Drilling

Starting in May, Lomiko started on an infill and extension exploration drill program with the goal to upgrade inferred resources of the Electric Vehicle (EV) and Battery zones to the indicated category as well as to augment the size of the deposits, and build on the results of the positive Preliminary Economic Assessment (“PEA”) from July 2021.  The comprehensive drill program comprised 79 holes totaling 13,113 metres drilled; 53 of these, totaling 9,037 metres, were drilled in the EV Zone and 26 holes totaling 4,076 metres were drilled in the Battery Zone as shown in Figures 1 and 2 respectively.

Figure 1 – EV Drill Zone Map

Graphite was also discovered in marbles and to the certain extent in quartzites. EV Zone still remains open at the south-east and north east end.

Figure 2 – Battery Drill Zone Map

Based on the drill results it is evident that Battery Zone remains open to the south and at the depth. The drilling was supervised by Québec-based, independent geological consultant Breakaway Exploration Management Inc. and was operated under UR ECOLOGO requirements and compliance protocols.

For all of our latest updates please refer to the investor presentation.

Lomiko completed metallurgical testing to the preliminary feasibility study (PFS) level with independent laboratory SGS Lakefield (SGS). SGS had previously carried out all metallurgical testing required to support the PEA. The scope of the work included comminution, process optimization, and variability flotation testing. The samples submitted for metallurgical testing were selected for the EV Zone by InnovExplo Inc. Consultants (InnovExplo) from Val-d’Or, Quebec.

The program comprised comminution on twelve composites and flotation testing on one Master composite and twelve variability composites. A total of 224 kg of the EV Master composite and variability composited were processed in the various flotation tests. The comminution tests suggest that the La Loutre mineralization is generally very soft with low to medium abrasivity. This will translate into favourable grinding energy requirements and reasonable wear rates of crusher and mill wear items such as liners, lifters, and grinding media.

The process optimization program confirmed the flowsheet and conditions that were developed using a much more spatially limited sample during the PEA metallurgical program. The final flowsheet and conditions were developed from first principles without consideration of the results of the previous program. The final concentrate of a Lock Cycle Test (“LCT”) graded 98.6% C(t) with a closed-circuit total carbon recovery of 94.7%. These are considered excellent results that mimic the operating environment.

The resilience of the flowsheet was confirmed with the twelve variability composites, which included mine plan, domain, and grade composites. The minimum and maximum concentrate grades ranged were 95.2% C(t) and 99.7% C(t), respectively, and the average grade was 97.9% C(t). As expected, the open circuit recoveries were lower at 78.0 to 92.6% and averaged 87.2%. Some of the open circuit graphite losses were also associated with a coarser primary grind size of up to P80=424 microns instead of the target grind size of P80 = 200 microns.

A bulk flotation test, which employed larger equipment, non-optimized conditions and different composites, produced results that almost mirrored the data obtained in the LCT using optimized conditions and the EV Master composite (96.9% C(t) at 93.7% C(t) recovery). The results of the PEA and PFS level flotation programs confirmed the robustness of the proposed flowsheet.

The testing cycle started in the summer of 2022 with 640 kg of drill core provided from the existing core storage. These core samples originated from both the Battery and EV zones of the La Loutre deposit and are considered representative.

The first study (“The ProGraphite Characterization Study”) was performed on flotation concentrate that was produced at SGS Lakefield from the 640kg core samples. Various pre-feasibility (“PFS”) level metallurgical tests and a study were completed, including optimization of the flotation circuit, resulting in achieving 94.7% recovery and reconciled LCT (Locked Cycle Testing) testing grades at 99.1%Cg. For detailed results, please see the press release dated February 6, 2023. The work was directed by Metpro Management Inc.

In the second study, “The ProGraphite SPG Study”, testing was completed on a 10.5 kg bulk flotation sample prepared by SGS Canada Inc. ProGraphite, Germany, used this sample for micronization, spheroidization, and purification testing to produce spheroidized and purified graphite (SPG), which is the material required for the anode in Electric Vehicles (EVs). All physical characterization tests produced very good results, such as narrow particle size distribution range and high tap density and met the target values for Electric Vehicle and other lithium-ion based battery applications. Two purification methods were investigated on the La Loutre SPG, namely alkaline and acid purification. A total of 100 g of the SPG20 spherical graphite was subjected to intensive alkaline purification. For detailed results, please see the press release dated May 3, 2023.

