Critical Elements Lithium Announces New Positive Feasibility Study for the Rose Lithium Project Generating an After-Tax NPV8% of US$2.2B and an After-Tax IRR of 65.7%

2023-08-29

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MONTRÉAL, QC / ACCESSWIRE / August 29, 2023 /Critical Elements Lithium Corporation (TSX-V:CRE)(OTCQX:CRECF)(FSE:F12) ("Critical Elements" or the "Corporation") is pleased to announce the results of a new Feasibility Study on the Rose Lithium-Tantalum project ("Rose" or the "Project") in Eeyou Istchee James Bay, Québec.

The management of Critical Elements, with its new highly qualified technical team led by Yves Perron as Vice President of Engineering, Construction and Operations, brings a deep level of knowledge and expertise to the engineering process (particularly in mining operations, process, environment, design, estimation and project control). This new study replaces the Feasibility Study announced by the Corporation on June 13, 2022. Noteworthy changes include: (i) the increased indexation of industrial construction prices, (ii) the addition of certain process equipment to increase operational reliability and (iii) the addition of the scope change of the Project by incorporating the construction of our own 500-worker camp 4 km from the mine site. The new camp has been added to reduce the execution risk and timeline as this is vital to having the workers' accommodation ready in time as we increase the speed of the construction phase. The new 500-room camp includes both temporary and permanent sections (approximately 250 rooms for each section).

Jean-Sébastien Lavallée, Chief Executive Officer of the Corporation, said: "We are very pleased to announce the results of the new Definitive Feasibility Study at Rose to provide the updated economics of the Project. The study reaffirms the substantial value of Rose - amongst the backdrop of higher input costs and the decision to build our own 500-worker camp - to establish Critical Elements as a reliable, high-quality supplier of lithium. Thank you to our engineers, management team and local stakeholders for their diligent efforts and our shareholders for their continuous support."

Highlights

Expected 17-year mine life Average production Year 2-17: 157,706 tonnes of chemical grade 5.56% spodumene concentrate Average production Year 2-17: 46,059 tonnes of technical grade 6.16% spodumene concentrate Average production Year 2-17: 580 tonnes of tantalum concentrate Average operating costs: US$81,30 per tonne milled, US$587 per tonne of concentrate (all concentrate production combined) Estimated initial capital cost: US$471 million (before working capital) Average gross margin: 78.8% After-tax NPV8%of US$2,195 million, after-tax IRR of 65.7% Anticipated construction time: 21 months to start of production Average price assumptions of US$4,699 per tonne technical grade lithium concentrate, US$2,162 per tonne chemical grade lithium concentrate and US$150 per kg tantalum pentoxide (Ta2O5)

The Rose Lithium-Tantalum Project is 100%-owned by Critical Elements. The Corporation's market strategy is to enter the lithium market with a low-risk approach. The completion of the Feasibility Study on the spodumene plant is the first step to entering the market and establish the Corporation as a reliable high-quality lithium supplier. The low-risk approach is characterized by simple open-pit mining and conventional lithium processing technologies.

Critical Elements has consistently sought to advance the wholly-owned Rose Lithium-Tantalum Project in a low-risk manner. To this end, the Corporation has completed a new Feasibility Study with a conservative spodumene concentrate price deck, as well as capital and operating cost estimates reflective of current market conditions. The new Feasibility Study incorporates a standard truck and shovel open-pit mining operation and conventional lithium processing technologies. The Project will produce technical grade spodumene concentrate for the glass and ceramics industry and chemical grade spodumene concentrate for conversion for use in batteries for e-mobility, as well as a tantalite concentrate.

The mine will excavate a total of 26.3M tonnes ore grading an average of 0.87% Li2O and 138 ppm Ta2O5after dilution. The mill will process 1.61M tonnes of ore per year to produce an annual average of 203,765 tonnes of technical and chemical grade spodumene concentrates and 580 tonnes of tantalite concentrates. The ore is contained in several parallel and continuous shallow dipping pegmatite dykes outcropping on surface. The ore zones are open at depth and a future underground operation is possible.

Over the life of mine, the open pit will excavate a total of 182.4M tonnes of waste rock and 10.9 M tonnes of overburden. The average strip ratio is 7.3 tonnes of waste per tonne of ore.

