MOBLAN LITHIUM PROJECT FEASIBILITY STUDY: POSITIVE RESULTS DELIVER C$2.2B NPV

• Annual production rate of 300ktpa spodumene concentrate over 21-year Life of Mine (“LOM”) via open pit mining at rate of 1.8Mtpa, based on Mineral Reserve estimate of 34.5Mt at grade of 1.36% Li₂O
• Process plant feed rate at 4,800 tonnes per day (tpd); average LOM recovery of 74.7%; spodumene concentrate grade at 6% Li₂O
• Post-tax NPV_(8%) of C$2.2 billion; net cash flow of C$6.0 billion from LOM net revenues of C$14.4 billion; post-tax IRR of 34.4% and payback of 2.3 years
• Cost competitive operating unit cost of C$555/t and all-in sustaining costs of C$748/t
• Low-risk operation to form centrepiece of Sayona’s emerging northern lithium hub in Québec’s Eeyou Istchee James Bay territory

MONTREAL, Feb. 19, 2024 /CNW/ – North American lithium producer Sayona Mining Limited (“Sayona”) SYA SYAXF announced today a feasibility study (FS) that demonstrates the value of its Moblan Lithium Project, forming the centrepiece of the Company’s Eeyou Istchee James Bay Hub in northern Québec, Canada. Moblan is owned 60% by Sayona and 40% by Investissement Québec.

The Project has an estimated post-tax NPV_(8%) of C$2.2 billion. The operation is expected to generate estimated total net revenue of C$14.4 billion over its 21.1 LOM, with an EBITDA of C$11.2 billion.

These positive financial returns have been driven by an estimated head grade of 1.36% Li₂O, a LOM recovery rate of 74.7% and LOM average annual concentrate production of 300,000tpa at a grade of 6% Li₂O.

Moblan is a greenfield project situated in the Eeyou Istchee James Bay territory in north-western Québec, Canada. It is located within just 300 metres of the Route du Nord, a regional highway which is accessible year-round, providing access to railway lines that link with major ports in Eastern Canada.

The Project’s key production parameters include a relatively low strip ratio of 2.3:1 (ore versus waste), expected product grade of 6% Li₂O, and an estimated operating unit cost outlined in the FS are comparable with some of the most cost competitive international hard-rock lithium mines currently in production, supporting an extremely robust future for Moblan. Upon receipt of the necessary regulatory approvals, delivery of an appropriate financing package based on securing potential offtake and project partners, the Project is expected to require approximately two years to complete construction.

Sayona’s Interim CEO, James Brown commented:

“We are delighted by the results of this FS, which demonstrate that the Moblan Lithium Project is an incredibly strategic and valuable asset for Sayona, representing one of the single largest hard rock lithium resources in North America.

Forming the centrepiece of our northern lithium hub, Moblan has an extremely bright future supplying Québec-produced lithium derivatives into the expanding North American battery and EV sector.

Moblan has an amenable ore body that will deliver product from an integrated process of both dense medium separation (DMS) and floatation circuits supported by ore sorting technology. The offset of delivering such high recoveries is an increase in capital intensity relative to simpler DMS plants. The high expected product recovery will benefit project economics and extend the life of mine.

The challenging market conditions of recent months highlight the importance of developing Tier 1 lithium projects that are strategically located near existing transport corridors and end markets and that have the potential to deliver high grade lithium concentrate at industry-low and competitive operating costs. Moblan is an exceptional project that meets these criteria and we look forward to applying Sayona’s extensive operational expertise to minimise costs and develop the Project as efficiently as possible.

We are confident that the current lithium market will recover over the medium term and enable Moblan to benefit from the long-term industry fundamentals to become a profitable long-lasting operation for the benefit of all stakeholders.

Sayona will now look to review the timelines given the current market conditions, and continue to advance the necessary regulatory approvals, seek community support and secure the necessary financing and project partners capable of advancing this Project through to successful production, with the ultimate ambition to integrate Moblan into a regional supply chain for battery materials in Québec.”

The FS demonstrates a financially and technically viable operation based on estimated NI 43-101 Probable Mineral Reserves of 34.5Mt at 1.36% Li₂O to deliver average annual production of 1.8Mtpa. The financial analysis demonstrates an estimated pre-tax NPV_(8%) of C$3.9 billion and a pre-tax IRR of 47.4%, based on a 21.1 year LOM. The estimated post-tax NPV_(8%) is C$2.2 billion and a post-tax IRR of 34.4%, with a post-tax payback period of 2.3 years based on LOM net cash flows of C$6.0 billion. There are no Proven Mineral Reserves.

Analysis of the financial model on the key economic assumptions indicates that the Project is robust in terms of operating costs and capex. The Project is most sensitive to changes in commodity prices, exchange rates, product grades and recoveries.

The Project demonstrates robust operational and financial metrics, with the key Project assumptions and outputs shown in the tables below:

Table 1 – Main financial assumptions and results summary for the Moblan Project

The Moblan Lithium Project (“Moblan” or “the Project”) is a greenfield project located 130 km to the north of the township of Chibougamau with access via the Route du Nord. The Moblan Project comprises 20 claims covering 433 ha or 4.3 km² and is held by Sayona Nord (60%) and Investissement Québec (40%).

