
Management Ponds and Plant Water Management Pond
- Contact water
ditches and non-contact diversion water ditches
- Fine and coarse
tailing bins
- Spodumene
concentrate warehouse
- Explosive
storage building
The ROM stockpile and spodumene concentrate
warehouse will be located adjacent to the process plant. All
storage areas were selected to minimise their environmental impact.
A surface drainage network will be built to divert non-contact
water from the ROM pad and stockpile, WRTSF, OPSF stockpiles and
process plant. The same strategy will be used to manage the surface
water run-off (contact) for all disturbed land.
Supporting Infrastructure & Logistics
The following infrastructure facilities are
planned for the Project:
- 69 kV
main-substation
- Laboratory
building
- Accommodation
camp
- Workshop and
reagent buildings
- Storage and
communication facilities
- Distribution
facility for heating
- Potable water
and sewage treatment plants
- Effluent water
treatment plant
The process plant and supporting infrastructure
will predominantly be powered by Hydro-Québec’s 69 kV overhead
distribution system. An overhead distribution line extension has
been built to the plant substation from the 69 kV line (L-614)
located 10km south of the Project site. The 69 kV power supply is
limited by a capacity of 8 MVA due to the sensitivity of the
network and distance from the substation.
The Project is also accessible all year-round
via the paved Billy Diamond Highway which allows oversized haul
trucking to and from site, including the town of Matagami, located
382 km south of the Project. Matagami is connected to a major
railway, the Canadian National Railway network, allowing future
production to be railed to various locations in North America or
any port along the Saint Lawrence River for international
shipment.
The Eastmain airport is located 130 km from site
and will be used to transport staff and contractors from major
centres in southern Québec. Discussions are underway with Transport
Canada about necessary upgrades required to create more regular
aerial services to support future operations. Fuel and
accommodation are also available at the “Relais Routier Km 381”
Truck Stop, a sizeable facility, located adjacent to the Project
site.
FINANCIAL PERFORMANCE
Capital and Operating Costs
Capital and operating cost forecasts were
completed by SLR, GMS and Wave, incorporating engineering
undertaken by other contributors.
The total initial project development capital
expenditure (“CAPEX”) is estimated to be US$381.5
million. The CAPEX forecast has been prepared to reflect optimised
site layouts, mine scheduling, plant and equipment design, supply
and installation. The estimate is detailed in Table 4 and includes
processing, mine equipment purchases, infrastructure, contingency
and other direct and indirect costs. Deferred CAPEX is also
required during operations for additional equipment purchases, a
truck shop bay addition, and mine civil works. A pre-production
cost of US$29.5 million has also been estimated in addition to the
initial CAPEX which comprises of costs associated with overburden
and waste stripping, and building the initial inventory for
commissioning and startup of operations.
Operating costs (“OPEX”) are
estimated to be US$407 per tonne of concentrate (FOB Montreal).
OPEX includes mining, processing, general and administrative
services and concentrate transportation as detailed in Table 4.
Sustaining capex is estimated at US$151M for the
life of mine of the Project.
Table 4: Capital Cost Estimates and
Operating Cost Estimate
Capital Costs |
US$ M |
|
Operating Costs |
US$ / tonne of concentrate |
Initial CAPEX (US$ M) |
|
Mining |
124.4 |
001 – General |
1.4 |
|
Processing |
86.8 |
100 - Infrastructure |
47.2 |
|
General and administration |
88.0 |
200 - Power and Electrical |
45.4 |
|
Concentrate transportation |
107.9 |
300 - Water |
27.3 |
|
Total |
407.1 |
400 - Surface Operations |
8.4 |
|
|
|
500 - Mining Open Pit |
32.3 |
|
|
|
600 - Process Plant |
84.5 |
|
|
|
700 - Construction Indirects |
73.4 |
|
|
|
800 - General Services |
34.3 |
|
|
|
900 - Start-up, Commissioning |
4.9 |
|
|
|
990 - Contingency |
22.4 |
|
|
|
Total CAPEX |
381.5 |
|
|
|
Note: The totals above may not add up due to
rounding errors
Since the release of the Feasibility Study in
2021, work undertaken has improved the accuracy of the capital and
operating costs, particularly in relation to mining, processing,
and concentrate transport costs. The key observations include:
- Increased labour
rates throughout all trades (reflecting market conditions)
- Increased
mechanical and electrical equipment costs (based on firm price bid
received)
- Increase in
Hydro-Quebec powerline costs (reflecting market conditions)
- Increase in
accommodation and transport costs (reflecting market
conditions)
- Increase in
fuel-associated cost (unit cost reflecting market conditions)
Spodumene Pricing Forecast
Lithium has diverse applications including
ceramic glazes, enamels, lubricating greases, and as a catalyst.
Demand in traditional sectors grew by approximately 4% CAGR from
2020 to 2022. Rechargeable batteries dominate lithium usage which
accounted for 80% of demand in 2022, with 58% attributed to
automotive applications. Industry consultant, Wood Mackenzie
(“Woodmac") estimates growth in the lithium market
of 11% CAGR between 2023-2033 for total lithium demand, 13% for
automotive, and 7% for other applications.
Historical underinvestment and strong EV demand
have created a supply deficit, influencing prices and investment in
additional supply. Market balance remains uncertain due to project
delays and cost overruns. The market is forecast to be in deficit
in 2024, have a fragile surplus in 2025, and a sustained deficit
from 2033.
Prices have fluctuated in 2022-2023, with
factors like plateauing EV sales, Chinese production slowdown, and
supply chain destocking influencing trends. Woodmac notes that
battery grade carbonate prices are linked to demand growth for LFP
cathode batteries and are expected to decline but rebound by 2031.
Lithium Hydroxide's growth supports a strong demand outlook, with
long-term prices between US$25,000 and US$35,000 per tonne (real
US$ 2023 terms). Chemical grade spodumene concentrate prices are
expected to align with market imbalances, with a long-term price
forecast between US$2,000 per tonne and US$3,000 per tonne (real
US$ 2023 terms).
Allkem has relied on external spodumene
concentrate price forecasts provided by Woodmac for this
feasibility study update.
PROJECT ECONOMICS
An economic analysis was developed using the
discounted cash flow method and was based on the data and
assumptions for capital and operating costs detailed in this report
for mining, processing and associated infrastructure.
The basis of forecast spodumene pricing was
provided by Woodmac for the period 2023 to 2033, with a longer-term
price of US$2,107 used from 2033 onwards for 6.0% Li2O. Adjustments
were made to these prices to reflect the 5.6% Li2O spodumene
concentrate to be produced at James Bay based on Allkem experience
at Mt Cattlin.
The evaluation was undertaken on a 100% equity
basis. The key assumptions and results of the economic evaluation
are listed in Table 5 and Table 6 below.
Table 5: Key assumptions utilised in the
project economics
Assumption |
Units |
Feasibility Study |
Annual Spodumene Concentrate Production1 |
kt |
311 |
Commercial Production Estimate |
Years |
19 |
Discount Rate |
% |
8 |
CAPEX |
US$M |
381.5 |
OPEX |
US$/ tonne conc. |
407 |
Average Selling Price2 |
US$/ tonne conc. |
1,921 |
Exchange rate |
US$:CAD |
1.33 |
1 Final product grade of 5.6% Li2O2 Based on
Average LOM spodumene price (US$2,022 per t) forecast provided from
Woodmac, adjusted for 5.6% Li2O grade.
Table 6: Summary of Financials over the
estimated LOM
Financial Summary |
Units |
Feasibility Study |
NPV (Pre-tax) |
US$M |
2,947 |
NPV (Post-tax) |
US$M |
1,687 |
IRR (Pre-tax) |
% |
62.2 |
IRR (Post-tax) |
% |
45.4 |
Payback Period (Pre-tax) |
Years |
1.4 |
Payback Period (Post-tax) |
Years |
1.7 |
Capital Intensity (processing) |
US$ / dmtpa |
191 |
NPV: Development Capex (Post-tax) |
X: 1 |
4.4:1 |
Sensitivity Analysis
As displayed in Table 6, the Feasibility Study
demonstrates strong financial outcomes with a Post-tax NPV8% real
of US$1,687 million and IRR of 45.4%. Figure 4 analyses the impact
on NPV when spodumene pricing, operating costs, capital costs,
recovery, head grade fluctuate between +/- 20%. The NPV of the
project is most sensitive to movements in the price of spodumene
and foreign exchange fluctuations, followed by operating costs and
development capital costs.
Figure 4: Pre-tax NPV Sensitivity
Analysis
ENVIRONMENTAL AND SOCIAL
IMPACTS
Environmental and Permitting work packages were
performed by WSP Canada Inc., a global professional services and
engineering firm with environmental expertise and significant
experience in facilitating project approvals and development
projects.
Carbon Emissions Management
Allkem is committed to the transition to net
zero emissions by 2035 and is progressively implementing actions
across the group to achieve this target. Each project within the
group will contribute to this target in a different, but site
appropriate manner.
As a greenfield project, James Bay has a unique
opportunity to build a low carbon operation. The location of the
project will provide access to hydro power supplied by Hydro Québec
which delivers a significant advance in the overall decarbonisation
of the project.
Future studies will focus on opportunities to
increase the proportion of sustainable energy available to the
project which will further reduce operational carbon emissions. The
primary area to be investigated will be the supply of additional
hydro power which may allow the potential conversion of the mining
fleet and all site facilities away from fossil fuels. Allkem will
work with project partners to identify and develop further
emissions reduction opportunities within the project supply chain
mostly around the availability of battery-power mobile equipment
capable of operating in cold weather conditions. Additional studies
are also planned to replace petroleum hydrocarbons used for heating
during cold winter weather with renewable sources.
Allkem will also engage with the Québec
government which has demonstrated a strong commitment for renewable
energy with the “2030 Plan for a Green Economy”. The goals of this
plan are aligned with Allkem’s commitment to net zero via the
replacement of fossil fuels in transport, buildings and industrial
activity. The Québec government has also committed to develop and
consolidate energy networks through the territory, particularly for
critical and strategic mineral developments.