Table 1 Rose Key FS Results

| Item | | | | Units | Value | | Production | | | | | | | Project Life (from start of construction to closure) | years | 19 | | | | | Mine Life | | | | years | 17 | | Total Mill Feed tonnage | | | M t | 26.3 | | | Average Mill Feed grade | | | | | | | Li2O | | | | % Li2O | 0.87 | | Ta2O5 | | | | ppm Ta2O5 | 138 | | Lithium Concentrate Production | | | | | | | % of Production, Chemical Grade | | % | 75 | | | | % of Production, Technical Grade | | % | 25 | | | | Mill Recoveries | | | | | | | Li2O, Chemical Grade | | | % | 87.4 | | | Li2O, Technical Grade | | | % | 84.8 | | | Ta2O5 | | | | % | 54.4 | | Concentrate grade | | | | | | | Li2O, Chemical Grade | | | % | 5.56 | | | Li2O, Technical Grade | | | % | 6.16 | | | Ta2O5Grade | | | % | 20.00 | | | Payable | | | | | | | 5.56% Li2O Concentrate, Chemical Grade | t | 2,681,000 | | | | | 6.16% Li2O Concentrate, Technical Grade | t | 783,000 | | | | | Ta2O5 Contained in Concentrate | | kg | 1,971,000 | | | | Commodity Prices | | | | | | | 5.5% Li2O Concentrate, Chemical Grade | US$/tconc. | 2,162 | | | | | 6% Li2O Concentrate, Technical Grade | US$/tconc. | 4,699 | | | | | Ta2O5 Contained in Concentrate | | US$/kgcontained | 150 | | | | Exchange rate 1.00 US$ : 1.30 CAN$ | | | | | | | 0.77 US$ : 1.00 CAN$ | | | | | |

| Item | | | | Units | Value | | Value | | Project Costs | | | | CA$ | | US$ | | | Average Mining Cost | | | $/t milled | 35.13 | | 27.05 | | | Average Milling Cost | | | $/t milled | 27.00 | | 20.79 | | | Average General & Administrative Cost | $/t milled | 20.70 | | 15.94 | | | | | Average Concentrate Transport Costs | $/t milled | 22.76 | | 17.52 | | | | | Project Economics | | | | CA$ | | US$ | | | Gross Revenue | | | $M | 12,692 | | 9,772 | | | Total Selling Cost Estimate | | $M | 161 | | 124 | | | | Total Operating Cost Estimate | | $M | 2,776 | | 2,137 | | | | Total Sustaining Capital Cost Estimate | | $M | 310 | | 239 | | | | Total Capital Cost Estimate | | $M | 611 | | 471 | | | | Duties and Taxes | | | $M | 3,688 | | 2,840 | | | Average Annual EBITDA | | | $M | 599 | | 461 | | | Average Gross Profit Margin | | % | 78.8% | | | | | | Pre-Tax Cash Flow | | | $M | 8,835 | | 6,803 | | | After-Tax Cash Flow | | | $M | 5,147 | | 3,963 | | | Effective Tax Rate | | | % | 41.7% | | | | | Discount Rate | | | % | 8.0% | | | | | Pre-Tax Net Present Value @ 8% | | $M | 5,048 | | 3,847 | | | | Pre-Tax Internal Rate of Return | | % | 95.9% | | | | | | Pre-Tax Payback Period | | | years | 1.3 | | | | | After-Tax Net Present Value @ 8% | | $M | 2,851 | | 2,195 | | | | After-Tax Internal Rate of Return | | % | 65.7% | | | | | | After-Tax payback Period | | years | 1.8 | | | | |

Property

The Rose property is located in northern Québec's administrative region, on the territory of Eeyou Istchee James Bay. It is located on Category III land, on the Traditional Lands of the Eastmain Community, approximately 40 km north of the Cree village of Nemaska. The latter is located approximately 300 km north-west of Chibougamau.

The Rose property is accessible by road via the Route du Nord, usable all year round from Chibougamau. The mine site can also be reached by Matagami, via Route 109 and Route du Nord. Figure 1 displays the regional location of the project. The project is located 80 km south of Goldcorp's Éléonore gold mine and 45 km north-west of Nemaska's Whabouchi lithium project and 20 km south of Hydro Québec's Eastmain-1 hydroelectricity generating plant. The Nemiscau airport services the region's air travel needs. The Rose property site is located 50 km by road from the Nemiscau airport.

The Rose property comprises 473 claims spread over a 24,654-ha area. Geologically, the Rose property is located at the north-east end of the Archean Lake Superior Province of the Canadian Shield.

Figure 1 Rose Property Location

Reserve Estimate

A Mineral Reserve Estimate for 17 mineralized zones was prepared during this study. The estimation assumed the production of a chemical grade spodumene concentrate with a price of US$20 per kg Li2O and a tantalite concentrate with a price of US$130 per Kg of Ta2O5. The recoveries were fixed at 85% and 64% for lithium and tantalum, respectively. The grade-recovery curve used for resource estimate, which became available after the mineral reserves were evaluated, was verified and found to have little influence on the reserve estimate. The production of a higher value technical grade spodumene concentrate was not assumed in the reserve estimate.