The Project is host to lithium mineralised pegmatite. Individual dykes have been documented and modelled comprising the Main Zone, South Zone, Inter Zone and Moleon domain.

The FS assessed several strategic development options and determined an economic open pit mine operation, production schedule and site layout as the preferred option. The FS has been completed with an overall accuracy of ±15% to 20%.

The FS has been completed by an independent Canadian consulting firm, InnovExplo Inc., in collaboration with AtkinsRéalis (formerly SNC-Lavalin), Primero Group Americas, SLR Consulting, G Mining Services Inc. and Richelieu Hydrogéologie Inc.

Mining is via open pit using a conventional fleet of excavators and trucks. The final design comprises two pits with the Moleon pit encompassing the Moleon domain, and the Main pit encompassing the Main, Inter and South domains.

A detailed dilution model has been developed using linear dilution of 0.50 m and a minimum mining width of 4.00 m. Mining dilution is 5.8% with a mining recovery of 87.6%. The average Fe grade for the LOM is 1.03%.

The Moblan processing facility is designed to produce a 6.0% Li₂O spodumene concentrate from an ore grade of 1.36% Li₂O (diluted), with an average iron oxide (Fe₂O₃) content of 1.47%. The spodumene concentrate will be produced via processing through DMS and flotation circuits.

The mine plan involves the excavation of 34.5 million tonnes (“Mt”) of ore grading at an average of 1.36% Li₂O. The mill is designed to process 1.8 Mt of ore per annum to produce an annual average of 300,000 tonnes of spodumene concentrate at 6% Li₂O. Over LOM, the planned open pit will excavate 75.4 Mt of waste rock and 4.1 Mt of overburden. The total calculated stripping ratio is 2.3 tonnes of waste and overburden per tonne of ore.

A metallurgical cut-off grade (COG) of 0.60% Li₂O has been used. It should be noted that the iron content can have an impact on metallurgical recoveries and the quality of the spodumene concentrate. Ore shapes containing more than 2.80% Fe have been excluded from the Mineral Reserves Estimate.

The Moblan Lithium Project properties (the “Properties”) are situated in the Eeyou Istchee James Bay territory in north-western Québec, Canada. (Figure 1).

The Project is located 130 km from Chibougamau via a year-round accessible road, named ‘Route du Nord’. Access to site is easily obtained via a 300-metre access off the main road.

Chibougamau is the largest community in the James Bay area. Chibougamau and Chapais (located approximately 45 km drive west of Chibougamau) are former copper and gold mining centres with a combined municipal population of about 10,000 residents, providing all related municipal infrastructure and services.

Aside from provincial roads connecting Chibougamau to all major cities, the railway hub located in Chibougamau offers links with major ports of Eastern Canada, including Montreal and Québec City ports. Chibougamau is also serviced regularly by commercial airlines from Montreal and Québec City.

Access to clean and reliable hydroelectricity is provided via Hydro-Québec. A connection to the existing 161kV electrical line will be made 42 km from the Moblan site.

Moblan comprises 20 claims covering 433 ha or 4.3 km² held by Sayona (60%) and Investissement Québec (40%) (Table 2 and Figure 2). The interest in the 20 claims was transferred from SOQUEM to Investissement Québec pursuant to the “Moblan joint venture agreement deed of assignment” dated December 31, 2023. InnovExplo verified the status of all mining titles using GESTIM, the Government of Québec’s online claim management system (gestim.mines.gouv.qc.ca). All claims were in good standing as of December 2023. At the time of verification by InnovExplo, the transfer of the 20 claims from SOQUEM to Investissement Québec had not yet been registered in GESTIM.

Table 2 – Summary of the Moblan Project mining titles

The Property is located in the Frotet-Evans greenstone belt (‘FEGB’), which forms part of the Archean Superior Province. The geology of the Moblan Property is dominated by a large north-east trending gabbro, bordered to the north-west by mafic volcanics and lesser sedimentary rocks. The Archean bedrock is locally covered by glacial tills which typically do not exceed 3 to 4 metres in thickness.

The gabbro is the main host rock for lithium bearing pegmatite mineralisation. The pegmatites are of the albite – spodumene class of LCT (lithium-cesium-tantalum) pegmatites. Four pegmatite clusters are recognised, forming a series of stacked pegmatite dykes of variable thicknesses. These are displayed in Figure 3 below.

The Moblan 2023 Mineral Resource Estimate (MRE) covers an area of 2,500 m strike length and 900 m width, extending to a depth of 350 m below surface. The mineralisation model consists of 21 lithium pegmatite dykes modelled as the Main dykes, 20 as the South dykes, 17 as the Inter domain and 17 as the Moleon dykes. The MRE is based on diamond drill holes drilled between 2002 and 2022 and trenches sampled between 2004 and 2009. The database includes assay data from 366 surface drill holes and 10 surface trenches with a close-out date of January 18^th, 2023.