Regulations and Permitting
The Project is subject to a federal and
provincial environmental assessment, which must be consistent with
the James Bay and Northern Québec Agreement
(“JBNQA”). In January 2023, the federal Minister
for the Environment and Climate Change issued federal authorisation
for the Project. Allkem is now awaiting the issuance of provincial
authorisation by the Government of Québec following completion of
the environmental and social impact assessment and review process
by the COMEX. Once the ESIA is approved, auxiliary 4 construction
permits will be submitted for approval prior to commencing
construction at James Bay.
Community Engagement
The Cree Nation community of Eastmain located
130 km east of the Project site is the nearest major community to
the site. The Company has a strong working relationship with the
Cree Nation of Eastmain and conducts regular and meaningful
engagement and consultation with the Cree Nation.
On 18 March 2019, a Preliminary Development
Agreement (“PDA”) was signed with the Cree Nation
of Eastmain, Grand Council of the Cree and Cree Nation Government.
The PDA will be replaced by an Impact Benefit Agreement
(“IBA”), which is currently being negotiated,
before construction is initiated.
Further engagement with the Cree Nation
Government and stakeholders, including the communities of
Waskaganish and Waswanipi, continue in relation to project updates.
The project will create approximately 250 full-time positions in
the Eeyou Istchee/James Bay region.
EXECUTION STRATEGY
The Project Execution Strategy has been
determined by an integrated team between Allkem, GMS, Wave and
selected key contractors. Detailed engineering and procurement
activities are 80% complete providing strong support for the
updated cost estimate. It is estimated project construction will
take approximately 19 months once authorisation is obtained. The
majority (+80%) of mobile, fixed mechanical and electrical
equipment have been procured. Contractors’ selection commenced
after engineering was well advanced (above 60%). Key contractors
for all disciplines have been selected and final negotiations are
in progress. It is planned to integrate contractors into the final
stages of the design and planning the construction work with
Allkem.
Funding
Funding is expected to be provided through one
or more of the following:
- existing corporate cash;
- existing or new corporate debt or project finance
facilities;
- cash flow from operations;
- strategic offtake partner(s).
This release was authorised by Mr Martin Perez de
Solay, CEO and Managing Director of Allkem Limited.
Allkem LimitedABN 31 112 589 910 Level 35, 71
Eagle StBrisbane, QLD 4000 |
Investor Relations & Media EnquiriesAndrew
Barber M: +61 418 783 701 E:
Andrew.Barber@allkem.coPhoebe LeeP: +61 7 3064
3600 E: Phoebe.Lee@allkem.co |
Connectinfo@allkem.co+61 7 3064
3600www.allkem.co |
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IMPORTANT NOTICES
This investor ASX/TSX release (Release) has been
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Allkem). It contains general information about the Company as at
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Past performance information given in this
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relied upon as (and is not) an indication of future
performance.
Forward Looking Statements
This news release contains “forward-looking
information” under the provisions of applicable securities
legislation. Such forward-looking information is subject to various
risks and uncertainties. Forward-looking information in this news
release includes, but is not limited to, statements with respect
to: (i) the economics and potential returns associated with the
Project; (ii) the estimation of ore reserves and mineral resources;
(iii) the technical viability of the Project; (iv) the market and
future price of spodumene concentrate and other commodities; (v)
the ability to work cooperatively with other stakeholders,
including local community groups and all levels of government; (vi)
projected employment and other social benefits resulting from the
Project; and (vii) the results of the Feasibility Study, including
statements about future production, mining methods, future
operating and capital costs, the projected IRR, NPV, construction
timelines, permit timelines and production timelines for the
Project. Forward-looking statements are based on current
expectations and beliefs and, by their nature, are subject to a
number of known and unknown risks and uncertainties that could
cause the actual results, performances and achievements to differ
materially from any expected future results, performances or
achievements expressed or implied by such forward-looking
statements, including but not limited to, the risk of further
changes in government regulations, policies or legislation; the
risks associated with the continued implementation of the merger
between Orocobre Limited and Galaxy Resources Ltd, risks that
further funding may be required, but unavailable, for the ongoing
development of the Company’s projects; fluctuations or decreases in
commodity prices; uncertainty in the estimation, economic
viability, recoverability and processing of mineral resources;
risks associated with development of the Company Projects;
unexpected capital or operating cost increases; uncertainty of
meeting anticipated program milestones at the Company’s Projects;
risks associated with investment in publicly listed companies, such
as the Company; and risks associated with general economic
conditions.
Forward-looking statements are made as of the
date hereof and, subject to any continuing obligation under
applicable law or relevant listing rules of the ASX/TSX, the
Company disclaims any obligation or undertaking to disseminate any
updates or revisions to any forward-looking statements in this
Release to reflect any change in expectations in relation to any
forward-looking statements or any change in events, conditions or
circumstances on which any such statements are based. Nothing in
this Release shall under any circumstances (including by reason of
this Release remaining available and not being superseded or
replaced by any other Release or publication with respect to the
subject matter of this Release), create an implication that there
has been no change in the affairs of the Company since the date of
this Release.
Competent Person Statement
The information in this announcement that
relates to Mineral Resources is based on information compiled and
supervised by Luke Evans, P.Eng, a Competent Person who is a member
of L’Ordre des Ingénieurs du Québec (License No. 105567). Mr. Evans
is a full-time employee of SLR Consulting (Canada) Ltd. Mr. Evans
has sufficient experience that is relevant to the style of
mineralization and type of deposit under consideration and to the
activity being undertaken to qualify as a Competent Person as
defined in the 2012 Edition of the ‘Australasian Code for Reporting
of Exploration Results, Mineral Resources and Ore Reserves’. Mr.
Evans consents to the inclusion in this announcement of the matters
based on his information in the form and context in which it
appears.
The information in this announcement that
relates to the Ore Reserves is based on information compiled by Mr.
Normand Lecuyer, P. Eng., a Competent Person who is a Member of
L’Ordre des Ingénieurs du Québec (License No. 34914), a Recognised
Professional Organisation included in a list posted on the ASX
website from time to time. Mr Lecuyer is an employee of SLR
Consulting (Canada) Ltd. Mr Lecuyer has sufficient experience that
is relevant to the style of mineralisation and type of deposit
under consideration and to the activity being undertaken to qualify
as a Competent Person as defined in the 2012 Edition of the
‘Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves’. Mr Lecuyer consents to the inclusion
in this announcement of the matters based on his information in the
form and context in which it appears.
Technical information relating to the Company’s
James Bay project contained in this release is derived from, and in
some instances is an extract from, the technical report entitled
“James Bay Project - Feasibility Study Update” (Technical Report)
which has been reviewed and approved by Luke Evans, P.Eng. (SLR
Consulting (Canada) Ltd.) as it relates to property, geology,
drilling, sampling, exploration, QA/QC and mineral resources: Joel
Lacelle, P. Eng. (G-Mining Services Inc.); as it relates to site
infrastructure and capital cost estimate: Normand Lecuyer, P. Eng.
(SLR Consulting (Canada) Ltd.); as it relates to mining methods,
mining cost, mining opex, financial modelling and economic
analysis: Jeremy Ison, P.Eng. (Wave International); as it relates
to mineral processing and related infrastructures: Darrin Johnson,
P. Eng. (WSP Canada Ltd.); as it relates to waste rock and tailings
management related infrastructures: Joao Paulo Lutti, Eng. (WSP
Canada Ltd); as it relates to water management infrastructures:
Pierre Groleau Eng. (WSP Canada Inc.); as it relates to
environmental and permitting in accordance with National Instrument
43-101 – Standards for Disclosure for Mineral Projects. The
Technical Report will be available for review under the Company’s
profile on SEDAR at www.sedar.com.
JORC Code 2012 and NI 43-101 Standards
of Disclosure Commentary
There are differences in terminology from the
JORC Code compared to the CIM Definition Standards. The term “Ore
Reserves” in the JORC Code is substantially equivalent to “Mineral
Reserves” using the CIM Definition Standards, and the term “Proved
Ore Reserves” in the JORC Code is substantially equivalent to
“Proven Mineral Reserves” using the CIM Definition Standards.
The only relevant reporting differences are that
National Instrument 43-101 – Standards of Disclosure for Mineral
Projects reporting requirements require each category of Mineral
Reserves (Ore Reserves) and Mineral Resources to be reported
separately, and do not permit Inferred Mineral Resources to be
added to other Mineral Resource categories. Consequently, Measured
and Indicated Mineral Resources have been reported separately from
Inferred Mineral Resources. Ore Reserves reported herein are
classified in a manner consistent with the requirements of the JORC
Code. The JORC Code differs from CIM in that it permits Ore
Reserves to be estimated as inclusive of marginally economic
material and diluting material (including Inferred) delivered for
treatment or dispatched from the mine without treatment, and on the
basis that such material does not materially contribute to the
economic assessment of any study. It should be noted that Ore
Reserves for the James Bay project do not include any Inferred
Mineral Resources.
While NI 43-101 restricts the inclusion of
inferred material in an economic analysis it does permit for
Resources and Reserves to be classified and reported in accordance
with acceptable foreign standards, including the JORC Code.
Not for release or distribution in the United
States
This announcement has been prepared for
publication in Australia and may not be released to U.S. wire
services or distributed in the United States. This announcement
does not constitute an offer to sell, or a solicitation of an offer
to buy, securities in the United States or any other jurisdiction,
and neither this announcement or anything attached to this
announcement shall form the basis of any contract or
commitment.
APPENDIX A – JORC 2012 TABLE 1
DISCLOSURE
Section 1: Sampling Techniques and
Data
JAMES BAY LITHIUM PROJECT SAMPLING AND DATA |
Sampling techniques |
Nature and quality of sampling (e.g. cut channels, random chips, or
specific specialized industry standard measurement tools
appropriate to the minerals under investigation, such as down hole
gamma sondes, or handheld XRF instruments, etc.). These examples
should not be taken as limiting the broad meaning of sampling.
