EX-99.2 3 tm232777d1_ex99-2.htm EXHIBIT 99.2

 

Exhibit 99.2

 

SCHEDULE 51-102F3

 

Material Change Report

 

1.Name and Address of the Corporation

 

NOUVEAU MONDE GRAPHITE INC. (the “Corporation”)
481 Rue Brassard
Saint-Michel-des-Saints QC, J0K 3B0

 

2.Date of Material Change

 

January 10, 2023

 

3.News Release

 

A news release, in French and English versions, was issued on January 10, 2023 through Business Wire and filed on SEDAR and EDGAR.

 

4.Summary of Material Change

 

The Corporation announced the issuance of positive results of its preliminary economic assessment for the Uatnan Mining Project, one of the world’s largest graphite projects in development with indicative net present value (“NPV”) in excess of C$2 billion.

 

5.Full Description of Material Change

 

5.1Full Description of Material Change

 

The Corporation, in collaboration with Mason Graphite Inc. (“Mason Graphite”) announced the release of the results of a preliminary economic assessment (“PEA”), according to National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”), for a new project covering Mason Graphite’s Lac Guéret graphite deposit, the Uatnan mining project (the “Uatnan Mining Project”) located in Québec, Canada.

 

The PEA, conducted by engineering firms BBA Inc. (“BBA”) and GoldMinds Geoservices Inc. (“GMG”), shows strong economics for the Corporation’s updated operational parameters and production volumes targeting the production of approximately 500,000 tonnes of graphite concentrate per annum over a 24-year life of mine (“LOM”). The proposed Uatnan Mining Project is currently one of the largest projected natural graphite productions in the world as battery and electric vehicle (“EV”) manufacturers seek local alternatives for sourcing their graphite-based solutions amidst growing demand and a projected a structural deficit of production as of this year as supported by Benchmark Mineral Intelligence (December 2022).

 

 

 

 

PEA Results: Uncovering the Potential of the Uatnan Mining Project

 

The Corporation and its consultants revisited all components of Mason Graphite’s original mining project to align the development of the Lac Guéret graphite deposit with today’s market opportunity and potential customers’ requirements. The most recent technical report from Mason Graphite (SEDAR, Feasibility study update of the Lac Guéret Graphite Project issued on December 11, 2018) planned for a production of 51,900 tonnes of graphite concentrate per annum, with the concentrator and tailings storage facility located offsite in the town of Baie-Comeau, approximately 285 km to the south by road from the mining operations.

 

The PEA optimizes the Mineral Resources and aims to expand the original mining project tenfold by targeting the production of approximately 500,000 tonnes of graphite concentrate per annum, entirely destined for the anode material manufacturing market. The concentrator has been relocated to be near the deposit with electrical needs that could be sourced from the Manic-5 hydroelectric power station, located 70 km away.

 

In line with the Corporation’s responsible mining approach, plans include progressive site closure with backfilling of the pit with waste rock as much as possible. Additional characterization of waste rock and tailings will be included in the next engineering phase to select proper tailings and waste rock management technologies. Existing baseline studies will be updated based on the study area to identify any environmental issues, evaluate potential impacts and develop alternatives for the Uatnan Mining Project.

 

Commercial parameters were set using current projections of pricing prepared by a third-party expert for flake concentrate. Design of the Uatnan Mining Project has been tailored to the needs of the battery and EV market, orienting production volumes for beneficiation in order to produce active anode material. Natural flake graphite is expected to enter a structural deficit as of 2023 due to the continued growth of lithium-ion battery manufacturing, outpacing supply capacity from graphite producers (Benchmark Mineral Intelligence, December 2022). Hence, market perspectives and the Corporation’s active commercial discussions indicate favorable conditions for commercializing the Uatnan Mining Project production.