Table 3 – Moblan Lithium Project – 2023 Mineral Resource Estimate

The Mineral Reserves have been classified according to the category of the underlying mineral resources and the status of the modifying factors. Probable Mineral Reserves are based upon Indicated and Measured mineral resources. The confidence level in the modifying factors (mid-term planning, planned dilution and %Fe grade) is not considered sufficient to classify any of the Measured mineral resources as Proven Mineral Reserves.

Table 4 – Moblan Lithium Project – Mineral Reserves Estimate

The Project will be mined by open pit methods using a conventional excavator and truck fleet. The final design comprises two open pits. The Moleon Pit encompasses the Moleon domain, and the Main Pit encompasses the Main, Inter and South domains.

Pit designs are derived from optimisation pit shells obtained with Dassault System’ GEOVIA Whittle software using the Lerchs-Grossman algorithm. A revenue factor of 0.59 pit shell was retained for the final design from an optimisation using 49 revenue factors. Phase 1 of the Main and South pits, which later merge into a single pit (the Main Pit), is based on a revenue factor of 0.41.

Pit shell optimisation parameters were obtained from the following parameters:

• 6% spodumene concentrate price of US$1,050
• 2% royalty on sales
• 0.76 CAD/USD exchange rate
• Processing cost of $35.00/t
• Rehandling cost of $0.90/t
• Tailings management cost of $0.80/t
• G&A costs of $12.35/t
• Concentrate transportation cost of $157.90/t of concentrate
• Process recovery of 75%
• Overburden removal cost of $3.94/t
• Waste mining cost of $5.25/t
• Ore mining cost of $5.50/t
• Mine recovery of 90%
• Dilution of 10%
• Overall overburden slope angle of 20°
• Overall rock slope angle of 55°

The calculated economic marginal cut-off grade is lower than the operational cut-off grade of 0.6% Li₂O which was estimated based on metallurgical process parameters and limitations and which was retained for the purpose of the optimisation.

The Main, Inter and South geological zones merge into a single final Mine design named Main Pit. The Moleon Zone will require a separate pit design and access.

The optimal depth of the Main Pit from the highest topographic point mined is 200 m. The optimal depth of the Moleon Pit is 130 m. Final designs are based on the optimised pit shells. Pit design is based on geotechnical, geomechanical, and hydrogeological studies combined with considerations and mine fleet equipment. Selected parameters are presented in Table 5.

Table 5 – Mine design parameters

Figure 4 presents the Main Pit and Figure 5 presents the Moleon pit.

Ore shapes were defined using Deswik Stope Optimiser (“DSO”). As part of the metallurgical process considerations, DSO ore shapes with more than 2.8% Fe were excluded from the reserves to maintain an Fe grade of 1.03% over the LOM. Final Ore Shapes are displayed below as Figure 6 and Figure 7.

The owner operated production fleet consists of three 7 m³ backhoes, six 92 t mine trucks, and three 100 mm to 152 mm drills with remote capabilities.

The LOM plan was evaluated to optimise process feed with the ore shapes discussed above. An optimised mining schedule was prepared with Dassault System Minesched Software.

A total of 114.1 Mt will be mined from the pits over a 21.1-year LOM, including 4.1 Mt of overburden, 75.4 Mt of waste rock and 34.5 Mt of ore at a grade of 1.36% Li₂O. The total calculated stripping ratio (‘SR’) is 2.3. The total tonnage distribution by phase is presented in Table 6.

Table 6 – Mining quantities by pit and phase

The LOM is composed of 13 months of preproduction within the 39 months construction period starting in March 2026 followed by a 19-year production period starting in April 2027. LOM ends in 2047. Mining tonnages and the mining sequence are presented in Figure 8, and the material sequence and stripping ratio are presented in Figure 9.

The Moblan concentrator ore feed will be blended from the ROM and low-grade stockpile to control Li₂O grade and Fe contamination. Head feed is optimised to obtain an average grade of 1.45% Li₂O over the first 10 years of the LOM. Figure 10 presents yearly head feed tonnage and grade over the LOM. LOM is optimised to maximise concentrate production in the first 10 years of the Project. Figure 11 presents yearly concentrate production and metallurgical recovery over the LOM.

The Moblan processing facility has been designed to process a nominal 1.8 Mtpa with a 74.7% Li₂O recovery, with a DMS and flotation plant availability of 85%. The circuit will produce a nominal 144 ktpa of DMS concentrate and 142 ktpa of flotation concentrate, with a target product grade of 6.0% Li₂O.

Over the 20 years of production, targets equate to a nominal 300 ktpa of concentrate.

Metallurgical recovery assumptions are based on historical metallurgical tests and test work completed during 2022-2023, under the supervision of independent QPs and Sayona representatives.

The deposit was drilled extensively, from which over 300 pegmatites samples totalling over 4 tonnes were used to generate 14 composites ranging in grade from 0.70% to 1.73% Li₂O and 0.74% to 1.41% Fe₂O₃, which straddles the mine grade material for Li₂O and Fe₂O₃. The iron content can have an impact on metallurgical recovery and the quality of the spodumene concentrate.

The average Fe grade for the LOM is 1.03% Fe. Test programs provided the data required to establish optimal crush size, comminution parameters, DMS separation, magnetic separation and impact of dilution/feed grade among other parameters.