The micronized and spheronized graphite was then purified and carbon coated by Corem to produce 160g each of coated spherical graphite cSPG16 & cSPG20 for the Polaris Study.

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The updated MRE for the La Loutre Project used all available validated data, and includes results incorporated into the resource model from the 2014 to 2022 drilling programs for a total of 28,243 metres in 190 diamond drill holes. Drill holes are variably spaced from 30 to 100 metres apart in the core resource area. The deposits were modelled using Leapfrog software to create domains using lithology, structure and alteration type (or assemblage) and intensity, with graphite grade continuity analysis of each domain. The mineralized domain model consists of two main graphite-bearing domains that include five high grade envelopes. The high and low grades envelopes were used to better guide interpolation process using dynamic anisotropy to adjust the search ellipsoids to fit each domain’s mean orientation (azimuth and dip).

The estimate was prepared using a block model approach (5.0 x 5.0 x 5.0 metres block dimensions with sub-blocking down to 2.5 metres) employing inverse distance squared (“ID²”) interpolation constrained by 3D wireframes using hard domain boundaries. A Whittle Mine Planning Software was run on the block model to constrain the resource and to support the CIM requirement that Mineral Resources have “reasonable prospects for eventual economic extraction”. Pit slopes in rock were assumed at 45° and at 30° in overburden and the mineral resource estimate assumes a long-term price of US$1,098.07 per tonne of graphite. Graphite recoveries are assumed at 94.7% as indicated by metallurgical test work completed to date. Only mineralization contained within the optimized pit shell has been included in the resource estimate. The resource estimate was completed by InnovExplo with an effective date of March 31st, 2023 and is reported at a 1.50%Cg cut-off grade.

During the final validation and completion of the Technical Report, adjustments were made to the mineral resource estimate statement disclosed in the April 13, 2023, news release and therefore the mineral resource tonnage in all categories has been amended. The adjustments now show an increase of 184% versus the previously published increase of 195% in tonnage for the Indicated Mineral Resource Category. See the news release dated April 13, 2023 entitled “Lomiko announces Updated Mineral Resource Estimate for La Loutre Natural Flake Graphite Property in Southern Quebec Achieving 195% Increase in Tonnage in the Indicated Mineral Resource Category”) which summarized certain key results, assumptions and estimates contained in the Technical Report filed on SEDAR. The adjustments also contributed to increasing the overall grade from 4.50% to 4.59% which removed lower grade material from all categories. Mineral resources adjustments are presented in Table 1 for the updated 2023 MRE statement which was filed.