Include reference to measures taken to ensure sample representivity
and the appropriate calibration of any measurement tools or systems
used. Aspects of the determination of mineralization that are
Material to the Public Report. In cases where ‘industry standard’
work has been done this would be relatively simple (e.g. ‘reverse
circulation drilling was used to obtain 1 m samples from which 3 kg
was pulverized to produce a 30 g charge for fire assay’). In other
cases, more explanation may be required, such as where there is
coarse gold that has inherent sampling problems. Unusual
commodities or mineralization types (e.g. submarine nodules) may
warrant disclosure of detailed information. |
2008/2009 Exploration Drilling – Lithium One
Lithium One (subsequently acquired by Galaxy Lithium (Canada) Inc.)
drilled a total of 102 diamond drill holes for 13,487 m on
a pattern ranging between 50 m and 60 m spacing. Drill holes
were for the most part inclined towards the southeast to intersect
the spodumene mineralization perpendicular to the dyke
geometry. Drill hole diameter was NQ.The 2008/2009 drill hole
collars were initially surveyed by handheld GPS, and subsequently
resurveyed using RTK by Galaxy Lithium Canada in 2017. A total of
84 out of 102 drill holes were located and resurveyed
by RTK.Downhole survey methods for the 2008 drilling are
unknown, however downhole surveying in 2009 was conducted at 3 m
intervals using a REFLEX Flexit tool. 2009/2010 Channel
Sampling – Lithium OneSurface outcrops of pegmatite were
channel sampled in 2009 and 2010 using a dual-blade diamond saw to
ensure consistent widths during cutting. A total of 53 channel
samples were collected for a combined length of 810 m. Channel
lengths ranged from 2 m to 41 m, and sampling was conducted on 1.5
m intervals. Channel samples were terminated at the contact with
surrounding lithologies.2017 Resource Definition Drilling –
Galaxy Lithium (Canada) Inc.Galaxy Lithium (Canada) Inc.
conducted a program of infill and extensional diamond drilling in
2017 with 157 holes drilled for a total meterage of 33,339 m. Drill
hole diameter was NQ. All drill hole collars were resurveyed using
a RTK method. Downhole surveys were recorded every 3 m using a
multi-shot camera (REFLEX EZ-TRAC).2017/2018 Geotechnical
and Metallurgical Drilling – Galaxy Lithium (Canada)
Inc.Galaxy Lithium (Canada) Inc. conducted a program of
diamond drilling in 2017 and 2018, with 102 holes drilled for a
total meterage of 10,900 m. Drill hole diameter was HQ for
metallurgical drill holes, and NQ for the remaining geotechnical
holes.2021 - 2023 Sterilisation, Exploration and Resource
Delineation Drilling – Galaxy Lithium (Canada) Inc.Galaxy
Lithium (Canada) Inc. conducted two programs of diamond drilling
during the winter of 2021/2022 and 2022/2023, with 231 holes
drilled for a total meterage of 43,600 m. Drill hole diameter was
NQ and drilling was undertaker by Major Drilling. All drill hole
collars were resurveyed using a RTK method by an independent land
surveyor. Downhole surveys were recorded every 3 m using a
multi-shot camera (REFLEX EZ-TRAC) or a gyroscope. |
Drilling techniques |
Drill type (e.g. core, reverse circulation, open-hole hammer,
rotary air blast, auger, Bangka, sonic, etc.) and details (e.g.
core diameter, triple or standard tube, depth of diamond tails,
face-sampling bit or other type, whether core is oriented and if
so, by what method, etc.). |
Diamond Drilling: Drilling campaigns between
2008 and 2018 were conducted by Chibougamou Drilling using either
NQ or HQ drilling diameters. Triple tubing was not necessary as the
rock is fresh and highly competent starting from the base of the
overburden. Recoveries were excellent (> 95%). Drilling
campaigns conducted between 2021 and 2023 were carried out by Major
Drilling using NQ drill diameter.Exploration and resource
definition drill holes vary in depth from 50 m to 300 m, with the
occasional deep exploration hole up to 500 m depth.Metallurgical
drill holes are HQ diameter and vary in depth between 10 m and 105
m.Geotechnical and sterilisation drill holes are NQ diameter and
are generally 70 m to 120 m deep. |
Logging |
Whether core and chip samples have been geologically and
geotechnically logged to a level of detail to support appropriate
Mineral Resource estimation, mining studies and metallurgical
studies. Whether logging is qualitative or quantitative in nature.
Core (or costean, channel, etc.) photography. The total length and
percentage of the relevant intersections logged. |
All drill core processing was performed at the Relais Routier Km
381 Truck Stop, with logging and sampling conducted by employees
and contractors of GLCI. Lithology, structure, mineralization,
sample number, and location were recorded by the geologists in a
GeoticLog log database, with a backup stored on an external hard
drive for additional security.Drill core was stored in wooden core
boxes and delivered to the core logging facility at the camp twice
daily by the drill contractor. The drill core was first aligned and
measured for core recovery by a technician, followed by RQD
measurements. Due to the hardness of the pegmatite units, the
recovery of the drill core was generally very good, averaging over
95%. The core was then logged, and sampling intervals were defined
by the geologist. Before sampling, the core was photographed using
a digital camera and core boxes were marked with box number, hole
ID, and aluminium tags indicating “from” and “to” measurements. All
drill holes were logged in full. |
Sub- sampling techniques and sample
preparation |
If core, whether cut or sawn and whether quarter, half or all core
taken. If non-core, whether riffled, tube sampled, rotary split,
etc. and whether sampled wet or dry. For all sample types, the
nature, quality and appropriateness of the sample preparation
technique. Quality control procedures adopted for all sub-sampling
stages to maximise representivity of samples. Measures taken to
ensure that the sampling is representative of the in-situ material
collected, including for instance results for field
duplicate/second-half sampling. Whether sample sizes are
appropriate to the grain size of the material being sampled. |
2008/2009 Drilling and Channel
SamplingStandardized core sampling protocols were used by
Lithium One. Initially, during the 2008 drilling program, core was
sampled at 2.5 m intervals, and subsequently at 1.5 m intervals. A
selective sampling procedure was used based on lithological
contacts, where the maximum (and most common) sample interval was
1.5 m. Shorter samples were collected to define geological domains.
Channel samples were also sampled at 1.5 m intervals.Sample
intervals were marked by appropriately qualified geologists. Two
sample tags were placed at the beginning of each sample interval,
while a third copy remained in the sample booklet along with the
associated “from” and “to” information recorded by the geologist. A
geo-technician was responsible for core cutting and for preparing
the samples for dispatch to the preparation laboratory – Table
Jamésienne de Concertation Minière in Chibougamau (TJCM). Assay
samples were collected on half-core sawed lengthwise using a
diamond saw; the remaining half was replaced in the core box for
future reference. Quarter core duplicates were collected
frequently.2017/2018 DrillingSample intervals were
determined based on observations of the lithology and
mineralization and were marked and tagged by the geologist. The
typical sample length was 1.5 m but varied according to
lithological contacts between the mineralized pegmatite and the
country rock. In general, one country rock sample was collected
from each side of the contact with the pegmatite.The drill core was
split lengthwise; one half was placed in a plastic bag with a
sample tag, and the other half was left in the core box with a
second sample tag for reference. The third sample tag was archived
on site. The samples were then catalogued and placed in rice bags
for shipping. Sample shipment forms were prepared on site, with one
copy inserted with the shipment and a second copy given to the
carrier. One copy was kept for reference. The samples were
transported regularly by contractors’ truck directly to the ALS
Canada Ltd – ALS Minerals laboratory in Val-d’Or, Québec. At the
ALS facility, the sample shipment was verified, and a confirmation
of receipt of shipment and content was sent digitally to the Galaxy
project manager.The sample sizes (half-core, NQ diameter) are
appropriate for the style, thickness and consistency of the
mineralization at the James Bay Lithium Project.2021 – 2023
DrillingSampling techniques and preparation were
consistent with the 2017/2018 drilling campaigns, with sampling
lengths reduced to 1 m within pegmatite lithologies. |
Quality of assay data and laboratory tests |
The nature, quality and appropriateness of the assaying and
laboratory procedures used and whether the technique is considered
partial or total. For geophysical tools, spectrometers, handheld
XRF instruments, etc., the parameters used in determining the
analysis including instrument make and model, reading times,
calibrations factors applied and their derivation, etc. Nature of
quality control procedures adopted (e.g. standards, blanks,
duplicates, external laboratory checks) and whether acceptable
levels of accuracy (i.e. lack of bias) and precision have been
established. |
2008 - 2010 AssayingSamples were shipped from site
in secure containers to Table Jamésienne de Concertation Minière
(TJCM) in Chibougamau for preparation. The protocol for sample
preparation involved weighing, drying, crushing, splitting and
pulverizing. The pulverized pegmatite core samples were shipped
from the TJCM to the COREM Research Laboratory (COREM) in Québec
City. COREM was accredited ISO/IEC 17025:2005 by the Standards
Council of Canada for various testing procedures on April 30, 2009.