Near-surface bulk samples totalling over 50 tonnes were used to perform sorting test work and to confirm design parameters and process flowsheet. A portion was sent to SGS Lakefield, CA, to run a pilot DMS and flotation program, where it was processed based on the proposed flowsheet to produce >5t of 6.0% Li₂O concentrate, a sufficient quantity to undertake testing of the major-size equipment in the flowsheet, as required, and to provide concentrate samples to third-party prospective buyers. Another portion was used to test the ore sorting technology.

A global recovery was calculated using the bulk test work and pilot data and then compared to the bench-scale test program results and trended across the feed grades straddling the proposed mine Li₂O grade. The recoveries over the LOM range from 72.3-77.9% with varying Li₂O and Fe₂O₃ grades (refer to Table 7). The concentrate grades across the range of feed grades vary from 5.6-6.2% Li₂O. As a result of this work an average metallurgical recovery of 74.7% Li₂O is used in the design criteria to produce a 6% Li₂O concentrate. This performance is predicated on the use of a combined DMS and flotation flowsheet to achieve the reported recovery.

Table 7 – Life of mine recoveries and potential variability with feed grade

A spodumene concentrate will be produced via processing through DMS and flotation circuits. The plant is designed to produce a 6.0% Li₂O spodumene concentrate from an ore grade of 1.36% Li₂O (diluted), with an average iron oxide (Fe₂O₃) content of 1.47%. The design of the spodumene concentrator process plant is based on a commercially proven DMS and flotation circuit technology (refer to Figure 12) and includes the following:

• A three-stage conventional crushing and screening circuit
• Ore sorting circuit on primary crushed material (to control the iron content in the ROM)
• DMS screening and mica removal via fluidised classification
• Two-stage DMS circuit for coarse fraction with magnetic separation of concentrate
• Two-stage DMS circuit for fines fraction with magnetic separation of concentrate
• Grinding and flotation circuit for the middlings and ultra fines fraction
• Magnetic separation on the flotation feed
• Thickening and filtration of flotation tailings and hyperfine fractions
• Tailings from the DMS and flotation plant trucked for co-disposal with the waste rock

A ROM blend will be fed to the primary crusher. The primary crusher product will be sized and fed to the ore sorter circuit. The sorter product will be fed to the secondary and tertiary crushing stages.

The crushing circuit will produce a nominal 6.35mm product screened into coarse (-6.3+4.0mm) and fine (-4.0+1.0mm) streams to be fed to the respective DMS circuits. The fines will be fed through a fluidised classifier to remove mica, before being fed to the fines DMS circuit.

Before feeding the primary DMS cyclones, each ore stream (coarse and fine) will be mixed with ferrosilicon slurry and pumped to the respective coarse and fine primary DMS cyclones. The ferrosilicon slurry density will be carefully controlled to enable the gravity separation of spodumene from minerals with a lower SG. Spodumene has a higher SG than most other gangue minerals. Consequently, the spodumene will report to the DMS cyclone underflow (sinks), with the gangue material reporting to the DMS cyclone overflow (floats) and then reporting to the DMS tailings stockpile. The sinks are fed to the respective secondary DMS circuits.

The secondary DMS circuit cyclones for both the coarse and fine DMS circuits will be fed with the ferrosilicon medium (SG 2.95). This will separate the material (floats) that contains some lithium as unliberated spodumene, which will report as middling to the grinding circuit for size reduction prior to flotation. The sinks from the secondary coarse DMS cyclones and from the secondary fines DMS cyclones will be sent to the DMS product stockpile after respective magnetic separators, which remove iron minerals to meet the product iron content criteria. This will be the final DMS spodumene concentrate product at 6% Li₂O.

The screened fines (-1.0mm) and DMS middlings will be ground in a ball mill and then fed through desliming cyclones, magnetic separators, mica flotation, and dewatering cyclones, which remove the slimes, the fine iron minerals and mica components. The deslimed slurry is then attrited further to dislodge or break down any residual mica flakes present.

The slurry is then pumped through a final deslime step before being fed to the spodumene flotation circuit. The flotation feed is treated with a high-intensity conditioning step where flotation reagents (generally oleic acids and tallow alkyl amine acetate) are added as required. The floated spodumene concentrate is thickened and filtered, and the tailings (a combination of all slimes, mica and flotation tails) are thickened and filtered for disposal to the tailings stockpile.

During the operation of the Moblan mine, a combined waste rock and filtered tailings co-disposal pile will be implemented. The dimensions have been designed according to the Project’s LOM, with sufficient capacity to contain 75.4Mt (32.8Mm³) of waste rock and 28.7Mt (16.7Mm³) of filtered tailings.

The proposed footprint covers approximately 200 ha, including ponds and ditches around the stockpile. The design is in accordance with the Government of Québec’s Directive 019 (MDDEP, 2012), other industry guidelines (Canadian Dam Association, Global Industry Standard on Tailings Management), and best industry practice.

Static and leaching tests have characterised the mill tailings as non-acid generating and non-leachable. The waste rock acid generation potential is uncertain, and a series of kinetic (humidity cells and column tests) tests are in progress.

