CORRECTION BY ACCESSWIRE: CoTec Announces Initial Mineral Resource and Positive Preliminary Economic Assessment for the Lac Jeannine Iron Tailings Project, Québec, Canada

Mining

The Project involves the extraction and reprocessing of the Lac Jeannine tailings based on an extraction rate of 7 Mtpa to produce on average 380 Ktpa of concentrate for just over 10 years. Based on the study to date, the concentrate is expected to be a premium grade product containing 66.8 % total Fe with very low concentrations of deleterious elements such as SiO₂, P and Al₂O₃.

It is anticipated that the rejects from the reprocessing of the tailings will be pumped back into the former Lac Jeannine mine open pit so that the natural topography can, as much as possible, be returned to its natural state.

Whilst the Inferred Resource is currently restricted to approximately 73 Mt of material it is recognized that there is additional material present outside of the drill tested area. This material is classified as an exploration target and is presented as a range of grade and tonnes in this PEA study. Any material which is classified as part of the exploration target is treated as waste and stockpiled for the purpose of the PEA and is not considered as payable material in the financial analysis.

The Project design is relatively simple as the tailings pile forms a dome shape with an aerial extent of approximately 1.8 x 1.6 km and an estimated depth of up to 70 m at the central highest point. The Inferred Mineral Resource is currently restricted to an aerial extent of approximately 1.1 km x 1.2 km with thickness of approximately 50 m to 60 m.

There is a natural gradation in grade from high to low in the tailings pile, which means that the Inferred Resource can be extracted level by level (top to bottom) to eventually form a saucer shaped depression with a depth of up to 60 m from the existing tailings high point and a resultant maximum pit depth of 45 m (Figure 2). Grade variation is observed in the Project schedule as a linear reduction from approximately 8.4% total Fe to 7.0 % total Fe in the first 3.5 years of production, grade further reducing to approximately 6.0% total Fe by year 8 and subsequently 5.6% total Fe in the final year reflecting the vertical variation seen in the Resource block model

Figure 2: Optimized Pit limits based on Inferred Resources

The maximum extents of the pit were determined through pit optimization of the block model. Each block was allocated an economic value based on the revenue and costs and all blocks with a positive value were sent for processing. The economic cut-off grade was found to be 3.3 % total Fe.

Given there is no surface waste covering (organic material or low grade) it is expected that 100% of the MRE within the optimized pit limit can be re-processed as the grade of the blocks are all above the economic cut-off grade. The average grade for the Inferred material was 6.7 % total Fe.

The proposed extraction method is based on the recovery of 3 m high benches with a hydraulic excavator that loads 40t haul trucks. The haul trucks will shuttle between a temporary stockpile (ROM pad) and material from the ROM pad is then fed into the plant feed bin by one or more FELs.

The average production rate of 7 Mtpa equates to approximately 1,000 to 1,250 tph based on an equipment utilization of 62%. This can be achieved with one excavator and 3 or 4 trucks, provided the haul distance to the ROM pad is kept short and there are a minimum number of delays. Having two FELs at the ROM pad provides flexibility to deal with operational delays and unplanned breakdowns with the second FEL acting as a backup loader at the face.

It is expected that the extraction operation can continue throughout the year and material handling issues can be minimized by the rapid turnover of the faces (i.e. prevents permafrost forming). Although the material can become compacted, it is generally relatively dry and self-draining by virtue of the dome shape of the deposit. The digging conditions are not expected to be challenging, but the high silica content will mean that it is highly abrasive.

The Company is expected to be run with a contract miner who may also take on the contract for hauling the concentrate to the rail head.

The mining contractor will be responsible for operation and servicing of all excavation equipment and will bring in their own office and workshop facilities.

For the purpose of the PEA, 1.2 Mt of material that is within the pit limit and is classified as exploration target is treated as waste and will be stockpiled near to the plant. If this material can be shown to be economic through sampling, then it will be processed along with the Inferred material. It was not, however, considered in the PEA as payable material.

It is also pragmatic to consider the impact on the Project schedule and waste disposal requirements should the exploration target material be converted to a Mineral Resource. Were this to happen the addition of the exploration target material is unlikely to significantly change the sequence of extraction from a top-down approach, while it will mean the pit can be taken to the extents of the deposit, and this eliminates the formation of the saucer shaped pit. This will have advantages in terms of slope stability and ease of rehabilitation of the whole of the tailings area. It may also offer potential for an extended period of higher-grade feed in the early years, on the assumption that the higher-grade material seen at the top of the Inferred Mineral Resource extends towards the edge of the tailings. It is envisaged that waste material from the processing facility will be disposed of in the old Lac Jeannine open pit. It is estimated there is adequate space present to accommodate processing waste material from both the Mineral Resource and exploration target material.

Processing

The proposed concentrator plant is based on both historical, and 2023/2024 test work and knowledge acquired in the processing of iron ore deposits in Eastern Canada.

The Project is designed to process Lac Jeannine tailings material grading at approximately 7.0% total Fe at a nominal feed rate of 875 tph. The process flowsheet enables the production of a 66.8% total Fe concentrate for an iron recovery of 51.6%, allowing a production of circa 380ktpa of concentrate.

The flowsheet includes proven technologies for processing iron ore such as spirals, hydraulic classifier, jigs, ball mill and high-rate thickener. Figure 3: Simplified process flow diagram outlines the proposed process.

Figure 3: Simplified process flow diagram

Infrastructure and Services

The Project is expected to benefit from access to renewable hydroelectric power, water, roads, airfield, existing rail and port facilities in a proven regional labour market in a mining friendly jurisdiction with a long history of supporting iron ore operations. The Project is located directly to the west of ArcelorMittal's existing and operational Mont-Wright rail loop infrastructure, with access to end markets via port and rail. Rail access for the Lac Jeannine Project is expected to consist of two segments. The first stage, uses an existing road following the previous Lac Jeannie rail spur, which will transport the concentrate from the Project site to the Cartier Railway/Lac Jeannine rail junction. The second stage would utilise the existing Cartier railway operated by ArcelorMittal, connecting Mont-Wright Mine to the seaport at Port-Cartier (Québec). Once unloaded, the high purity Fe concentrate will be stockpiled, then loaded onto vessels to supply global customers. The Project requires a negotiated agreement in due course with ArcelorMittal for the use the Cartier railway for transportation.

Capital Costs

Initial capital expenditure (CAPEX) costs for the Lac Jeannine Project are based on a ROM of 7Mtpa with a nominal production capacity of circa. 400ktpa of 66.8% total Fe concentrate. Capex costs are estimated at US$65M, including EPCM costs, future study costs and a 15% contingency.

Sustaining capital over the Project life is estimated at 1.5% of operating costs (excluding G&A) and closure cost is estimated at 5% of total capex, resulting in total life of mine CAPEX cost of US$71M.

Table 4: Capital Costs

Operating Costs

The operating costs include manpower to run the overall operations, contractor rates for extraction and sub-contracted maintenance teams, power and utilities, materials handling, transport of the concentrate from the Project site to the port and G&A.

Table 5: Operating costs

Economic Analysis and Sensitivity

Table 6: Economic Results

A sensitivity analysis was performed whereby initial infrastructure capital cost, annual operating costs and product selling price were individually varied between +/-15% to determine the impact on Project IRR and NPV at a 7.0 % discount rate.

Results are presented in Table 7, as well as graphically in Figure 4 and Figure 5. The project financials are most sensitive to the commodity selling price followed by operating costs and finally initial capital expenditures.

Table 7: Sensitivity Analysis (US$,000)