The scope of accreditation did not include the specific testing
procedures used by COREM to assay lithium (method code B23).Lithium
One also utilized SGS Mineral Services Lakefield Laboratory (SGS)
as an umpire laboratory to monitor the reliability of assaying
results delivered by the primary laboratory COREM.At COREM,
prepared samples were assayed using three-acid digestion (nitric
acid, hydrofluoric acid, perchloric acid) in boiling water. The
dissolved sample was analysed by atomic absorption (AA)
spectrometry. At SGS, check samples were assayed by sodium peroxide
fusion and atomic absorption spectroscopy. At ALS Minerals,
prepared samples were assayed using four-acid digestion (perchloric
acid, hydrofluoric acid, nitric acid and hydrochloric acid) with
ICP-AES finish. Although a four-acid digest is considered a
near-total digest, common practice for the analysis of pegmatite
material is a sodium-peroxide fusion. Significant verification test
work has been undertaken and has demonstrated that the acid digest
method is robust, and no bias has been observed when compared to
the sodium-peroxide fusion check assays.Samples from 2008 – 2010
represent roughly 14% of the total meterage of the drilling on the
project.2008 - 2010 QA/QCLithium One relied partly
on the internal analytical quality control measures implemented by
COREM laboratory. Additionally, Lithium One implemented external
analytical quality control measures consisting of using control
samples (field blanks, in house standards and field duplicates)
inserted with sample batches submitted for assaying in 2009 and
2010, and coarse reject duplicate samples in 2008. Standards were
non-certified and were custom-made from a bulk sample of the
outcropping pegmatite material from the project.Field duplicates
were generated from quarter core samples and inserted every 40
samples.Total insertion rate for QA/QC in 2008 – 2010 was 4.2%,
with an additional 2.6% when including umpire assays.Although the
insertion rate of QA/QC in 2008 – 2010 was below industry
standards, subsequent check assays have shown that the assay
results are valid. Also, the results from the limited QA/QC
undertaken at the time of drilling show no issues.2017/2018
AssayingSamples were shipped to ALS Minerals in Val-d’Or
for preparation and analyses. The laboratory is accredited ISO/IEC
17025:2005 by the Standards Council of Canada for various testing
procedures, however, the scope of accreditation does not include
the specific testing procedure used to assay lithium. Sample
preparation involved the sample material being weighed and crushed
to 70% passing 2 mm. The ground material was then pulverized to 90%
passing 75 microns before being analysed. At ALS Minerals, prepared
samples were assayed for mineralization grade lithium by
specialized four-acid digestion and inductively coupled plasma –
atomic emission spectrometry (ICP-AES) finish (method code
Li-OG63). An approximately 0.4-g sample was first digested with
perchloric, hydrofluoric, and nitric acid until dry. The residue
was subsequently re-digested in concentrated hydrochloric acid,
cooled and topped up to volume. Finally, the samples were analysed
for lithium by ICP-AES. The method used has a lower detection limit
of 0.005% lithium and an upper limit of 10% lithium.Samples from
2017 represent roughly 44% of the total meterage of the drilling on
the project.2017/2018 QA/QCGLCI relied partly on
the internal analytical quality control measures implemented by the
ALS Minerals laboratory, which involved routine pulp duplicate
analyses. GLCI also implemented external analytical quality control
measures including the insertion of control samples (blanks, in
house standards and field duplicates) with sample batches submitted
for assaying at ALS Minerals in 2017. In 2017, a number of pulp
samples were also re-submitted to the SGS laboratory in Lakefield,
Ontario for umpire check assays. In 2020, additional pulp samples
were resubmitted to Nagrom Analytical, Perth.Duplicate samples were
inserted into each sample series at a rate of one in every
20 samples. Duplicates corresponded to a quarter core from the
sample left behind as reference.Total insertion rate for QA/QC in
2017 was 12.4%, with which increases up to 16.6% when including
umpire assays.The rate of insertion of QA/QC samples in 2017 was
much improved compared to 2008 – 2010 period. No biases were
identified, and a minor failure was identified in the low-grade
standard, which was investigated and no issues were
identified.2021 - 2023 AssayingSamples were
shipped to ALS Minerals in Val-d’Or for preparation and analyses.
The laboratory is accredited ISO/IEC 17025:2005 by the Standards
Council of Canada for various testing procedures, however, the
scope of accreditation does not include the specific testing
procedure used to assay lithium. Sample preparation (code PREP-31A)
involved the sample material being weighed and crushed to 70%
passing 2 mm, with a riffle split of 250 g pulverized to 85%
passing 75 microns before being analysed. At ALS Minerals, prepared
samples were assayed for mineralization-grade lithium by
sodium-peroxide fusion and digestion followed by inductively
coupled plasma – atomic emission spectrometry (ICP-AES) finish
(method code ME-ICP81). The method used has a lower detection limit
of 0.001% lithium and an upper limit of 10% lithium.Samples from
2021 - 2023 represent roughly 42% of the total meterage of the
drilling on the project.2021 - 2023 QA/QCGLCI
implemented external analytical quality control measures including
the insertion of control samples (blanks and in house standards)
with sample batches submitted for assaying at ALS Minerals at a
rate of 1 QA/QC sample for every 9 samples. A number of pulp
samples were also re-submitted to the SGS laboratory in Lakefield,
Ontario for umpire check assays.Total insertion rate for QAQC
between 2021 and 2023 was roughly 12% when including umpire
assays.No biases were identified, and two minor blank failures were
identified and a re-analysis was requested. The re-analyses
returned similar results to the original assays. |
Verification of sampling and assaying |
The verification of significant intersections by either independent
or alternative company personnel. The use of twinned holes.
Documentation of primary data, data entry procedures, data
verification, data storage (physical and electronic) protocols.
Discuss any adjustment to assay data. |
James Purchase, P. Geo, Geology Manager for Galaxy Lithium Canada
Inc. has visually assessed and verified the drilling results and
protocols described in this announcement and has witnessed
outcropping spodumene mineralization in the field. A selection of
drill collar coordinates was validated by handheld GPS, and core
and sample storage and security facilities were inspected. Channel
sample outcrops were also inspected and found to be of
high-quality. Mr. Purchase has conducted numerous site visits since
2021, the most recent being in June 2023.In addition, Luke Evans,
P.Eng. of SLR Consulting (Canada) Ltd. and the Independent CP for
the Mineral Resource visited the site in June 2023 and inspected
outcrop, drill core and sampling storage facilities.It should be
noted that the drilling between 2021 and 2023 was managed by
independent geological contractors and was conducted by
professional geologists registered in the Province of Québec.Data
collection and entry procedures were also reviewed and found to be
adequate. Various reanalyses of pulps have shown that there are
very immaterial differences between analysing using a standard
4-acid digest and a peroxide fusion for the James Bay lithium
deposit. No clear and consistent biases were defined during
investigations into QAQC performances, and any failures were duly
investigated and found to be minor. |
Location of data points |
Accuracy and quality of surveys used to locate drill holes (collar
and down-hole surveys), trenches, mine workings and other locations
used in Mineral Resource estimation.Specification of the grid
system used.Quality and adequacy of topographic control. |
Drill collars were surveys by an external contractor using RTK
methodology in UTM (Universal Transverse Mercator) Zone 18N. Datum
is NAD83.Downhole surveys were completed using an EZ-TRAC multishot
tool provided by REFLEX. Declination (-14.2) was removed to correct
the data from magnetic north to geographic north. At the collar, a
TN14 tool was used to measure the dip and azimuth of the
casing.Topographic controls are informed by a LiDAR survey
completed recently on the project. |
Data Spacing and distribution |
Data spacing for reporting of Exploration Results.Whether the data
spacing and distribution is sufficient to establish the degree of
geological and grade continuity appropriate for the Mineral
Resource and Ore Reserve estimation procedure(s) and
classifications applied.Whether sample compositing has been
applied. |
In the NW Sector, drilling has been completed on a nominal 80 m x
80 m spacing.Most of the Main Deposit has been drilled at a nominal
spacing of approximately 50 m to satisfy the classification as
Indicated Mineral Resources.No sample compositing has been
undertaken. |
Orientation of data in relation to geological
structure |
Whether the orientation of sampling achieves unbiased sampling of
possible structures and the extent to which this is known,
considering the deposit type.If the relationship between the
drilling orientation and the orientation of key mineralised
structures is considered to have introduced a sampling bias, this
should be assessed and reported if material. |
As the pegmatite dykes in the NW Sector are concealed by 5 m to 15
m of glacial till, it was difficult to accurately orientate the
drilling at a perpendicular angle to the pegmatites as limited
information was available at the time. As drilling progressed, it
become apparent that the drilling was intersecting the pegmatites
at a sub-optimal angle, and that the true thickness of pegmatites
in drilling represent between 60% to 80% of the apparent thickness
(downhole thicknesses). Although this angle is sub-optimal, the
author does not believe this has introduced a sampling bias.The
orientation of the dykes is well understood for the remainder of
the deposit where outcrop is abundant, and drilling has been
oriented perpendicular to the dyke contacts. |
Sample Security |
The measures taken to ensure sample security. |
Drill core, sample rejects and sample pulps are stored in a secure
environment (in a locked dome structure) at the Relais Routier 381
truck stop. Sample pulps are stored in a locked container adjacent
to the dome. |
Audits or reviews |
The results of any audits or reviews of sampling techniques and
data |
Sampling techniques were reviewed by previous employees of Galaxy
Lithium, and also by James Purchase, P.Geo, the QP of the previous
Mineral Resource released in the 2021 feasibility study. In
addition, external geological contractors were engaged during
drilling activities to monitor the QA/QC data and logging
procedures to ensure that industry best practises were
followed.Lastly, Luke Evans, P.Eng. of SLR Consulting (Canada) Ltd.
and the Independent CP for the Mineral Resource visited the site in
June 2023 and inspected outcrop, drill core and sampling storage
facilities. |
Section 2: Reporting of Exploration
Results
Criteria |
JORC Code explanation |
Commentary |
Mineral tenement and land tenure status |
- Type, reference name/number, location
and ownership including agreements or material issues with third
parties such as joint ventures, partnerships, overriding royalties,
native title interests, historical sites, wilderness or national
park and environmental settings.