Overburden and topsoil, which will be excavated during site development, will be stored and reused during progressive rehabilitation. The tailings will be encapsulated by waste rock for stability purposes and then covered by a geomembrane followed by overburden and topsoil. This will reduce the amount of contact run-off water to be managed during the operations.

The need for the geomembrane cover will be reconsidered based on the kinetics tests results. The tailings and waste rock storage design and water treatment processing are displayed in Figure 13.

The project is still at a greenfield stage and therefore has no operating infrastructure built to date other than access roads. Table 8 provides a list of buildings that need to be built on-site.

Table 8 – List of Moblan infrastructure components

Figure 14 presents the general layout for the Moblan project site.

The Project will be powered via hydroelectric power. The preferred power option is to build a new power transmission line over a length of 42 km which will be connected into the existing Hydro-Québec 161kV power line number 1625. The tap connection will be located between structures 563 and 564.

An on-site 161kV / 25kV substation will then supply the 26.1MW power demand of the Project required for mining and processing operations. A third party will construct and maintain the supply line.

Emergency power will be provided by two 600V 1MW and one 600V 500kW diesel-powered generators.

Site contact water will be conveyed and stored in the main collection basin located north of the tailings storage facility. Contact water will be pumped to the water treatment plant (WTP) before being released in the polishing basin. From the polishing basin, water will be pumped to the ore processing plant or released to the environment.

The WTP is designed to manage run-off from the site for a design storm flood event consisting of a 30 days, 1:100 year snowmelt coupled with a 24 hours, 1:2000 year rainfall event. The Project will process contact water from the processing operations, and run-off to ensure compliance with the applicable discharge limits under Directive 019 (MDDEP, 2012) and the Federal Metal and Diamond Mining Effluent Regulations (SOR/2002-222).

Water from Lake Coulombe will be pumped for the fire protection systems and distribution at the ore processing and the permanent camp. Lake Coulombe will also supply the initial raw water demand at the start of the concentrator’s operations.

Potable water will be generated from supplied fresh water, which is being sourced from three artesian wells located near the concentrator site, the accommodation camp and the explosives storage area. A supplementary source from the freshwater distribution system will be available. The local artesian wells supply an estimated maximum of 90 m³/day based on 300L/person/day. Two water treatment plants will be installed to ensure that water quality complies with regulations.

The Environmental and Social Impact Assessment (‘ESIA’) is underway. The following are key findings of the environmental studies to date:

• The Project is expected to impact 580 ha of forest land and 76.6 ha of wetlands and water bodies, from which 4.5 ha are fish habitats. Impacted forest land will be restored upon closure, except for the pit and mine waste storage facility, which will undergo ad-hoc closure measures. The impacts on wetlands and water bodies will require authorisation from the federal government and a compensation program.
• The Project may impact the displacement of Boreal Woodland Cariboo (Rangifer tarandus caribou), which are present north and south of the Project area. Cariboo’s displacement routes are already impacted by the presence of the Route du Nord (gravel highway). The actual impacts and corresponding mitigation measures are under evaluation and will be defined in the ESIA.
• Preliminary estimates of greenhouse gas (GHG) emissions during operations amount to 25,000 t-CO₂-eq/y direct (scope 1) emissions from on-site fuel consumption, ore transport by road to Chibougamau and by railway to the Port of Québec, and personnel transportation by road and aircraft. No significant scope 2 (indirect emissions from electricity consumption) have been identified due to the use of hydropower generated electricity for all site power consumption.
• Due to its location, the Project falls within the scope of the James Bay and Northern Québec Agreement and Complementary Agreements (JBNQA), signed by the Canadian and Québec governments with the Cree and Inuit peoples. According to this agreement, the Cree Nation Government is directly involved in the approval process for the ESIA. The project falls into Category III lands, which are public lands in the domain of the State. The closest Cree communities around the Project are Mistissini and Oujé-Bougoumou, with other more distant communities such as Waswanipi and Nemaska. A consultation process is already in place, and the general perception of the Project from the side of Cree communities and other non-Cree stakeholders is positive, with no indications of actual or potential severe conflict envisaged.
• Sayona is committed to prioritising local recruitment and procurement.

The ESIA must be submitted to Québec authorities, and the Cree Nation Government is also involved in the approval process. The project is exempted from the federal environmental impact assessment procedure due to its size, although federal authorisations are required for the expected impacts on wetlands and watercourses.

Applications for the use of land for the processing plant and the mine waste storage facility have already been submitted and are under evaluation by the authorities. The filing of the closure plan is planned for 2024. Financial assurance will be required upon approval of the closure plan. Other permit applications will be submitted upon approval of the ESIA, including those for the mining lease, lease to mine surface mineral substances, construction on State lands, modification of public roads in forest, and storage of petroleum equipment and explosives.

The closure plan for the site includes an impermeable cover with geomembrane for the mine waste storage facility (based on the preliminarily presumed acid generating nature of the waste rock), flooding of the pits and demolition, decontamination, and reforestation of the rest of the impacted land.

A detailed project and construction implementation schedule has been developed using estimated labour hours required during the construction phase. The schedule outlines a 39-month duration from FS completion until introduction of first ore. Introduction of first ore into the main process plant is planned in April 2027. The schedule has zero float.