 

 

 

 

The following lists the economic highlights and operational parameters developed in the PEA. Graphite is expressed in graphitic carbon (“Cg”):

 

Table 1: Operational Parameters of the Uatnan Mining Project

 

OPERATIONAL PARAMETERS     
LOM  24 years  
Nominal annual processing rate  3.4 M tonnes  
Stripping ratio (LOM)  1.3:1  
Average grade (LOM)  17.5% Cg  
Average graphite recovery  85%  
Average annual graphite concentrate production (LOM)  500,000 tonnes  
Finished product purity  94% Cg  

 

Cautionary Note: The PEA is preliminary in nature and includes Inferred Mineral Resources, considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as Mineral Reserves, and there is no certainty that the PEA will be realized. Mineral resources that are not mineral reserves have not demonstrated economic viability.  Additional trenching and/or drilling will be required to convert inferred mineral resources to indicated or measured mineral resources. There is no certainty that the resources development, production, and economic forecasts on which this PEA is based will be realized.

 

 

 

 

Table 2: Economic Highlights of the Uatnan Mining Project

 

ECONOMIC HIGHLIGHTS  Uatnan Mining Project  
Pre-tax NPV (8% discount rate)  C$ 3,613 M  
After-tax NPV (8 % discount rate)  C$ 2,173 M  
Pre-tax IRR  32.6%  
After-tax IRR  25.9%  
Pre-tax payback  2.8 years  
After-tax payback  3.2 years  
Initial CAPEX  C$ 1,417 M  
Sustaining CAPEX  C$ 147 M  
LOM OPEX  C$ 3,236 M  
Annual OPEX  C$ 135 M  
OPEX per tonne of graphite concentrate  C$ 268/tonne  
Concentrate selling price  US$ 1,100/tonne  

 

All costs are in Canadian dollars with the exception of the graphite sale price which is provided in US dollars.

 

Capital expenditure (“CAPEX”) and operational expenditure (“OPEX”) were established from test work results, supplier quotations and consultant in-house databases. Estimates currently being at the market's peak as influenced by inflationary trends, the Corporation, Mason Graphite and their consulting firms have refined design, engineering, and construction parameters to enable cost optimization and competitive pricing. Québec’s affordable clean hydropower underpins the Uatnan Mining Project’s economic structure and supports the Corporation’s undeterred carbon-neutrality commitment.

 

Considering the significant modifications to Mason Graphite’s original project, the Corporation initiated a name change with the collaboration of the Innu First Nation of Pessamit. The deposit is located on the Nitassinan, the Innu of Pessamit’s ancestral territory, in a sector referred to as Ka uatshinakanishkat meaning “where there is Tamarack”. Hence, the name Uatnan meaning Tamarack, a conifer prominent in the area, was chosen to identify the property and project. The graphite deposit identified on the property is still referred to as the Lac Guéret deposit.

 

Initial modelling indicates that the Uatnan Mining Project would create approximately 300 direct jobs.

 

 

 

 

The Property

 

The Uatnan property presently consists of 74 map-designated claims totalling 3,999.52 hectares (“ha”), wholly owned (100%) by Mason Graphite. The Uatnan Mining Project lies within Nitassinan, the Innu of Pessamit’s ancestral territory and the Rivière-aux-Outardes municipality located in the Côte-Nord administrative region, Québec, Canada, approximately 220 km as the crow flies, north northwest of the closest community, the town of Baie-Comeau. The Uatnan Mining Project is accessible by road 389 and then by following Class 1 forestry roads.

 


Figure 1: Uatnan property location

 

 

 

 

Exploration work on the Uatnan property targeted graphite mineralization and consists to date of airborne geophysics, prospecting, ground geophysics, trenching/channel sampling and core drilling. Bulk surface samples and core samples were also collected for metallurgical and geomechanical tests. Exploration work uncovered significant crystalline flake graphite mineralization, ultimately leading to the identification of Mineral Resources and Mineral Reserves (see Mason Graphite’s press release dated November 9, 2015). Due to significant changes to the project scope, as mentioned above, it was decided that the Uatnan Mining Project would revert to a Preliminary Economic Assessment level.

 

On May 15, 2022, the Corporation concluded an investment to explore the potential development of the Lac Guéret graphite property (now the Uatnan Property). This agreement aligns with the Corporation’s growth strategy with a view to establishing a large, scalable, and fully vertically integrated natural graphite production, from ore to battery materials, at the western markets’ doorstep.