- The security of the tenure held at the
time of reporting along with any known impediments to obtaining a
license to operate in the area.
|
The Project comprises two contiguous packages of mining titles
located on NTS map sheet 33C03, covering an area of approximately
11,130 hectares (Figure 5). The 224 claims are classified as “map
designed claims”, also known as CDC-type claims under the Québec
governments mining title classification system and provide the
holder the exclusive right to explore for mineral substances on the
land subject to the claims. The claims are registered under either
Galaxy Lithium (Canada) Inc. (“GLCI”) or Galaxy Lithium (Ontario)
Inc. (“GLOI”). Both GLCI and GLOI are wholly owned subsidiaries of
Allkem. All claims are in good standing, with expiry dates between
June 12, 2024, and November 2, 2025.As of the time of writing, two
net smelter return (“NSR”) royalties remain on the James Bay
Lithium Project:
- 0.50% NSR royalty previously held
by Gérard Robert, which was subsequently sold to Ridgeline
Royalties Inc. Portions of the mineral resources subject to this
royalty are located on six claims (claim numbers: 2329097, 2329098,
2238480, 2238478, 2329101 and 2329100) of the James Bay project,
although the royalty covers 11 claims in total.
- 1.50% NSR royalty previously held
by Resources d’Arianne Inc., subsequently sold to Lithium Royalty
Corp. Allkem has the right to buy back 0.5% of the NSR for $500,000
Canadian dollars, reducing the royalty to 1.00%. Portions of the
mineral resources subject to this royalty are located on two claims
(claim numbers: 2126988 and 2126860) of the James Bay project,
although the royalty covers 23 claims in total.
|
Exploration done by other parties |
- Acknowledgment and appraisal of exploration by other
parties.
|
Prospector Jean Cyr first discovered spodumene pegmatite outcrops
on the property in 1964. The property was staked in 1966 by Mr. Cyr
and was optioned by the SDBJ in 1974, who after conducting some
exploration on the property, returned it to Mr. Cyr on June 10,
1986.Commencing in 1974, SDBJ conducted an exploration program that
consisted of geological mapping, systematic sampling and diamond
drilling of the mineralized outcrops to evaluate the lithium
potential of the property. The mapping defined an area of 45,000
square metres of outcropping spodumene dykes.The Centre de
Recherches Minérales du Québec conducted concentration tests and
chemical analyses in 1975. A composite sample of the spodumene
pegmatite grading 1.7% Li2O yielded a spodumene concentrate grading
an average of 6.2% Li2O with a recovery factor of 71%.LithiumOne
acquired the claims in 2007 and embarked on an exploration campaign
designed to produce a maiden mineral resource on the property. In
2012, Galaxy Resources Limited merged with Lithium One. |
Geology |
- Deposit type, geological setting and style of
mineralization.
|
The Project is in the northeastern part of the Superior
Province. It lies within the Lower Eastmain Group of the Eastmain
greenstone belt, which consists predominantly of amphibolite grade
mafic to felsic metavolcanic rocks,
metasedimentary rocks and minor gabbroic intrusions.The
property is underlain by the Auclair Formation,
consisting mainly of paragneisses of probable sedimentary
origin which surround the pegmatite dykes to the northwest and
southeast. Volcanic rocks of the Komo Formation occur to
the north of the pegmatite dykes. The greenstone rocks are
surrounded by Mesozonal to catazonal migmatite
and gneiss. All rock units are Archean in age. The pegmatites
delineated on the property to date are oriented in a generally
parallel direction to each other and are separated by barren host
rock of sedimentary origin (metamorphosed to amphibolite facies).
They form irregular dykes attaining up to 60 m in width and
over 200 m in length. The pegmatites crosscut the regional
foliation at a high angle, striking to the south-southwest and
dipping moderately to the west-northwest. Spodumene is the
principal source of lithium found at
the Project. Spodumene is a relatively rare pyroxene that
is composed of lithium (8.03% Li2O), aluminium (27.40% Al2O3), and
silica (64.57% SiO2). It is found in lithium rich granitic
pegmatites, with its occurrence associated with quartz, microcline,
albite, muscovite, lepidolite, tourmaline and beryl. |
Drill hole Information |
- A summary of all information material to the understanding of
the exploration results including a tabulation of the following
information for all Material drill holes:
- easting and northing of the drill hole collar
- elevation or RL (Reduced Level – elevation above sea level in
meters) of the drill hole collar
- dip and azimuth of the hole
- down hole length and interception depth
- hole length.
|
This press release does not include new exploration results.Most
holes are inclined 45 – 70 degrees towards the southeast. |
Data aggregation methods |
- In reporting Exploration Results, weighting averaging
techniques, maximum and/or minimum grade truncations (e.g. cutting
of high grades) and cut-off grades are usually Material and should
be stated.
- Where aggregate intercepts incorporate short lengths of
high-grade results and longer lengths of low-grade results, the
procedure used for such aggregation should be stated and some
typical examples of such aggregations should be shown in
detail.
- The assumptions used for any reporting of metal equivalent
values should be clearly stated.
|
No exploration results have been included in this announcement,
however Allkem uses the following procedures to report exploration
results.Capping is not applied for the purpose of reporting
exploration results.Lower cut-off used for reporting is 0.4% Li2O%;
minimum 4 m true width interval; maximum 2 m of internal waste.No
metal equivalent values are used.Li% assays have been multiplied by
2.153 to transform them to Li2O%. |
Relationship between mineralization widths and intercept
lengths |
- These relationships are particularly important in the reporting
of Exploration Results.
- If the geometry of the
mineralization with respect to the drill hole angle is known, its
nature should be reported.
- If it is not known and only the down hole lengths are reported,
there should be a clear statement to this effect (e.g. ‘down hole
length, true width not known’).
|
Lithium mineralization in the NW Sector occurs as thick, steeply
dipping pegmatite dykes ranging between 4 m and 30 m thick (true
thickness), with some dykes coalescing up to 85 m true thickness in
the core of the pegmatite swarm.Due to the sub-optimal angle of
intercept between the drilling at the assumed orientation of the
pegmatite dykes in the NW Sector, true widths have been estimated
at between 60% and 80% of downhole widths. |
Diagrams |
- Appropriate maps and sections (with scales) and tabulations of
intercepts should be included for any significant discovery being
reported These should include, but not be limited to a plan view of
drill hole collar locations and appropriate sectional views.
|
No exploration results have been included in this
announcement. |
Balanced reporting |
- Where comprehensive reporting of all Exploration Results is not
practicable, representative reporting of both low and high grades
and/or widths should be practiced to avoid misleading reporting of
Exploration Results.
|
No exploration results have been included in this
announcement. |
Other substantive exploration data |
- Other exploration data, if meaningful and material, should be
reported including (but not limited to): geological observations;
geophysical survey results; geochemical survey results; bulk
sample– size and method of treatment; metallurgical test results;
bulk density, groundwater, geotechnical and rock characteristics;
potential deleterious or contaminating substances.
|
Bulk sampling was conducted on the property in 2011, four test pits
were dug to obtain metallurgical samples. An IP survey undertaken
in 2020 and 2021 has uncovered potential extensions of
mineralization to the east of the property, east of the
Billy-Diamond Highway.Re-assaying of pulps using multi-element
sodium-peroxide fusion methods has not returned economic
concentrations of tantalum, tin or other elements of economic
importance apart from lithium. |
Further work |
- The nature and scale of planned
further work (e.g. tests for lateral extensions or depth extensions
or large-scale step-out drilling).
- Diagrams clearly highlighting the areas of possible extensions,
including the main geological interpretations and future drilling
areas, provided this information is not commercially
sensitive.
|
Downhole televiewer survey is planned to determine geometry of
newly discovered pegmatites in the NW Sector. In addition, an
aeromagnetic survey covering NW Sector has just been concluded and
results should be available shortly.Infill drilling to convert the
NW Sector to Indicated category is planned, and also deeper
drilling to convert any enclaves of Inferred category within the
RPEEE pit shell. |
Section 3: Estimation and Reporting of
Mineral Resources – James Bay Lithium Project
Criteria |
JORC Code explanation |
Commentary |
Database integrity |
- Measures taken to ensure that data has not been corrupted by,
for example, transcription or keying errors, between its initial
collection and its use for Mineral Resource estimation
purposes.
- Data validation procedures used.
|
The drilling database is hosted within a relational SQL database,
with all key information stored in various tables. Original copies
of assay certificates are stored on a secured server. All data
pertaining to the 2022 and 2023 drilling campaigns were managed
externally by geological contractors and verified by Allkem
personnel for accuracy. As part of the data verification
process, SLR Consulting (Canada) Ltd. compared assay certificates
for all drilling campaigns with the drilling database used in the
mineral resource calculation and found no material errors. |
Site visits |
- Comment on any site visits undertaken by the Competent Person
and the outcome of those visits.
- If no site visits have been undertaken indicate why this is the
case.
|
The Independent CP for the Mineral Resource (Mr Luke Evans, P.Eng.
of SLR Consulting (Canada) Ltd.) visited the site between the 5th
and 7th June 2023. Mineralised outcrop was visited, and drill core
was inspected and compared to assay certificates. Sample and drill
core storage facilities were also inspected. |
Geological interpretation |
- Confidence in (or conversely, the uncertainty of) the
geological interpretation of the mineral deposit.
- Nature of the data used and of any assumptions made.
- The effect, if any, of alternative interpretations on Mineral
Resource estimation.
- The use of geology in guiding and controlling Mineral Resource
estimation.