A total of 1.5 million labour hours plus indirect labour is expected to be spent on the Project during the construction phase. Figure 15 presents the histogram of the workforce required based on the construction schedule.

Table 9 presents a summary of the total life-of-mine capital and sustainable costs (CAPEX/SUSEX), including contingencies, in millions of Canadian dollars ($M). The total CAPEX is $962.5M and the total SUSEX is $96.1M for a total LOM CAPEX/SUSEX of $1,058.6M.

Table 9 – Summary of total LOM CAPEX/SUSEX by area

Combined owner’s costs and indirect costs represent 33.7% of total CAPEX.

Table 10 summarises the owner’s cost by expense type (capitalised operating costs) excluding contingency. The total cost is estimated at $118.0M, of which 73.9% ($87.1M) is related to supervision, manpower, and contractors. Also, it should be noted that 85% ($100.73M) of owner’s costs are planned for 2026 and 2027 when most of Moblan’s employees are functioning.

Table 10 – Summary of owner’s cost by expense type (capitalised operating costs)

Table 11 summarises the total indirect cost during construction by expense type, including contingencies, for a total of $223.1M.

Table 11 – Summary of indirect cost by expense type

Figure 16 presents the repartition of CAPEX and SUSEX costs by area over the LOM. Only the categories of mining, concentrator, tailings, and water management will require other major sustaining expenditures during operation.

The total contingency for the entire project amounts to $153.0M. Different types of contingencies were applied to the Project’s cost evaluation.

A design contingency was applied to each CAPEX line-item detail according to the level of engineering progress. The overall design contingency for the Project is 11.7% of total CAPEX ($96.3M) and 15.8% of total SUSEX ($13.1M), for a total amount of $109.4M.

A global contingency of 5.3% of the total CAPEX was applied to mitigate the risk during the construction phase, for a total of $43.5M. A quantitative risk analysis was performed, which is detailed in the risk analysis report. Using a semi-qualitative risk evaluation matrix, each risk was assigned a scale for cost and/or schedule impact during the risk development interviews.

A multidisciplinary committee reviewed and refined these proposed risk assessments by estimating the level of probable impact (minimum, most likely or maximum). Monte Carlo simulations were performed iteratively to refine risk mitigations of key drivers until the Feasibility Study residual risk profile was as low as reasonably practicable.

Consequently, a total contingency of 17.0% was applied to the Project’s CAPEX ($139.8M) and a total contingency of 15.8% was applied to the SUSEX ($13.1M). These contingencies align with AACE International’s recommendations because the cost estimation is based on:

• A class 3 estimate, including ±15% to 20% accuracy in engineering
• A bottom-up estimation methodology
• A feasibility-level estimate

The next engineering process will focus on the front-end engineering design (‘FEED’).

Table 12 – Contingency applied to CAPEX and SUSEX

Mine operating expenditures (‘OPEX’) were estimated based on:

• Suppliers’ quotes and/or recent internal database
• Mine production plan and quantities
• Manpower evaluation over the LOM
• Equipment evaluation over the LOM, including leasing, acquisition, rebuilds, operation and maintenance
• Estimated quantities of energy consumption (fuel and electricity)
• Estimated quantities of other consumables

Table 13 summarises the estimated OPEX for the LOM and unit costs. Unit costs were calculated for the tonnes extracted and processed during the production period only. Overall operating unit costs are $29.49/t mined, $94.04/t milled, and $555.39/t of concentrate. It should be noted that 50.8% ($1,651M) of the OPEX is related to the mine site and concentrator. Unit costs include energy consumption and exclude the cost of transporting the concentrate off-site.

Table 13 – Summary of estimated operating expenditures for the LOM

Table 14 summarises the OPEX by expense type. Note that $2,656.7M (81.8%) of the $3,248.0M is related to supervision and labour (44.7%) and consumables (37.1%). The consumable category includes the energy cost (electricity and fuel). The mobile equipment category includes the leasing of all the major mobile equipment (acquisition and rebuilt), and the operating fees and maintenance of the overall equipment fleet at the exclusion of the maintenance labour.

Table 14 – Summary of OPEX by expense type over the LOM

Table 15 presents the projected long-term diesel price and long-term electricity costs used in the study.

Table 15 – Summary of project energy cost by type

The financial analysis considered that a third party owns the power line feeding the site. The cost related to the utilisation of this facility is added to the OPEX energy consumption and represents a fixed cost of $6.2M/y. It includes the estimated construction cost of the line, the maintenance cost over the LOM, and a margin for the third-party company that will operate the facility with a total cost over LOM of $123.3M.

Table 16 – Electrical cost over LOM by area

Sayona’s objective and vision is to promote local employment. Two work roster schedules will be used: 4 days on, 3 days off for all local personnel or working remotely and 14 days on, 14 days off for operations personnel. Sayona’s workforce will peak at 528 workers of which a maximum of 258 will be on-site at any given time, as can be seen in Figure 17.

Salary structures have been fully developed and based on Sayona’s existing Québec operation, providing a robust benchmark. Allocations have been established for the permanent 300-person camp accordingly, which will provide sufficient accommodations and will permit optimised occupancy during peak shutdown maintenance periods requiring supplemental contractors.