Based on compilation status, metal price parameters, and metallurgical recovery inputs, the effective date of the estimate is August 1st, 2023.

The estimate was prepared in accordance with CIM's standards and guidelines for reporting mineral resources and reserves.

Table 2 displays the results of the Mineral Reserve Estimate for the Rose Project at the CA$44.80 NSR per tonne cut-off for the open-pit scenario.

Table 2 Mineral Reserve Estimate

| | Tonnage | NSR | Li2O_eq | Li2O | Li2O | Ta2O5 | Ta2O5 | | Category | (Mt) | (CA$) | (%) | (%) | (000 t) | (ppm) | (000 t) | | Probable | 26.3 | 165 | 0.92 | 0.87 | 193,8 | 138 | 2,3 | | Total | 26.3 | 165 | 0.92 | 0.87 | 193,8 | 138 | 2,3 |

The Independent and Qualified Person for the Mineral Reserve Estimate, as defined by National Instrument 43-101 - Standards of Disclosure for Mineral Project ("NI 43-101"), is Simon Boudreau, P.Eng, of InnovExplo Inc. The effective date of the estimate is August 1st, 2023. The model includes 17 mineralized zones. Calculations used metric units (metres, tonnes and ppm). The number of metric tons was rounded to the nearest thousand. Any discrepancies in the totals are due to rounding effects. Rounding followed the recommendations in NI43‑101. InnovExplo is not aware of any known environmental, permitting, legal, title-related, taxation, socio-political, marketing or other relevant issue that could materially affect the Mineral Reserve Estimate.

Resource Estimate

The current Mineral Resource Estimate ("MRE") is primarily based on changes made to the net smelter return ("NSR") parameters, supported by new assumptions concerning metal prices and the creation of potentially mineable shape to constrain the MRE for the potential underground extraction scenario. No changes to the interpretation and interpolation parameters were deemed necessary. The mineral resource model for the current MRE is based largely upon the model generated for the 2011 PEA.

The effective date of the estimate is August 1st, 2023, based on compilation status, metal price parameters, metallurgical recovery inputs and creation of the constraining volume.

Given the density of the processed data, the search ellipse criteria, the drill hole density and the specific interpolation parameters, the Qualified Persons is of the opinion that the current MRE can be classified as Indicated and Inferred resources. The estimate was prepared in accordance with CIM's standards and guidelines for reporting mineral resources and reserves.

Table 3 displays the results of the MRE for the Rose Project using CA$31.40 NSR/t cut-off for the open-pit potential extraction scenario and CA$121.12 NSR cut-off for the underground potential extraction scenario.

Table 3 Mineral Resource Estimate

| Category | Tonnage | NSR | Li2O_Eq | Li2O | Ta2O5 | | | (CA$) | (%) | (%) | (ppm) | | | | | Indicated | Pit | 29,922,000 | 185 | 1.03 | 0.93 | 145 | | Underground | 624,000 | 177 | 0.96 | 0.91 | 82 | | | Total Indicated | 30,561,000 | 185 | 1.03 | 0.93 | 118 | | | Inferred | Pit | 1,787,000 | 149 | 0.86 | 0.77 | 138 | | Underground | 597,000 | 150 | 0.87 | 0.80 | 101 | | | Total Inferred | 2,384,000 | 149 | 0.86 | 0.78 | 129 | |

The Independent and Qualified Person for the Mineral Resource Estimate, as defined by NI 43-101, is Carl Pelletier, P.Geo., of InnovExplo Inc. The effective date of the estimate is August 1st, 2023. The MRE follow 2014 CIM Definition Standards and the 2019 CIM MRMR Best Practice Guidelines. These Mineral Resources are not Mineral Reserves as they do not have demonstrated economic viability. The model includes 24 mineralized zones. The reasonable prospect for eventual economic extraction is met by having constraining volumes applied to any blocks (potential open -pit or underground extraction scenario) using Whittle and the Deswik Stope Optimizer (DSO) and by the application of cut-off grades. The mineral resource is reported at a cut-off of CA$31.40 NSR for the open-pit potential; and of US$121.12 NSR for the underground potential based on market conditions (metal price, exchange rate and production cost). A range of densities was used on a per-zone basis based on statistical analysis of all available data. A minimum true thickness of 2.0 m was applied, using the grade of the adjacent material when assayed or a value of zero when not assayed. High grade capping was done on raw assay data based on the statistical analyses of individual mineralized zones. Compositing was done on drill hole intercepts falling within mineralized zones (composite lengths vary from 1.5 m to 3 m to distribute the tails adequately). Resources were evaluated from drill holes using a 2-pass OK interpolation method in a block model (block size = 5 m x 5 m x 5 m). The inferred category is only defined within the areas where blocks were interpolated during pass 1 or pass 2 where continuity is sufficient to avoid isolated blocks being interpolated by only one drill hole. The indicated category is only defined by blocks interpolated by a minimum of two drill holes in areas where the maximum distance to the closest drill hole composite is less than 40 m for blocks interpolated in pass 1. Results are presented in-situ. The number of metric tons was rounded to the nearest thousand. Any discrepancies in the totals are due to rounding effects. Rounding followed the recommendations in NI 43‑101. The qualified persons are not aware of any known environmental, permitting, legal, title-related, taxation, socio-political or marketing issues, or any other relevant issue, that could materially affect the potential development of mineral resources other than those discussed in the MRE.