- The factors affecting continuity both of grade and
geology.
|
The geological interpretation is considered robust as it supported
by both extensive outcrop and drilling. The continuity of the
mineralised pegmatites is well demonstrated between drill holes and
can be correlated with surface outcrops. Surface diamond drill
holes have been logged for lithology, structure, geotechnical,
alteration and mineralisation information. The lithological
logging of pegmatite in combination with the Li2O, assays,
including grain size and mineralogical differentiation, have been
used to guide the sectional interpretation of the pegmatites in
Leapfrog Geo modelling software. Both an overburden (glacial till)
model and a lithological model have been constructed based on
lithological logging. Due to the consistent nature of the
pegmatites identified in the resource area, no alternative
interpretations have been considered. No further grade-based
domaining has been used, and the current pegmatite wireframes
include minor intervals of barren pegmatite without spodumene
mineralisation. |
Dimensions |
- The extent and variability of the Mineral Resource expressed as
length (along strike or otherwise), plan width, and depth below
surface to the upper and lower limits of the Mineral Resource
|
A total of 67 individual pegmatite dykes have been identified
within the deposit. The pegmatite dykes are located within a
“deformation corridor” that has been identified in drilling and
outcrop along a strike length of over 5 km, of which 2.8 km has
been delineated to form the current Mineral Resource. The
dykes present as en-echelon orientations, varying in length between
200 m and 400 m, and perpendicular to the strike of the deformation
corridor. The dykes have been traced to depths of up to 500 m
vertically from surface and are mostly open at depth. Dyke
width vary between 5 m to 40 m, and sometimes coalesce up to widths
of 80 m. |
Estimation and modelling techniques |
- The nature and appropriateness of the estimation technique(s)
applied and key assumptions, including treatment of extreme grade
values, domaining, interpolation parameters and maximum distance of
extrapolation from data points. If a computer assisted estimation
method was chosen include a description of computer software and
parameters used.
- The availability of check estimates, previous estimates and/or
mine production records and whether the Mineral Resource estimate
takes appropriate account of such data.
- The assumptions made regarding recovery of by-products.
- Estimation of deleterious elements or other non-grade variables
of economic significance (e.g. sulphur for acid mine drainage
characterisation).
- In the case of block model interpolation, the block size in
relation to the average sample spacing and the search
employed.
- Any assumptions behind modelling of selective mining
units.
- Any assumptions about correlation between variables
- Description of how the geological interpretation was used to
control the resource estimates.
- Discussion of basis for using or not using grade cutting or
capping.
- The process of validation, the checking process used, the
comparison of model data to drillhole data, and use of
reconciliation data if available.
|
Grade estimation for Li2O%, has been completed using Ordinary
Kriging (OK) into pegmatite domains using Leapfrog Edge software.
No other elements have been estimated into the block
model. Hard boundaries have been used at all domain boundaries
for the grade estimation. The pegmatite boundaries have been
modelled to honour the geological contacts without consideration
for the Li2O% grades. Compositing has been undertaken within
domain boundaries at 1.5 m with residuals less than 0.25 m absorbed
into the previous composite. No top-cutting (capping) has been
applied as no statistical outliers were
identified. Variography has been completed in Leapfrog Edge
software on pegmatites grouped by orientation and geographical
location. There were insufficient samples to model variograms for
each pegmatite dyke independently. No assumptions have been
made regarding the recovery of any by-products. The drill hole
data spacing is approximately 50 m in Indicated areas and
approximately 80 m in Inferred areas. The block model
parent block size is 3 m (X) by 5 m (Y) by 5 m (Z),
which is considered appropriate for the widths of the pegmatite
dykes and the proposed mining selectivity. A sub-block size of
0.75 m (X) by 1.25 m (Y) by 1.25 m (Z) has been used
to define the mineralisation edges, with the estimation undertaken
at the parent block scale.
- Pass 1 estimations have been undertaken using a minimum of 4
and a maximum of 12 samples into a search ellipse set at
approximately half of the variogram range. A 3 sample per drill
hole limit has been applied in all pegmatite domains.
- Pass 2 estimations have been undertaken using a minimum of 4
and a maximum of 12 samples into a search ellipse set at
approximately 80% of the variogram range. A 3 sample per drill hole
limit has been applied in all pegmatite domains.
- Pass 3 and Pass 4 estimations have been undertaken using a
minimum of 1 and a maximum of 12 samples into a search ellipse set
at 120% to 200% the variogram range, respectively. A 3 sample per
drill hole limit has been applied in all pegmatite domains.
The Mineral Resource estimate has been validated using visual
validation tools combined with volume comparisons with the input
wireframes, mean grade comparisons between the block model and
composite grade means and swath plots comparing the composite
grades and block model grades by northing, easting and elevation.
In addition, the OK grade estimate was compared with ID2 (Inverse
Distance squared) and NN (Nearest Neighbour) interpolation
methods. No selective mining units are assumed in this
estimate. No correlation between variables has been
assumed. |
Moisture |
- Whether the tonnages are estimated on a dry basis or with
natural moisture, and the method of determination of the moisture
content.
|
Tonnes have been estimated on a dry basis. |
Cut-off parameters |
- The basis of the adopted cut-off grade(s) or quality parameters
applied
|
For the reporting of the Mineral Resource Estimate, a raised
cut-off grade of 0.5 Li2O% was used to report the block model
within a US$1,500 per tonne Whittle pit shell. The open pit
discard cut-off grade was calculated at 0.16% Li2O, however due to
the absence of metallurgical test work on low-grade material, the
cut-off was raised to 0.5% Li2O. |
Mining factors or assumptions |
- Assumptions made regarding possible mining methods, minimum
mining dimensions and internal (or, if applicable, external) mining
dilution. It is always necessary as part of the process of
determining reasonable prospects for eventual economic extraction
to consider potential mining methods, but the assumptions made
regarding mining methods and parameters when estimating Mineral
Resources may not always be rigorous. Where this is the case, this
should be reported with an explanation of the basis of the mining
assumptions made.
|
A Whittle pit optimisation has been run at various spodumene
concentrate prices in order to generate pit shells for Mineral
Resource reporting purposes and to meet the RPEEE reporting
requirement. The mining assumptions/parameters applied to the
optimisation for the Mineral Resource were taken from the previous
feasibility study (updated parameters were not available at the
time) and are:
- Spodumene concentrate (6.0% Li2O) – US$$1,500 per tonne.
- Li2O% metallurgical recovery – 70.1%
- Concentrate Transport – US$$86.16 per tonne concentrate
- NSR Royalty – 0.32%
- Processing – CAD$13.23 per tonne ore
- G&A – CAD$13.86 per tonne ore
- Closure + Sust. CAPEX + IBA + Miscellaneous – CAD$6.83 per
tonne ore
- Mining Cost – CAD$4.82 per tonne mined
These parameters were subsequently updated for the Ore Reserve to
adjust for inflationary pressures since the 2021 FS. This resulted
in a marginal increase in the cut-off grade, which remains
significantly lower than the 0.5% Li2O used to report the Mineral
Resource. US$ exchange rate of 1.33 (CAD:US$) has been applied
in the Whittle optimisation. Both Inferred and Indicated
Mineral Resource classifications have been utilised in the RPEEE
optimisation. |
Metallurgical factors or assumptions |
- The basis for assumptions or predictions regarding
metallurgical amenability. It is always necessary as part of the
process of determining reasonable prospects for eventual economic
extraction to consider potential metallurgical methods, but the
assumptions regarding metallurgical treatment processes and
parameters made when reporting Mineral Resources may not always be
rigorous. Where this is the case, this should be reported with an
explanation of the basis of the metallurgical assumptions
made.
|
An overall Li2O% metallurgical recovery of 70.1% has been applied
during the pit optimisation and generation of the mineral resource
RPEEE pit shell and is based on numerous campaigns of metallurgical
test work on samples sourced from the pit design. |
Environmental factors or assumptions |
- Assumptions made regarding possible waste and process residue
disposal options. It is always necessary as part of the process of
determining reasonable prospects for eventual economic extraction
to consider the potential environmental impacts of the mining and
processing operation. While at this stage the determination of
potential environmental impacts, particularly for a greenfields
project, may not always be well advanced, the status of early
consideration of these potential environmental impacts should be
reported. Where these aspects have not been considered this should
be reported with an explanation of the environmental assumptions
made
|
No environmental factors or assumptions have been incorporated into
this Mineral Resource Estimate, and there is no current surface
infrastructure to constrain the eventual pit footprint. No
protected zones that would obstruct the award of a future mining
lease are present at the project. Allkem received the federal
approval of the ESIA in January 2023, and provincial approval is
pending. |
Bulk density |
- Whether assumed or determined. If assumed, the basis for the
assumptions. If determined, the method used, whether wet or dry,
the frequency of the measurements, the nature, size and
representativeness of the samples.
- The bulk density for bulk material must have been measured by
methods that adequately account for void spaces (vugs, porosity,
etc), moisture and differences between rock and alteration zones
within the deposit,
- Discuss assumptions for bulk density estimates used in the
evaluation process of the different materials.
|
In the block model, bulk density within the pegmatite lithology was
assigned using the following regression formula: Bulk
Density (g/cm³) = (0.0669 x Li2O %) + 2.603 Outside the
pegmatite wireframes, the mean bulk densities shown in the table
below were assigned into the block model by lithology. Overburden
was assumed to have a bulk density of 2.2 g/cm3. |
Classification |
- The basis for the classification of the Mineral Resources into
varying confidence categories
- Whether appropriate account has been taken of all relevant
factors (i.e. relative confidence in tonnage/grade estimations,
reliability of input data, confidence in continuity of geology and
metal values, quality, quantity and distribution of the data).
- Whether the result appropriately reflects the Competent
Person’s view of the deposit.
|
The resource classification has been applied to the MRE based on
the drilling data spacing, grade and geological continuity, quality
of the estimation and data integrity. The block classification
was based primarily on drill hole spacing, geological and grade
continuity and the average distance of composites to a given block.
The block classification was subsequently manually modified to
ensure a coherent, contiguous classification suitable for mine
planning purposes. Within the pegmatite dyke wireframes, the
following criteria was used:
- No Measured Mineral Resources were identified.
- Indicated Mineral Resources were identified in areas defined by
a nominal drill spacing of 50 m x 50 m.
- Inferred Mineral Resources were identified in areas defined by
a nominal drill spacing of 80m x 80m.