Table 1. Mineral Resource Estimate Statement of the La Loutre Property

Notes to accompany the Mineral Resource Estimate:
1. The independent and qualified persons for the mineral resource estimate, as defined by NI 43 101, are Marina Iund, P.Geo. (InnovExplo Inc.), Martin Perron, P.Eng. (InnovExplo Inc.)., Simon Boudreau, P.Eng. (InnovExplo Inc.). and Pierre Roy, P.Eng. (Soutex Inc.). The effective date of the estimate is May 11, 2023.
2. These mineral resources are not mineral reserves as they do not have demonstrated economic viability. The mineral resource estimate follows current CIM Definitions (2014) and CIM MRMR Best Practice Guidelines (2019).
3. The results are presented undiluted and are considered to have reasonable prospects of economic viability.
4. The estimate encompasses two mineralized domains (EV and Battery) using the grade of the adjacent material when assayed or a value of zero when not assayed.
5. No capping was applied on 1.5m composites.
6. The estimate was completed using sub-block model in Leapfrog Edge 2022 with user block size of 5m x 5m x 5m and minimum block size of 2.5m x 2.5m x 2.5m. Grades interpolation was obtained by ID2 using hard boundaries.
7. Bulk density values were applied by lithology (g/cm3): mineralized domain = 2.82; paragneiss = 2.8; quartzite = 2.73; pegmatite = 2.63, marble = 2.75 and OB = 2.0.
8. The mineral resource estimate is classified as indicated and inferred. The Indicated mineral resource category is defined with a minimum of three (3) drill holes in areas where the drill spacing is less than 55 m, and reasonable geological and grade continuity have been demonstrated. The Inferred category is defined with a minimum of two (2) drill holes in areas where the drill spacing is less than 100m, and reasonable geological and grade continuity have been demonstrated. Clipping boundaries were used for classification based on those criteria.
9. The mineral resource estimate is pit-constrained with a bedrock slope angle of 50° and an overburden slope angle of 30°. It is reported at a graphite cut-off grade of 1.5%. The cut-off grade was calculated using the following parameters: processing cost = C$13.04; product transporting cost = C$41.16; mining cost (rock) = C$3.70; mining cost (OB) = C$2.90; graphite price = US$1,098.07 /tonne of graphite; USD:CAD exchange rate = 1.32; graphite recovery to concentrate product = 94.7%. The cut-off grade should be re-evaluated in light of future prevailing market conditions (metal prices, exchange rates, mining costs etc.).
10. The number of metric tons was rounded to the nearest thousand, following the recommendations in NI 43 101 and any discrepancies in the totals are due to rounding effects.
11. The authors are not aware of any known environmental, permitting, legal, title-related, taxation, socio-political, or marketing issues, or any other relevant issue not reported in the Technical Report, that could materially affect the Mineral Resource Estimate.

The mine plan includes 21.9 Mt of mill feed and 88.4 Mt of waste over the 14.7-year project life. Mine planning is based on conventional open pit methods suited for the project location and local site requirements. Owner-operated and managed open pit operations are anticipated to begin prior to mill start up, running for 14.7 years to pit exhaustion, with feed from the low-grade stockpile supplementing plant feed over the last two years.

The subset of Mineral Resources contained within the designed open pits, summarized in Table below with a 2.5% Cg cut-off, forms the basis of the mine plan and production schedule. La Loutre deposit comprises the Battery (B) zone and the Electric Vehicle (EV) zone. The B zone is planned as two pits, and the EV zone is split into two pits EV North (EVN) and EV South (EVS) with the EVN pit split into two phases. Pit designs are based on 45 degree overall configured on 6 metre bench heights, with 7.8-metre-wide berms placed every two benches with 70 degree face angles.

*Overburden is 2-3m of broken and weathered rock overlaying more competent material.

Pit figures:

The La Loutre Process Plant employs standard flotation technology to produce a graphite concentrate. The plant includes crushing, grinding, classification, flotation, tailings thickening and filtration, graphite concentrate filtration, drying and screening and separation into the product sizes. Graphite concentrate is loaded into 1 tonne bags for shipment and sale.

The plant is expected to treat 1.5 Mt of feed per year at an average throughput of 4,100 t/d. The mill design availability is 8,147 hours per year or 93%, with an operating throughput of 184 t/h.

The plant has been designed to realize an average recovery of 93.5% of the graphite at a concentrate grade of 95% Cg over the life of the project based on metallurgical test work completed by SGS Lakefield in 2021. Graphite product split is estimated to be 32% plus 80 mesh (177 microns) and 68% less than 80 mesh (177 microns).

Mill tailings storage capacity has been identified to safely accommodate the life of mine production as described in this PEA. Mill tailings produced will be comingled or co-disposed with 50% of the mine waste rock in the central and southern portion and the balance of the waste rock will be stored predominantly in the northern section until after Year 9 of the operation in a co-disposal facility constructed northwest of the process plant.

The Co-Disposal Storage Facility perimeter containment berms will be constructed with waste rock from open pit mine development and will utilize downstream construction method to ensure safe tailings storage over the long-term. Run-off water and seepage from the Co-Disposal Storage Facility will be collected in an adjacent Water Management Ponds. Tailings production after Year 9 will be placed in the mined out EVN pit.