 

Mineral Resources

 

Current Mineral Resources (Table 3) have been estimated for the Uatnan property based on 25,956 assay intervals collected from 43,343.1 m of core drilling and 4 surface trenches providing 207 channel samples totalling 721.7 m. Proper quality control measures, including the insertion of duplicate, blank and standard samples, were used throughout the exploration programs and returned within acceptable limits. Although parameters to determine reasonable prospects for eventual economic extraction (RPEE) were updated (Table 4), there are no significant changes between the current Mineral Resources and the Mineral Resources last published on November 9, 2015.

 

 

 

 

Table 3: Current Pit-Constrained Mineral Resource Estimate

 

IN-PIT CONSTRAINED MINERAL RESOURCES  Tonnes (Mt)   Grade (% Cg)   Cg (Mt) 
Measured 5.75% < Cg < 25%   15.65    15.2    2.38 
Measured Cg > 25%   3.35    30.6    1.02 
Total Measured   19.02    17.9    3.40 
Indicated 5.75% < Cg < 25%   40.29    14.6    5.89 
Indicated Cg > 25%   6.33    31.6    2.00 
Total Indicated   46.62    16.9    7.89 
Indicated + Measured 5.75% < Cg < 25%   55.94    14.8    8.27 
Indicated + Measured Cg > 25%   9.70    31.2    3.03 
Total Measured + Indicated   65.64    17.2    11.30 
Inferred 5.75% < Cg < 25%   15.35    14.9    2.28 
Inferred Cg > 25%   2.47    31.8    0.79 
Total Inferred   17.82    17.2    3.07 

 

Notes:

 

1.The Mineral Resources provided in this table were estimated by M. Rachidi P.Geo., and C. Duplessis, Eng., (QPs) of GoldMinds Geoservices Inc., using current Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Standards on Mineral Resources and Reserves, Definitions and Guidelines.
2.Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability. The estimate of Mineral Resources may be materially affected by environmental, permitting, legal, title, market or other relevant issues. The quantity and grade of reported Inferred Mineral Resources are uncertain in nature and there has not been sufficient work to define these Inferred Mineral Resources as indicated or Measured Mineral Resources. There is no certainty that any part of a Mineral Resource will ever be converted into Mineral Reserves.
3.The Mineral Resources presented here were estimated with a block size of 3mE x 3mN x 3mZ. The blocks were interpolated from equal-length composites (3 m) calculated from the mineralized intervals.
4.The Mineral Resource estimate was completed using the inverse distance to the square methodology utilizing three runs. For run 1, the number of composites was limited to ten with a maximum of two composites from the same drillhole. For runs two and three the number of composites was limited to ten with a maximum of one composite from the same drillhole.
5.The Measured Mineral Resources classified using a minimum of four drillholes. Indicated resources classified using a minimum of two drillholes. The Inferred Mineral Resources were classified by a minimum of one drillholes.
6.Tonnage estimates are based on a fixed density of 2.9 t/m3.
7.A pit shell to constrain the Mineral Resources was developed using the parameters presented in Table 4. The effective date of the current Mineral Resources is January 10, 2023.
8.Mineral Resources are stated at a cut-off grade of 5.75% C(g).

 

 

 

 

Table 4: Parameters used to develop the pit shell to constrain the Mineral Resources

 

PARAMETERS  Value
Mining cost  C$ 4.00/t mined
Processing cost  C$ 36.00/t milled
Tailings management cost  C$ 2.00/t milled
G&A cost  C$ 5.00/t milled
Mill recovery  85%
Concentrate grade  94%
Concentrate price  C$ 1,500 /t
Production rate  3.4 Mtpa
Overall pit slope  50%

 

Mining

 

The mining method selected for the Uatnan Mining Project is a conventional open pit, truck and shovel, drill, and blast operation. Topsoil and overburden would be stripped and stockpiled for future reclamation use. The mineralization and waste rock would be mined with 9-m high benches, drilled, blasted, and loaded into 60-tonne rigid-frame haul trucks with backhoe excavators.

 

To minimize the environmental footprint of the Uatnan Mining Project, waste rock would be hauled to the tailings storage facility where it would be disposed of with the tailings. As of year 5 of operations, waste rock would be backfilled into the mined-out open pit when possible. The following table presents the subset of Mineral Resources within the pit design for the PEA.