The classification reflects the view of the Competent
Person. |
Audits or reviews |
- The results of any audits or reviews of Mineral Resource
estimates.
|
The Mineral Resource estimate for the James Bay project has been
produced independently of Allkem by SLR Consulting (Canada) Ltd.,
and peer reviewed and validated internally by Allkem employees
(James Purchase, P.Geo., M.AusIMM(CP) and Albert Thamm,
F.AusIMM). The tonnages and grades have been verified in more
than one software package. |
Discussion of relative
accuracy/confidence |
- Where appropriate a statement of the relative accuracy and
confidence level in the Mineral Resource estimate using an approach
or procedure deemed appropriate by the Competent Person. For
example, the application of statistical or geostatistical
procedures to quantify the relative accuracy of the resource within
stated confidence limits, or, if such an approach is not deemed
appropriate, a qualitative discussion of the factors that could
affect the relative accuracy and confidence of the estimate
- The statement should specify whether it relates to global or
local estimates, and, if local, state the relevant tonnages, which
should be relevant to technical and economic evaluation.
Documentation should include assumptions made and the procedures
used
- These statements of relative accuracy and confidence of the
estimate should be compared with production data, where
available
|
The relative accuracy of the Mineral Resource estimate is reflected
in the reporting of the Mineral Resource as per the guidelines of
the 2012 JORC Code. No geostatistical study has been conducted
to quantify accuracy nor confidence within confidence limits
(conditional simulation) Grade estimates are local on a
domain-by-domain basis and drill spacing is sufficient for a local
grade estimate suitable as input into mine planning. No
reconciliation data is available as the deposit is not in
production. |
Section 4: Estimation and Reporting of
Ore Reserves – James Bay Lithium
Project(Criteria listed in section 1, and where relevant
in sections 2 and 3, also apply to this section.)
Criteria |
JORC Code explanation |
Commentary |
Mineral Resource estimate for conversion to Ore
Reserves |
- Description of the Mineral Resource estimate used as a basis
for the conversion to an Ore Reserve.
- Clear statement as to whether the Mineral Resources are
reported additional to, or inclusive of, the Ore Reserves.
|
The Mineral Resource of 54.3 Mt at 1.30% Li2O in the Indicated
Category, and 55.9 Mt at 1.29% Li2O in the Inferred Category was
used as a basis for the Mineral Reserve.The effective date of
the Mineral Resource is August 9th, 2023. The Ore Reserve for
the James Bay Project is estimated at 37.3 Mt, at an average
grade of 1.27% Li2O.The Ore Reserve was prepared by SLR Consulting
(Canada) Ltd. (“SLR”) effective as of August 31, 2023.The Ore
Reserve does not include any Inferred Mineral Resources which were
classified as waste for reporting purposes. |
Site visits |
- Comment on any site visits undertaken by the Competent Person
and the outcome of those visits.
- If no site visits have been undertaken indicate why this is the
case.
|
The CP for the Mineral Resource (Mr. Luke Evans, P.Eng.) visited
the project in June 2023. The CP for the Ore Reserve has not
visited the Project. |
Study status |
- The type and level of study undertaken to enable Mineral
Resources to be converted to Ore Reserves.
- The Code requires that a study to at least Pre-Feasibility
Study level has been undertaken to convert Mineral Resources to Ore
Reserves. Such studies will have been carried out and will have
determined a mine plan that is technically achievable and
economically viable, and that material Modifying Factors have been
considered.
|
The James Bay Lithium Project is at a Feasibility Study level. |
Cut-off parameters |
- The basis of the cut-off grade(s) or quality parameters
applied.
|
A raised cut-off grade is at 0.62% Li2O was adopted due to
metallurgical considerations, however the breakeven cut-off grade
was calculated at 0.27% Li2O. |
Mining factors or assumptions |
- The method and assumptions used as reported in the
Pre-Feasibility or Feasibility Study to convert the Mineral
Resource to an Ore Reserve (i.e., either by application of
appropriate factors by optimization or by preliminary or detailed
design).
- The choice, nature and appropriateness of the selected mining
method(s) and other mining parameters including associated design
issues such as pre-strip, access, etc.
- The assumptions made regarding geotechnical parameters (eg pit
slopes, stope sizes, etc), grade control and pre-production
drilling.
- The major assumptions made, and Mineral Resource model used for
pit and stope optimization (if appropriate).
- The mining dilution factors used.
- The mining recovery factors used.
- Any minimum mining widths used.
- The way Inferred Mineral Resources are utilized in mining
studies and the sensitivity of the outcome to their inclusion.
- The infrastructure requirements of the selected mining
methods.
|
The mining method is conventional open pit, drill blast, truck and
shovel and selective mining. The slope configuration
recommendations are presented in the table below. The pit slope
profile is based on recommendations by Petram Mechanica:
Open pit optimization was conducted in GEOVIA WhittleTM to
determine the optimal economic shape of the open pit to guide the
pit design process. Optimization parameters are shown below:A
raised cut-off grade was adopted at 0.62% Li2O. The average mining
dilution factor is 8.7% at 0.42% Li2O. The LOM metallurgical
recovery was assumed at 68.9%. The equipment requirements are based
on mining 10 m benches, including 11-m3 and 6.3-m3 bucket diesel
hydraulic excavators (backhoe configuration), and up to nine 100-t
rigid frame haul trucks, two 10.7-m^3 front end loaders, two
drills, and secondary equipment like track dozers, wheel dozers,
graders, and water trucks. Personnel needs are devised on two
Fly-In, Fly-Out (FIFO) rosters, peaking at 164 individuals on site
in Year 10. |
Metallurgical factors or assumptions |
- The metallurgical process proposed and the appropriateness of
that process to the style of mineralisation.
- Whether the metallurgical process is well-tested technology or
novel in nature.
- The nature, amount and representativeness of metallurgical test
work undertaken, the nature of the metallurgical domaining applied
and the corresponding metallurgical recovery factors applied.
- Any assumptions or allowances made for deleterious
elements.
- The existence of any bulk sample or pilot scale test work and
the degree to which such samples are considered representative of
the orebody as a whole.
- For minerals that are defined by a specification, has the ore
reserve estimation been based on the appropriate mineralogy to meet
the specifications?
|
The James Bay Project will have a crushing circuit and a dense
media separation plant. Metallurgical processes are operational at
up to 2.0Mpta nameplate. The LOM Plant Recovery is estimated to be
68.9%.The metallurgical process is well understood and well tested
in the industry.Both SGS and Nagrom received bulk samples of
14,690kg and 400kg respectively. These samples were considered
representative of the ore body as a whole.Gravity separation test
work on a single composite sample and crushing particle size were
undertaken by SGS Canada Inc. (“SGS”) and Nagrom resulted in
improved recovery and final product grade. These tests were deemed
representative.Full-scale plant performance of Mt Cattlin and
other Australian operations were compared to the James Bay test
work data. A final recovery scale-up factor of 0.85 for the early
years and 0.82 for the mid/later years was adopted.Metallurgical
test work was conducted by SGS Canada Inc. and Nagrom to determine
optimal plant operating recoveries. For a final spodumene
concentrate grading 5.6% Li2O, modelling indicates that a recovery
of 69.6% in the early years and 66.9% in later operating years is a
reasonable assumption |
Environment |
- The status of studies of potential environmental impacts of the
mining and processing operation. Details of waste rock
characterization and the consideration of potential sites, status
of design options considered and, where applicable, the status of
approvals for process residue storage and waste dumps should be
reported.
|
The Project is subject to a federal and provincial environmental
assessment, which must be consistent with the James Bay and
Northern Québec Agreement (“JBNQA”). In January 2023, the Federal
Minister for the Environment and Climate Change issued federal
authorisation for the Project. Allkem is now awaiting the issuance
of provincial authorisation by the Government of Québec following
completion of the environmental and social impact assessment and
review process by the COMEX. Once the key approvals are obtained,
there are a range of other approvals required prior to commencing
construction at James Bay. In 2017, various studies were
undertaken to update a former data collection from 2011 to obtain
necessary baseline information required to assess the Project’s
impacts as part of the ESIA. Other complementary baseline studies
were conducted in 2019 and 2020. The four main lithologies,
namely barren pegmatite, gneiss, banded gneiss and mafic
volcanic/basalt are considered Non-Potential Acid Generating
(“Non-PAG”). Some metal leaching that exceeded the criteria
applicable for resurgence to surface water (RES) was encountered
during the first weeks of testing, but all metals complied with the
RES criteria after week 14. |
Infrastructure |
- The existence of appropriate infrastructure: availability of
land for plant development, power, water, transportation
(particularly for bulk commodities), labor, accommodation; or the
ease with which the infrastructure can be provided or
accessed.
|
The following infrastructure facilities are planned for the
Project:
- 69 kV main-substation
- Administrative and laboratory building
- Operations camp
- Workshop and reagent buildings
- Propane storage and distribution facility
- Diesel storage and distribution facility
- Truck-shop including a wash-bay
- Cold dome warehouse for the storage of critical parts
- Water treatment plant (effluent)
- Potable water treatment plant
- Sewage treatment plant
- ROM pad and stockpile
- Crushed mineralized material stockpile
- Four Waste Rock and Tailings Storage Facilities (“WRTSFs”)
- Overburden and Peat Storage Area (“OPSF”)
- Two Water Management Ponds (“WMPs”) and a Plant Water
Management Pond
- Contact water ditches and non-contact diversion water
ditches
- Fine and coarse tailing warehouse building
- Spodumene concentrate warehouse facility
- Emulsion and explosive storage and distribution facility
The Eastmain airport (130 km from site) will be used to
transport workers from southern Québec. The Project lands, subject
to mining claims are easily accessed by the Billy Diamond
Highway.The process plant and supporting infrastructure will be
powered by Hydro-Québec’s 69 kV overhead distribution system.
The 69 kV transmission line is relayed through Hydro-Québec’s
Muskeg substation and ultimately fed by the Némiscau substation
located roughly 100 km southwest of the Project site. An
overhead distribution line extension was built to the plant
substation from the 69 kV line (L-614) located 10km south of
the Project site. The 69 kV power supply is limited by a
capacity of 8 MVA due to the sensitivity of the network and
distance from the supplying substation |
Costs |
- The derivation of, or assumptions made, regarding projected
capital costs in the study.
- The methodology used to estimate operating costs.