Sayona has relied on the Q3 2023 price forecast from consultancy Benchmark Mineral Intelligence (‘BMI’) to assess the expected market balance for battery-grade lithium and pricing assumptions for the spodumene concentrate.

According to BMI, from 2023 to 2028, a slight surplus in the supply of battery-grade lithium chemicals is expected as new production is brought online more rapidly than demand. However, from 2029 to 2040, a growing deficit is projected, and it is expected to reach 1,516 kt of LCE in 2040 as demand for electric vehicles grows faster than supply.

According to BMI, the price of spodumene concentrate (6%) increased significantly from 2020 to 2023, reaching a peak of US$4,488/t. However, by 2026, the market price of spodumene is expected to decrease to US$1,710/t. A short-term price rise is forecasted in the following years, up to US$3,000/t in 2029, followed by another decrease and a gradual stabilisation at a long-term price of US$1,850/t from 2032 onwards.

Sources: Lithium-Price-Forecast-Q3-2023-Benchmark-Mineral-Intelligence, PwC Analysis

The average 6% Li₂O concentrate price is US$1,990/t over the LOM and the prices range from US$1,850/t to US$3,000/t over LOM. Table 17 presents the price used for the FS to calculate revenue, using a 0.75 CAD/USD exchange rate. Recent negative spodumene price movements have been noted, however the commencement of production timeline for Moblan aligns with medium-term product pricing.

Table 17 – Li₂O concentrate price escalation scenario over LOM

The Moblan Lithium Project does not host another economical mineral or co-product.

The main highlights of the Project’s financial analysis are presented in Table 1.

There are other costs that have been considered in the Project’s financial analysis, including the following.

An analysis has been undertaken during the FS to define the transportation options for the transportation charges of 300,000 tpa of 6% Li₂O concentrate from Moblan to the Port of Québec. The transportation option retained from Moblan to the port is:

• By truck to Chibougamau, and
• By train to Québec City.

The transportation cost of $147.87/t is applied to a Li₂O 6% wet concentrate, including 7% moisture. The 7% moisture content is calculated in the transport overall cost. Total concentrate transportation cost is $925.3M over LOM.

Under Québec regulations, all mining projects must provide a financial guarantee for 50% of the closure and site rehabilitation cost as soon as authorisation is given by the government, and then 25% on each subsequent anniversary date (year 1: 25% and year 2: 25%). The closure cost for the Moblan project is estimated at $46.9M.

The salvage value of the Project is nil.

Other environmental costs related to the Project include:

• Compensation for loss of wetlands and water bodies
• Compensation for loss of fish habitats
• Compensation for loss of forest land
• Compensation for impacts on caribou

The calculated total for these other environmental costs is $21.2M over the LOM.

The compensation for GHG emissions was considered under the taxation calculations (carbon tax) for a total of $30.1M over LOM.

Sayona is currently discussing with the Cree community regarding compensation for the use of Cree lands. As the discussions have not yet concluded, this cost was not considered in the Project’s financial analysis.

Some of the other costs that might eventually by added to the Project, but were not considered in the financial analysis are:

• Exploration costs
• Corporate costs

A sensitivity analysis was conducted on the factors presented in Table 18.

Table 18 – Sensitivity analysis factors

Post-Tax NPV_8% sensitivities range from -15% to +15% for all factors. The impact of the NPV (in CAD $M) outputs was tested at discount rates of 0%, 5%, 8%, 10% and 12%. The results of the sensitivity analysis are summarised in Table 19 and Figure 19.

Table 19 – Sensitivity analysis results for Post-Tax NPV_8%

The project is more sensitive to revenue assumptions than cost assumptions. The spodumene price has a major impact on the Project. Therefore, an additional analysis for spodumene price was completed with a variance of from –30% to +30%. Results are presented in Table 20.

Table 20 – Average annual spodumene price sensitivities, Post-Tax NPV CAD $M

As the recovery rate varies considerably from one project study to another, the sensitivity to recovery was also tested, with the resultant range from 64% to 86% recovery. The results are presented in Table 21.

Table 21 – Post-tax NPV sensitivity analysis results for recovery

The key outcome is the sensitivity to the spodumene price. If the spodumene price decreases, other factors might have a greater impact on the economics of the Project.

PROJECT RISK ASSESSMENT

A risk assessment was undertaken to identify potential risks that could impact the delivery and operability of the Project as well as structure mitigation measures to help reduce potential impacts.

A standard Risk Assessment process was followed, ranking the severity of consequence and likelihood of the occurrence for each area of the Project as much for its construction as the operation. The risk assessment was carried out in a workshop session with a broad spectrum of expertise from within Sayona as well as specialised consultants intimately involved with the Project.

Further, a quantitative risk analysis was performed on the CAPEX estimate. Each risk identified which impacts cost and or schedule. It was evaluated and assigned a minimal, likely, and maximum data points which was run through a Monte-Carlo simulation running through several iterations. Based on this quantitative risk, a 5.3% global contingency was applied above and beyond the traditional project CAPEX contingency.