 

 

 

 

Table 5: Subset of Mineral Resources within the Pit Design for the PEA

 

DESCRIPTION  Tonnes
(Mt)		   Cg Grade
(%)		   In-Situ Graphite
(Mt)		 
Measured resources   18.7    17.9    3.3 
Indicated resources   43.5    17.1    7.4 
Total M&I resources   62.2    17.3    10.8 
Inferred resources   14.2    18.0    2.6 
Overburden & waste rock   102.6           

 

The mine would be operated by an owner fleet, seven days per week, 24 hours per day and be comprised of a four-crew system working on a two-week in, two-week out rotation. The Corporation intends to deploy a zero-emission operating strategy with a battery-powered fleet of haul trucks and electric equipment as the technology becomes available. In the meantime, the PEA used a base case with a diesel-operated fleet.

 

Processing & Recovery

 

The process flow sheet was developed using the same metallurgical basis used for Mason Graphite’s updated Feasibility Study issued on December 11, 2018. The main difference between the two flowsheets, apart from the increased plant capacity, is the intended end-use of the material. Given that 100% of the graphite concentrate produced from the Uatnan Mining Project is destined for the battery market, preserving flake sizes is no longer considered in the processing route. Given this consideration, the flowsheet was simplified by reducing the number of both polishing and cleaner flotation stages from four to two. This change minimizes the number of grinding mills and flotation cells required, reducing both the capital and operating costs for the Uatnan Mining Project.

 

The flowsheet consists of a mineral sizer to reduce the size of the run of mine (“ROM”) mineral before it is fed to a SAG mill for primary grinding. The ground mineral then undergoes rougher flotation, after which the reground and scavenged concentrate is combined with the rougher concentrate for further processing. The concentrate then undergoes two additional stages of regrinding, first in a ball mill ahead of the first cleaning step, then a second regrind in a tower mill ahead of secondary cleaning. The resulting concentrate undergoes a final deliming stage to remove low-grade minus 20-micron particles to maximize the final concentrate grade. The concentrator tailings are filtered and delivered to the tailings storage facility. The concentrate is filtered and dried before being trucked 285 km to Baie-Comeau for transport to market.

 

 

 

 

Economic Evaluation

 

The CAPEX, summarized below, covers the development of the mine, processing facilities, and infrastructure required for the Uatnan Mining Project. It is based on the application of standard costing methods of achieving a PEA which provides the accuracy of -30% to +50%. The operating cost covers mining, processing, concentrate haulage, tailings and water management, general and administration fees, as well as infrastructure and services.

 

Table 6: Summary of Uatnan Mining Project CAPEX Costs

 

SECTOR  LOM CAPEX
($M)		 
Mining   61 
Site infrastructure   55 
Offsite Infrastructure   184 
Water treatment and tailings   118 
Ore crushing and process plant   548 
Indirect   319 
Contingency   279 
TOTAL CAPEX   1,564 
Initial CAPEX   1,417 
Sustaining CAPEX   147 

 

 

 

 

Table 7: Summary of Main Uatnan Mining Project OPEX Costs

 

SECTOR  LOM OPEX Cost ($M)   C$/t Conc. 
Mining and tailings   917    76 
Processing   1,620    134 
Water management   134    11 
G&A   565    47 
TOTAL   3,236    268 

 

Next Steps and Quality Assurance

 

The PEA shows that the Uatnan Mining Project is technically feasible as well as economically viable. It further strengthens the Corporation’s active commercial discussions and the Corporation’s plans for growth through a Phase-3 expansion.

 

On the basis of these positive results, the Corporation intends to launch an updated feasibility study in compliance with the option and joint venture agreement signed with Mason Graphite. The Uatnan Mining Project will have to go through the process of the Government of Québec’s Environment Quality Act with the objective of obtaining a ministerial decree.

 

The Corporation is committed to extending its approach of open and proactive engagement with Indigenous Peoples and local stakeholders to the Uatnan Mining Project. The Corporation plans to maintain a transparent dialogue with the Innu First Nation of Pessamit as it advances the project development to ensure the respect of their rights, the protection of the environment, their culture, way of life and spirituality, as well as the inclusion of their perspective, and traditional knowledge. The Corporation also pledges to expand its relationships with stakeholders from all horizons to foster mechanisms for collaboration and shape a project generating shared value.