- Allowances made for the content of deleterious elements.
- The source of exchange rates used in the study.
- Derivation of transportation charges.
- The basis for forecasting or source of treatment and refining
charges, penalties for failure to meet specification, etc.
- The allowances made for royalties payable, both Government and
private.
|
The mine operating costs are estimated from first principles for
all mine activities. Equipment hours required to meet production
needs of the LOM plan are based on simulations over the Life of
Mine. Transportation charges of the concentrate from the Mine to
Matagami by truck and from Matagami to Trois-Rivières by rail, were
based on quotations from road and railway transporters. The
forecasting of revenues was based on a market study done by a
specialized firm and internal research. Royalties have been
calculated for the mine production plan based on known agreements
and preliminary estimates from IBA discussions. Exchange rate used
is CAD 1.33/US$, based on long-term forecasts. Treatment and
refining charges are not applicable as spodumene is sold on an open
market with clear pricing. The capital expenditure (“CAPEX”)
for Project construction, including processing, mine equipment
purchases, infrastructures and other direct and indirect costs is
estimated and summarized in the table below and are based on
information in-hand at the detailed engineering stage of the
Project.The total initial project CAPEX including an 6.2%
contingency is estimated at US$ 381.5M. Deferred and Sustaining
CAPEX is required during operations for additional equipment
purchases, a truck shop bay addition, and mine civil
works.Summary of LOM Capital Costs Operating
costs include mining, processing, general and administrative
services, mining, processing and concentrate transportation. The
LOM operating cost summary is presented in the table below.
Summary of LOM Cash Operating Costs |
Revenue factors |
- The derivation of, or assumptions made regarding revenue
factors including head grade, metal or commodity price(s) exchange
rates, transportation and treatment charges, penalties, net smelter
returns, etc.
- The derivation of assumptions made of metal or commodity
price(s), for the principal metals, minerals and co-products.
|
Ore Reserves are estimated using the following metal prices (Li2O
Conc = US$1,500/t Li2O at 6.0% Li2O) and an exchange rate of
CAD/US$ 1.33.Spodumene concentrate prices were based on
WoodMac recommendations and adjusted in the financial model to
represent a 5.6% Li2O product.Transport and insurance charges were
estimated at CAD 141.05. |
Market assessment |
- The demand, supply and stock situation for the particular
commodity, consumption trends and factors likely to affect supply
and demand into the future.
- A customer and competitor analysis along with the
identification of likely market windows for the product.
- Price and volume forecasts and the basis for these
forecasts.
- For industrial minerals the customer specification, testing and
acceptance requirements prior to a supply contract.
|
Lithium has diverse applications including ceramic glazes, enamels,
lubricating greases, and as a catalyst. Demand in traditional
sectors grew by approximately 4% CAGR from 2020 to 2022.
Rechargeable batteries dominate lithium usage which accounted for
80% of demand in 2022, with 58% attributed to automotive
applications. Growth is forecast at 11% CAGR between 2023-2033 for
total lithium demand, 13% for automotive, and 7% for other
applications. Growth is expected to slow as the market matures.
Different lithium chemical compositions are used in various
products. Lithium carbonate and hydroxide accounted for 90% of
refined lithium demand in 2022. High demand is expected for lithium
hydroxide due to high-nickel Li-ion batteries, and LFP cathode
demand is growing, especially in China. Wood Mackenzie predicts
growth in lithium carbonate at 14% CAGR between
2023-2033.Historical underinvestment and strong EV demand have
created a supply deficit, influencing prices and investment in
additional supply. Market balance remains uncertain due to project
delays and cost overruns. The market is forecast to be in deficit
in 2024, have a fragile surplus in 2025, and a sustained deficit
from 2033.Prices have fluctuated in 2022-2023, with factors like
plateauing EV sales, Chinese production slowdown, and supply chain
destocking influencing trends. BG Carbonates' prices are linked to
demand growth for LFP cathode batteries and are expected to decline
but rebound by 2031. Lithium Hydroxide's growth supports a strong
demand outlook, with long-term prices between US$25,000 and
US$35,000 per tonne (real US$ 2023 terms). Chemical-grade Spodumene
Concentrate's prices are expected to align with market imbalances,
with a long-term price forecast between US$2,000 per tonne and
US$3,000 per tonne (real US$ 2023 terms).Allkem has relied on
external spodumene concentrate price forecasts provided by Woodmac
for this feasibility study update. |
Economic |
- The inputs to the economic analysis to produce the net present
value (NPV) in the study, the source and confidence of these
economic inputs including estimated inflation, discount rate,
etc.
- NPV ranges and sensitivity to variations in the significant
assumptions and inputs.
|
An economic analysis of the project was carried out utilizing the
discounted cash flow (DCF) method. This approach draws on
comprehensive data and detailed assumptions pertaining to capital
and operating costs, which are elaborated upon in this report. The
costs encapsulate mining, processing, and other associated
infrastructure requirements. For the financial analysis, an
average life-of-mine spodumene concentrate price of US$2,022 was
calculated based on the WoodMac forecast, adjusted downwards to
US$1,921 to represent a 5.6% Li2O final product. For the
purpose of this analysis, an exchange rate of CAD 1.33 per US$ was
applied to convert specific cost estimates from US$ to Canadian
dollars. Importantly, no provisions were made to account for
inflation, and all monetary values were assessed on a constant 2023
CAD basis, reflecting the base currency utilized in this
evaluation. The assessment was carried out entirely on a
100% equity basis, and it should be noted that exploration costs
are considered outside of this particular project scope.
Consequently, any additional study costs related to the project
were omitted from the analysis. The Feasibility Study
demonstrates strong financial outcomes with a Post-tax NPV8% real
of US$1,687 million and IRR of 45.4%. The NPV of the project
is most sensitive to movements in the price of spodumene and
foreign exchange fluctuations, followed by operating costs and
development capital costs. |
Social |
- The status of agreements with key stakeholders and matters
leading to social licence to operate.
|
Allkem established a stakeholder consultation and engagement
process as part of its project acceptance activities, which allowed
GLCI to gather information, questions and expectations of local
communities and stakeholders. Mitigation measures were proposed
based on the consultation process.Allkem signed a Preliminary
Development Agreement (“PDA”) with the Cree Nation of Eastmain,
Grand Council of the Cree and Cree Nation Government dated on
March 15, 2019. This PDA is to be replaced by an Impact
Benefit Agreement (“IBA”), currently under negotiation, before
project construction.Meetings were organized with the Eastmain Cree
community to inform and consult stakeholders concerned by this
mining development. These meetings were primarily aimed at
socioeconomic stakeholders, RE1, RE2, RE3, VC33 and VC35 tallymen,
the users of the territory of these traplines, and members of the
Eastmain community. RE2 trapline is the most impacted. Meetings
were also organized with Waskaganish and Waswanipi where community
members, designated senior community officials and tallymen were
consulted. |
Other |
- To the extent relevant, the impact of the following on the
project and/or on the estimation and classification of the Ore
Reserves:
- Any identified material naturally occurring risks.
- The status of material legal agreements and marketing
arrangements.
- The status of governmental agreements and approvals critical to
the viability of the project, such as mineral tenement status, and
government and statutory approvals. There must be reasonable
grounds to expect that all necessary Government approvals will be
received within the timeframes anticipated in the Pre-Feasibility
or Feasibility study. Highlight and discuss the materiality of any
unresolved matter that is dependent on a third party on which
extraction of the reserve is contingent.
|
All mining claims are currently in good standing, and current
stakeholder engagement indicates no reasonable objections with the
Project. Allkem has not entered into any marketing
arrangements for the James Bay Project Allkem has received
federal authorisation for the Project. Allkem is now awaiting the
issuance of provincial authorisation by the Government of Québec,
as environmental and social impact assessments have been completed
and submitted and under review process by the COMEX. Once the key
approvals are obtained, there are a range of other approvals
required prior to commencing construction at James
Bay. |
Classification |
- The basis for the classification of the Ore Reserves into
varying confidence categories.
- Whether the result appropriately reflects the Competent
Person’s view of the deposit.
- The proportion of Probable Ore Reserves that have been derived
from Measured Mineral Resources (if any).
|
Only Probable Ore Reserve category has been determined for the
project.The Ore Reserve result reflects the Competent Persons view
of the deposit.All Probable Ore Reserves have been derived from
Indicated Category Mineral Resources. |
Audits or reviews |
- The results of any audits or reviews of Ore Reserve
estimates.
|
No external audits and reviews have been conducted on the Ore
Reserves, however SLR Consulting (Canada) Ltd. have comprehensive
internal quality control check procedures. |
Discussion of relative accuracy/ confidence |
- Where appropriate a statement of the relative accuracy and
confidence level in the Ore Reserve estimate using an approach or
procedure deemed appropriate by the Competent Person. For example,
the application of statistical or geostatistical procedures to
quantify the relative accuracy of the reserve within stated
confidence limits, or, if such an approach is not deemed
appropriate, a qualitative discussion of the factors which could
affect the relative accuracy and confidence of the estimate.
- The statement should specify whether it relates to global or
local estimates, and, if local, state the relevant tonnages, which
should be relevant to technical and economic evaluation.
Documentation should include assumptions made and the procedures
used.
- ·Accuracy and confidence discussions should extend to specific
discussions of any applied Modifying Factors that may have a
material impact on Ore Reserve viability, or for which there are
remaining areas of uncertainty at the current study stage.
- It is recognised that this may not be possible or appropriate
in all circumstances. These statements of relative accuracy and
confidence of the estimate should be compared with production data,
where available.
|
SLR is satisfied that the geological modelling honours the current
geological information and knowledge. The location of the samples
and the assay data are sufficiently reliable to support resource
evaluation.Sufficient modifying factors and economic considerations
have been applied to the indicated Mineral Resource to declare the
Probable Ore Reserve. These modifying factors have been adjusted
for inflationary pressure observed since the 2021 feasibility
study. |
Photos accompanying this announcement are available at
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