The risk matrix developed is fulsome and as the Project evolves risk will change. Principal risks on the Project relate to obtaining permits, social licence in the Project footprint, climate, geotechnical information related to placing of infrastructure and pit design criteria, power line connection and geological certainty around the resource. As the mitigations identified will be applied in subsequent phases, the likelihood of such risks will diminish or be removed.

PROJECT OPPORTUNITIES

The same process was performed for Project opportunities. Similarly, actions to promote and evolve the opportunities are integrated in the recommendations of the Project, which will be implemented or explored in subsequent work.

There are several opportunities, including the potential for by-products (Ta, Rb, Cs), the potential for further resource conversion with infill drilling and extension of mineralised zones, cost reduction opportunities, design improvements and the potential for in-pit waste disposal.

The proposed Project site is located on public lands in the domain of the State (Government of Québec). Therefore, the final location of the Project infrastructure is conditional on obtaining appropriate surface rights from the province’s Ministry of Natural Resources and Forests (‘MRNF’), including a mining lease pursuant to the Mining Act (Québec), and surface (industrial) leases pursuant to the Act respecting the lands in the domain of the State (Québec).

Issued on behalf of the Board.

Sayona Mining Limited is a North American lithium producer (SYASYAXF, with projects in Québec, Canada and Western Australia.

In Québec, Sayona’s assets comprise North American Lithium together with the Authier Lithium Project and the emerging Tansim Lithium Project, supported by a strategic partnership with American lithium developer Piedmont Lithium Inc. PLLPLL)). Sayona also holds a 60% stake in the Moblan Lithium Project in northern Québec.

In Western Australia, the Company holds a large tenement portfolio in the Pilbara region prospective for gold and lithium. Sayona is exploring for Hemi style gold targets in the world class Pilbara region, while its lithium projects include Company-owned leases and those subject to a joint venture with Morella Corporation (ASX:1MC).

For more information, please visit us at www.sayonamining.com.au

Investissement Québec’s mission is to play an active role in Québec’s economic development by stimulating business innovation, entrepreneurship and business acquisitions, as well as growth in investment and exports. Operating in all of the province’s administrative regions, the Corporation supports the creation and growth of businesses of all sizes with investments and customised financial solutions. It also assists businesses by providing consulting services and other support measures, including technological assistance available from Investissement Québec Innovation. In addition, through Investissement Québec International, the Corporation prospects for talent and foreign investment, and assists Québec businesses with export activities.

• Quarterly Activities Report – January 31^st, 2024
• Annual Report to shareholders – October 30^th, 2023
• Moblan drilling shows expansion potential – October 22^nd, 2023
• Drill results significantly expand Moblan lithium footprint – July 11^th, 2023
• Moblan boosted by significant increase in lithium resource – April 17^th, 2023
• Northern lithium hub expands in major acquisition – November 17^th, 2022
• New lithium discoveries strengthen Moblan potential – June 26^th, 2022
• New lithium pegmatite discovery at Moblan project – April 26^th, 2022
• Sayona expands northern Québec lithium hub – 121 new claims – January 21^st, 2022
• Resource expansion eyed as Moblan acquisition closes – October 18^th, 2021

The Company confirms that it is not aware of any new information or data that materially affects the information included in the original market announcement and all material assumptions and technical parameters continue to apply and have not materially changed. The Company confirms that the form and context in which the Competent Person’s findings are presented have not been materially modified from the original market announcements.

The Moblan Feasibility Study and the related Technical Report was prepared by Simon Boudreau, P.Eng., Geneviève Auger, P.Eng., Alain Carrier, P.Geo, and Sébastien Tanguay, P.Eng. of InnovExplo Inc.; Andrew Siemon, P.Eng. and Jacques Parent. P.Eng. of Primero Group Americas; Nicolas Lemieux, P.Eng., Anh-Long Nguyen, P.Eng., Fernando Medina, P.Eng., Richard Marcoux, P.Eng., Angel Humberto Pinto Unda, P.Eng., Nicolas Dupont, P.Eng., Mathieu Robitaille, P.Eng., and Martin Lord, P.Eng. of AtkinsRéalis (formerly SNC-Lavalin); Fraser Lord, P.Eng. of SLR Consulting (Canada) Ltd and Yves Leblanc, P.Eng. of Richelieu Hydrogéologie Inc in accordance with NI 43-101. Standards. Each person mention above, meets the requirements for a “qualified person”, as defined in NI 43-101 (a “QP”). All QPs are independent of Sayona and have reviewed and approved the disclosure of scientific and technical information contained in the respective sections of this press release.

Sayona has filed on February 19^th,2024 a NI 43-101 technical report summarising the Moblan Lithium Project on SEDAR+ (www.sedarplus.com) and the Company’s website (www.sayona.ca/en/).

This press release contains certain forward-looking statements. Such statements include, but are not limited to, statements relating to “reserves” or “resources”. Forward-looking statements are based on certain assumptions and involve known and unknown risks, uncertainties and other factors, many of which are beyond Sayona’s control. Actual events or results may differ materially from the events or results expressed or implied in any forward-looking statement. There can be no assurance that such information will prove to be accurate as actual results and future events could differ materially from those anticipated in such forward-looking statements.

SOURCE SAYONA