 

 

 

 

There is no certainty that the economic forecasts on which this PEA is based will be realized. The PEA is preliminary in nature and includes Inferred Mineral Resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as Mineral Reserves, and there is no certainty that the PEA will be realized. Mineral Resources that are not Mineral Reserves have not demonstrated economic viability. Additional trenching and/or drilling will be required to convert Inferred Mineral Resources to Indicated or Measured Mineral Resources. There is no certainty that the resources development, production, and economic forecasts on which this PEA is based will be realized. There are a number of risks and uncertainties identifiable to any new project and usually cover the mineralization, mineral processing, financial, environmental and permitting aspects. The Corporation’s Phase-3 is no different, and an evaluation of the possible risks was undertaken as part of the PEA.

 

Scientific and technical information presented in the Corporation’s press release dated January 10, 2023 was reviewed and approved by André Allaire, P.Eng. (BBA), Jeffrey Cassoff, P.Eng. (BBA), Claude Duplessis (GoldMinds Geoservices), and Merouane Rachidi, P.Geo. (GoldMinds Geoservices) Qualified Persons as defined under NI 43-101.

 

The PEA for the Uatnan Mining Project, prepared in accordance with NI 43-101 guidelines, will be filed on SEDAR at www.sedar.com, EDGAR at www.sec.gov and on the Corporation’s website at www.NMG.com within 45 days of the Corporation’s press release dated January 10, 2023. Readers are encouraged to read the PEA in its entirety, including all qualifications, assumptions and exclusions that relate to the details summarized in this material change report. The PEA is intended to be read as a whole, and sections should not be read or relied upon out of context.

 

6.Reliance on subsection 7.1(2) of Regulation 51-102

 

Not applicable.

 

7.Omitted Information

 

Not applicable.

 

8.Executive Officer

 

For all additional information, please contact:

 

Ms. Josée Gagnon
Vice President – Legal Affairs and Secretary
Telephone: (450) 757-8905

 

9.Date of Report

 

January 10, 2023

 

 

 

 

Cautionary Note

 

All statements, other than statements of historical fact, contained in this material change report including, but not limited to those describing the impact of the foregoing on the Uatnan Mining Project economics, PEA results (as such results are set out in the various tables featured above, and are commented in the text of this material change report), including CAPEX, OPEX, NPV and IRR, the estimated value of the Uatnan Mining Project, operations development scenarios for the Uatnan Mining Project, commercial and technical parameters, the attractive economics for the Uatnan Mining Project, LOM plans, the Corporation’s intended marketing strategy, , market trends, future graphite prices, the impact of the Uatnan Mining Project on the local communities, including job creation, the projected annual production of the Corporation’s Phase-3 operations, the expected electrification strategy and its intended results and benefits, the potential results and benefits of the Corporation’s proprietary technologies, the timelines and costs related to the various initiatives, deliverables and milestones described in this material change report and their expected results, the Corporation’s expected financial and operational performance, the nature of relationships with stakeholders such as the local community including the Innu First Nation of Pessamit, future demand for batteries and EVs, the objective of developing one of the largest fully integrated natural graphite operations in the World, the production of carbon-neutral anode material, Mineral Resource estimates (including assumptions and estimates used in preparing the Mineral Resource estimates), the general business and operational outlook of the Corporation, the Corporation’s future growth and business prospects, the Corporation’s ESG commitments, initiatives and goals, and those statements which are discussed under the “About Nouveau Monde” paragraph and elsewhere in the material change report which essentially describe the Corporation’s outlook and objectives, constitute “forward-looking information” or “forward-looking statements” (collectively, “forward-looking statements”) within the meaning of Canadian and United States securities laws, and are based on expectations, estimates and projections as of the time of this material change report. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by the Corporation as of the time of such statements, are inherently subject to significant business, economic and competitive uncertainties and contingencies. These estimates and assumptions may prove to be incorrect. Moreover, these forward-looking statements were based upon various underlying factors and assumptions, including the current technological trends, the business relationship between the Corporation and its stakeholders, the ability to operate in a safe and effective manner, the timely delivery and installation at estimated prices of the equipment supporting the production, assumed sale prices for graphite concentrate, the accuracy of any Mineral Resource estimates, future currency exchange rates and interest rates, political and regulatory stability, prices of commodity and production costs, the receipt of governmental, regulatory and third party approvals, licenses and permits on favorable terms, sustained labor stability, stability in financial and capital markets, availability of equipment and critical supplies, spare parts and consumables, the various tax assumptions, CAPEX and OPEX estimates, the Uatnan Mining Project permits’ status, all economic and operational projections relating to the project, local infrastructures, the Corporation’s business prospects and opportunities and estimates of the operational performance of the equipment, and are not guarantees of future performance.

