FIRST TRANSFORMATION

Lac Guéret Graphite Project

Mason Graphite’s 100% owned Lac Guéret property is located in northeastern Quebec, about 285 km north of the main service centre of Baie-Comeau and about 660 km from Montreal.

IDEAL LOCATION AND ACCESS

Mason Graphite’s Lac Guéret property is located in Quebec, one of the world’s most attractive jurisdictions for mineral exploration and development. It also falls within the “Plan Nord” territory in northeastern Quebec, which is an economic development strategy launched by the Government of Quebec in May 2011 to help the progression of Quebec mining projects located north of the 49th parallel1.

The Lac Guéret project consists of 215 claims covering 11,630 ha (116 km) and is easily accessible year-round by main logging roads via highway 389.

FEASIBILITY STUDY RESULTS

The Feasibility Study was prepared in partnership with several Quebec-based engineering firms:

  • GoldMinds Geoservices: Mineral Resource estimate;
  • Soutex: Process development; and
  • BBA: Mineral Reserves, Mining, Environnement, Economic Sections, etc.

Feasibility Study Highlights

Update Published December 5, 2018

NPV at 8% discount rate: Pre-Tax $484M; Post-Tax $278M

Internal Rate of Return (IRR): Pre-Tax 27.7%; Post-Tax 21.7%

Payback Period: Pre-Tax 3.7 years; Post-Tax 4.4 years

Avg. production cost of graphite concentrate: $484/tonne

Weighted avg. selling price (1) (in USD $1,465 (2)): $1,933/tonne

CAPEX: $258.2M

Avg. annual graphite concentrate production: 51,900 tonnes

Projected construction period: 13-16 months

*Unless otherwise noted, all monetary figures related to the Feasibility Study are expressed in Canadian dollars.  
(1) FCA Baie-Comeau: Free Carrier Incoterms – Seller is responsible for the delivery to the custody of buyer’s carrier. 
(2) Foreign exchange rate $0.77 USD = $1.00 CAD 

Operational Highlights

Project life of 25 years

4.7 million tonnes of ore processed at average project life grade of 27.8% Cg

Process designed for standard purity of 96% Cg in coarse products, capable of reaching up to 97.5% Cg in the same size fractions

Waste to ore stripping ratio of 0.8:1

Mineral Reserves of 4.7M tonnes grading 27.8% Cg and “in-Pit” Minerals Resources beyond the Project Life of 25 years of 58.1M tonnes grading 16.3% Cg

§ The Mineral Reserves are the basis of the 25 years Mine Life of the Feasibility Study published in Sept 2015 (updated on December 5, 2018) and are not included in the “in-pit” Measured and indicated Mineral Resources of 58.0 Mt grading 16.3% Cg (which have an equivalent drilling definition). The mineral Reserves and the “in-pit” Mineral Resources are included in the total Measured and Indicated Mineral Resources of 65.5 Mt grading 17.2% Cg (19.0 Mt of Measured Resources grading 17.9% Cg and 46.5 Mt of Indicated Resources grading 16.9% Cg) that were reported in the Company’s press release dated December 5, 2018. The reference point for the Mineral Reserves Estimate is the mill feed. Mineral resources, which are not mineral reserves, do not have demonstrated economic viability and were not included in the mine life or the economics of the feasibility study. Environmental, permitting, legal, title, taxation, sociopolitical, marketing, or other relevant issues may materially affect the estimate of Mineral Resources. The same issues would need to be considered when conducting an eventual economic evaluation in order to classify the In-Pit Mineral Resources as Mineral Reserves. In addition, there can be no assurance that Mineral Resources in a lower category may be converted to a higher category, or that Mineral Resources may be converted to Mineral Reserves.

MINERAL RESERVES AND ''IN-PIT'' MINERAL RESSOURCES BEYOND THE PROJECT LIFE OF 25 YEARS

The Feasibility Study presented a project life of 25 years using the Mineral Reserves of 4.7 million tonnes. But the pit optimization study looked at a much longer mine life where the “IN-PIT Mineral Resources Beyond Project Life of 25 years” of 58.0 million tonnes grading 16.3% could be used for an eventual extension of activity. No further drilling would be necessary in order to reclassify these IN-PIT Mineral Resources as Mineral Reserves in an eventual economic evaluation but there can be no assurance that they may be converted. The same pit optimization study was able to determine the best location for the initial 25 years of project life providing a high head grade and a low waste to ore stripping ratio.

