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PILOT PLANT METALLURGICAL TESTING COMPLETED ON _2017.pdf · PDF file magnetic and gravity separation, grinding, and bubble flotation. This provides significant operational cost savings

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  • EXPANDED CORPORATE FACT SHEET JUNE 15, 2017 SMY: TSX-V WWW.SEARCHMINERALS.CA

    TRANSFORMATIONAL ELEMENTS

    REEs are considered transformational because in small quantities they have a huge impact on the properties of the other materials they are blended with. For example they:

    • radically improve the strength, heat resistance and heat dissipation capabilities of metals and glass

    • can make magnets 40 times stronger • are used in glass to filter out harmful light frequencies • impact the color brightness of TV monitors, smart phones and tablets • are used in catalytic converters to reduce greenhouse gas emissions

    These remarkable properties underpin industry’s ability to miniaturize electronics and make certain REEs essential to development of permanent magnets and a variety of other components used in renewable energy, electric automobiles, defense systems, medical devices (such as MRI) and a wide range of consumer electronics.

    Search Minerals Inc. has been exploring for Rare Earth Elements (REEs) in SE Labrador since 2009 with considerable success. The FOXTROT Deposit on which a favourable Preliminary Economic Assessment (PEA) was completed in April 2016, was the first of what are now three important discoveries in a rapidly emerging Critical Rare Earth Element (CREE) District in SE Labrador. The other two major discoveries, Deep Fox and Fox Meadow, are similar in size and surface expression and hosted in the same geological sequences within the Fox Harbour Volcanic Belt. In February 2017, Search Minerals completed pilot plant metallurgical testing at SGS Laboratories in Lakefield, Ontario, Canada on material from the FOXTROT Deposit. This testing clearly demonstrated the ability to produce a high purity mixed rare earth oxide concentrate with uranium, thorium, zinc and iron impurities well below the maximum thresholds expected by refineries; a huge milestone for any rare earth element project.

    PILOT PLANT METALLURGICAL TESTING COMPLETED ON Southern Labrador Critical Rare Earth Element Deposit

    SIGNIFICANT EXPLORATION OPPORTUNITY

    These discoveries are the result of follow-up on twenty-three (23) original showings identified within a NW striking belt 70 km x 8 km that is controlled by Search Minerals. This work continues under the field supervision of Dr. Randy Miller, REE expert and V. P. Exploration. A significant exploration program has been developed for the 2017 field season which includes drilling the Deep Fox prospect.

    ABOUT THE NEW CRITICAL RARE EARTH ELEMENTS

    The new CREEs (their oxides termed by Adamas Intelligence of Sudbury, Ontario as “neo-CREOs”) include Neodymium (Nd), Praseodymium (Pr), Dysprosium (Dy), Terbium (Tb) and Lanthanum (La). This valuable subset of the full series of seventeen (17) REEs is considered critical due to high demand and/or constrained domestic supply. In its December 2016 Report, Adamas framed criticality in two dimensions: Importance to Clean Energy & Technology and Expected Surplus & Shortages. More specifically, the report referenced their use in permanent magnets found in wind turbines, electric vehicles and other clean energy technologies as the primary market driver.

    FOXTROT Project Location and Surrounding Showings Source: Adamas Intelligence, December 2016

  • The FOXTROT PROJECT The Fox Harbour volcanic belt, which hosts the FOXTROT Project and numerous other FOXTROT- like prospects, offers excellent geological control as the mineralized host rocks occur in a well- recognized steeply dipping volcanic sequence trending in a NW direction. In addition, the mineralization is associated with both magnetic and radiometric anomalies, further improving exploration and development control.

    The FOXTROT deposit has been delineated by over 70 drill holes, 20 channels, geological mapping and geophysics. The context of the mineralized zones is very well understood and the deposit is open at depth. In April 2016, independent consultants Roscoe Postle Associates Inc. (RPA) updated their Preliminary Economic Assessment (PEA) of the FOXTROT Project applying Search Minerals’ proprietary Direct Extraction Process. On that basis, Search is moving forward with the Environmental Assessment process with a view to mine development.