 

Forward-looking statements are subject to known or unknown risks and uncertainties that may cause actual results to differ materially from those anticipated or implied in the forward-looking statements. Risk factors that could cause actual results or events to differ materially from current expectations include, among others, those risks which are discussed under the “Next Steps and Quality Assurance” paragraph, delays in the scheduled delivery times of the equipment, the ability of the Corporation to successfully implement its strategic initiatives and whether such strategic initiatives will yield the expected benefits, the availability of financing or financing on favorable terms for the Corporation, the dependence on commodity prices, the impact of inflation on costs, the risks of obtaining the necessary permits, the operating performance of the Corporation’s assets and businesses, competitive factors in the graphite mining and production industry, changes in laws and regulations affecting the Corporation’s businesses, political and social acceptability risk, environmental regulation risk, currency and exchange rate risk, technological developments, the impacts of the global COVID-19 pandemic and the governments’ responses thereto, and general economic conditions, as well as earnings, capital expenditure, cash flow and capital structure risks and general business risks. A further description of risks and uncertainties can be found in the Corporation’s Annual Information Form dated March 22, 2022, including in the section thereof captioned “Risk Factors”, which is available on SEDAR at www.sedar.com and on EDGAR at www.sec.gov. Unpredictable or unknown factors not discussed in this Cautionary Note could also have material adverse effects on forward-looking statements.

 

 

 

 

Many of these uncertainties and contingencies can directly or indirectly affect, and could cause, actual results to differ materially from those expressed or implied in any forward-looking statements. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Forward-looking statements are provided for the purpose of providing information about management’s expectations and plans relating to the future. The Corporation disclaims any intention or obligation to update or revise any forward-looking statements or to explain any material difference between subsequent actual events and such forward-looking statements, except to the extent required by applicable law.

 

The market and industry data contained in this material change report is based upon information from independent industry publications, market research, analyst reports and surveys and other publicly available sources. Although the Corporation believes these sources to be generally reliable, market and industry data is subject to interpretation and cannot be verified with complete certainty due to limits on the availability and reliability of raw data, the voluntary nature of the data-gathering process and other limitations and uncertainties inherent in any survey. The Corporation has not independently verified any of the data from third-party sources referred to in this material change report and accordingly, the accuracy and completeness of such data is not guaranteed.

 

Disclosures regarding Mineral Resource estimates included in this material change report were prepared in accordance with Canadian NI 43-101. The disclosures included in this material change report use the terms “Feasibility Study,” “Mineral Resource,” “Inferred Mineral Resource,” “Indicated Mineral Resource,” “Measured Mineral Resource,” in connection with the presentation of resources, as each of these terms is defined in accordance with the CIM Definition Standards on Mineral Resources and Reserves adopted by the CIM Council, as required by NI 43-101. Unless otherwise indicated, all resource estimates included in this material change report have been prepared in accordance with the CIM Definition Standards, as required by NI 43-101.

 

NI 43-101 is a rule developed by the Canadian Securities Administrators that establish the Canadian standards for all public disclosure an issuer makes of scientific and technical information concerning mineral projects. These standards differ from the requirements of the United Securities and Exchange Commission (the “SEC”). Accordingly, mineral resource and reserve information included in this material change report may not be comparable to similar information made public by United States companies reporting pursuant to SEC reporting and disclosure requirements.