Mineral Reserves

Project Life – First 25 years

Ore category

Tons

Grade (% Cg)

Graphite In-Situ (t)

Proven

2,003,000

25.1

502,000

Probable

2,738,000

29.8

815,000

Proven and Probable

4,741,000

27.8

1,317,000

6% cut-off grade

In-Pit Mineral Resources

Beyond Project Life of 25 years

Resources type

Tons

Grade (% Cg)

Graphite In-Situ (t)

Measured

19,021,000

17.9

3,404,000

Indicated

46,519,000

16.9

7,862,000

Measured and Indicated

65,540,000

17.2

11,266,000

Inferred

17,613,000

17.3

3,404,000

Cut-off grade of 5.75% Cg

 

The Mineral Reserves are the basis of the 25 years Mine Life of the Feasibility Study published in Sept 2015 (updated on December 5, 2018) and are not included in the “in-pit” Measured and indicated Mineral Resources of 58.0 Mt grading 16.3% Cg (which have an equivalent drilling definition). The mineral Reserves and the “in-pit” Mineral Resources are included in the total Measured and Indicated Mineral Resources of 65.5 Mt grading 17.2% Cg (19.0 Mt of Measured Resources grading 17.9% Cg and 46.5 Mt of Indicated Resources grading 16.9% Cg) that were reported in the Company’s press release dated December 5, 2018. The reference point for the Mineral Reserves Estimate is the mill feed. Mineral resources, which are not mineral reserves, do not have demonstrated economic viability and were not included in the mine life or the economics of the feasibility study. Environmental, permitting, legal, title, taxation, sociopolitical, marketing, or other relevant issues may materially affect the estimate of Mineral Resources. The same issues would need to be considered when conducting an eventual economic evaluation in order to classify the In-Pit Mineral Resources as Mineral Reserves. In addition, there can be no assurance that Mineral Resources in a lower category may be converted to a higher category, or that Mineral Resources may be converted to Mineral Reserves. 

EXPLORATION AND GEOLOGY

To date, Mason Graphite has identified two graphite zones on its Lac Guéret property: the GC Zone and the GR Zone.

GC Zone

Graphite mineralization in the GC zone has been mapped on strike up to 1.2 km and at width up to 400 m. This zone has excellent mineral resource growth potential as the mineralization remains open at depth.

GR Zone

Graphite mineralization in the GR zone has been identified on an area of up to 1 km and up to 110 m wide. 

ACQUISITION TERMS WITH CLIFFS RESSOURCES

US$14,000,000 total acquisition cost for 100% of the project

 

  • US$7,500,000 payment completed in 2012

  • US$2,500,000 payment completed in 2015

  • US$4,000,000 payment completed in 2017

No remaining legacy interest exists; no royalties.

Summary

Development of a world class graphite deposit

The project involves developing the Lac Guéret graphite deposit, located approximately 285 kilometers north of Baie-Comeau, one of the highest grade deposits in the world.

Including the development of an open-pit mine and the establishment of a processing plant in the industrial park Jean-Noël-Tessier in Baie-Comeau, the project will generate approximately 100 direct jobs in the operating phase. 

With a capacity of approximately 52,000 tonnes of concentrate per year, the project has an estimated initial production life of more than 25 years, after which only 7% of the estimated total resources will have been extracted. Currently, only one graphite mine is active in North America. 

Keys to success

Market

Graphite is a much sought after and essential product. Its demand and consumption are growing due to its unique properties and its many different applications.

Deposit

Located at surface, the ore of Lac Guéret has an exceptionally high purity. Studies have demonstrated a long life of the deposit and excellent economic profitability.

Competence

The project management team is experienced and has extensive experience in graphite production, R&D and sales. It has an excellent history of achievements both in Quebec and abroad in the targeted field of graphite.

Location

The territory is very conducive to mining; accessible at all times and close to major mining service centers.