    PRELIMINARY ECONOMIC ASSESSMENT

    Revenue from FOXTROT is dominated by Nd (40%), Dy (30%), Pr (12%), Tb (8%); all elements projected to remain in supply deficit. The Life of Mine Plan outlined in the PEA indicates that 4.9 Mt of material containing an average of 1.17% Total Rare Earth Oxides (TREOs) could be mined over 14 years, including open pit mining for the first eight years and underground mining thereafter. Total production is projected to be 44,129 t of TREOs in a mixed rare earth precipitate. This equates to an annual production rate of 3,065 t/ year of TREOs which according to 2016 projections provided by independent consultants Adamas Intelligence, is equivalent to 1.5% of the forecasted demand of 198,131 tonnes in 2025. (Admas Scenario 2)

    FOXTROT RESOURCE ESTIMATE

    Classification Cut-off $NSR

    Tonnage (Tonnes)

    Dy (ppm)

    Dy2O3 (ppm)

    Nd (ppm)

    Nd2O3 (ppm)

    Pr (ppm)

    Pr6O11 (ppm)

    LREE %

    LREO %

    HREE %

    HREO %

    TREE %

    TREO %

    OPEN PIT

    INDICATED $165 4,129,000 177 203 1,393 1,625 372 449 0.69 0.83 0.17 0.2 0.86 1.03

    INFERRED $165 228,000 179 206 1,378 1,607 368 445 0.68 0.82 0.17 0.2 0.85 1.02

    UNDERGROUND

    INDICATED $260 3,263,000 209 240 1,602 1,868 429 518 0.78 0.94 0.19 0.23 0.97 1.17

    INFERRED $260 1,730,000 201 231 1,602 1,868 430 520 0.8 0.96 0.19 0.23 0.99 1.19

    TOTAL INDICATED 7,392,000 191 219 1,485 1,732 397 480 0.73 0.88 0.18 0.21 0.91 1.09

    TOTAL INFERRED 1,958,000 199 228 1,576 1,838 423 511 0.79 0.94 0.18 0.22 0.97 1.17

    Cautionary Statement: The preliminary economic assessment includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them to enable them to be categorized as mineral reserves and there is no certainty that the  preliminary economic assessment will be realized. Mineral resources that are not mineral reserves do not have a demonstrated economic viability.

    A COMPETITIVE PROPOSITION

    The fact that the FOXTROT Deposit is road accessible and in close proximity to a deep-water port, provides significant capital and operational cost advantages in comparison to other projects.

    Additionally, the Direct Extraction Process (Patent Pending) developed by Search Minerals’ Director and V. P. Metallurgy, Dr. David Dreisinger, provides the Company with additional operational cost advantages. This process requires less energy and utilizes fewer chemicals and fewer operational steps. Pilot plant testing which was completed in February 2017, exceeded recovery expectations.

    PRELIMINARY ECONOMIC ASSESSMENT KEY ASSUMPTIONS AND FINANCIAL HIGHLIGHTS

    $CDN Plant Capacity 1,000 tpd production rate (4.9 Mt over 14 years)

    Pre Tax NPV10% and IRR $93 million and 22%

    After Tax NPV10% and IRR $48 million and 16.7%

    Payback Period Pre-tax 3.5 years , After-tax 4.4 years

    Gross Revenue $1.713 billion (Life of Mine)

    CAPEX Requirement $152 million for startup including a $33M contingency $57 million for underground funded from operations $23 million for mine closure funded from operations

  • A SIMPLER, MORE ENVIRONMENTALLY FRIENDLY PROCESS

    Search Minerals’ Direct Extraction Process (patent pending) eliminates the need for certain stages of conventional processing: including magnetic and gravity separation, grinding, and bubble flotation. This provides significant operational cost savings and environmental advantages. It is also a key reason why capital costs are low. The need for a wet tailings pond is also eliminated in favour of dry stacking of waste residue. Again, this is less costly and more environmentally friendly. During the remediation phase, the dry residue is returned to the open pit.

    EXCELLENT PILOT PLANT TESTING RESULTS

    For any REE development the ultimate test is whether you can cost effectively produce high purity rare earth oxide concentrate for further refining. It is a challenge that can absorb millions of dollars and take many years to accomplish. In February 2017 Search Minerals achieved this milestone, demonstrating the ability to produce a ~99% pure oxide concentrate with low impurity content. The process was successful in bringing iron, zinc and other impurities well below levels accepted by refineries. Unlike some other deposits in the world, the Foxtrot Deposit has no challenges associated with the presence of high levels of radioactive material such as uranium and thorium. These impurities fell well below levels accepted by refineries.

    As well, the pilot plant enabled Search to further simplify its processing operation. Testing successfully demonstrated that less expensive sulfuric acid could be substituted for hydrochloric acid in the latter stages of the overall process, streamlining chemical requirements and reducing costs. The table below compares the recoveries from the January-February 2017 Pilot Plant Testing with those used in the April 2016 PEA for the Foxtrot Deposit. The elements referenced are the five neo-CREOs that Search estimates will comprise over 90% of the projected revenues from the Foxtrot Deposit.

    Assays Tonnage (000s)

    Dy (ppm)

    Nd (ppm)

    Pr (ppm)

    Tb (ppm)

    FOXTROT

    Indi

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