Feasibility Study

The parameters used for the Feasibility Study are the following:

Open pit mining rate of 1,610,000 tpy of ore Spodumene process plant with a 4,600 tpd capacity

Mining Operation

The mineralization is hosted within outcropping pegmatite dykes subparallel to surface. The ore body is relatively flat, close to surface and comprised of north oriented stacked lenses. Mineralization recognized to date on the Rose property includes rare elements of Lithium-Cesium-Tantalum or LCT-type pegmatites and molybdenum occurrences.

A conventional truck and shovel open-pit approach was considered to mine the Rose Lithium-Tantalum Project's Probable Mineral Reserves. The dimensions of the engineered pit design are approximately 1,620 m long x 900 m wide x 220 m deep.

The life of mine plan (LOM) proposes to mine 26.3 Mt of ore, 182.4 Mt of waste, and 10.9 Mt of overburden for a total of 219.6 Mt of material. The average stripping ratio is 7.3 tonnes of waste per tonne of ore. The nominal production rate is estimated at 4,600 tonnes per day and 350 operating days per year.

The mining operation production rate is set to approximately 15 Mt of material per year. An open pit mining schedule was planned and resulted in a mine life of 17 years.

Contract mining will be used for the removal of the overburden while Critical Elements will undertake the mining of all hard rock material with its own equipment fleet and operators.

The main production fleet will consist of one (1) backhoe excavator, one (1) electric front shovel, one (1) wheel loader, eight (8) haul trucks (65t each), seven (7) haul trucks (135t each), two (2) rotary drills, one (1) DTH drill, two (2) bulldozers, one (1) wheel dozer, two (2) graders, one (1) auxiliary excavator, one (1) auxiliary wheel loader, and two (2) water trucks.

The Rose project pit was designed with a 10 m single benching arrangement. A 57° inter-ramp angle and an overall pit slope angle of 55° were utilized for the ultimate pit design. A berm width of 7.0 m corresponding to the recommended overall slope angle was used. The pit slopes in overburden have a face ratio of 2.5:1 with a 10 m berm width.

The main in-pit haulage ramp is designed at 30.9 m wide to allow a double-lane traffic, except for the last benches at the pit bottom that are designed at 20.4 m wide for single lane traffic. A 2 m drainage ditch is included to allow for water drainage and pipe installation. The maximum gradient of the inner curvature of all ramp segments is 10%.

Figure 2 Rose Pit Plan View

Figure 3 Rose Pit Side View Looking West

Mineral Processing

A standard froth flotation process will be utilized to produce technical grade and chemical grade lithium concentrates and a tantalum concentrate. The mineral process plant will consist of crushing, beneficiation, and dewatering areas. The technical grade lithium concentrate will grade 6.16% Li2O while the chemical grade lithium concentrate will grade 5.56% Li2O. The tantalum concentrate will grade 20% Ta2O5.

The beneficiation process includes crushing, grinding, magnetic separation and flotation. The crushing circuit will consist of a jaw crusher and two (secondary and tertiary) cone crushers, and screens. The crushed ore will have a P80 of 13 mm and will be stockpiled in a 24-hour live capacity dome. The grinding circuit will consist of a ball mill operating in a closed circuit with a set of cyclones. The tantalum will first be recovered at a grade of 2.0% Ta2O5by high intensity magnetic separation then upgraded further to 20.0% Ta2O5by gravity separation. Tantalum concentrate will be thickened, filtered, dried to 1% moisture, and bagged for shipment. The lithium flotation circuit will include removal of slimes (particles less than 20 um) after magnetic separation followed by mica flotation, scrubbing, and spodumene flotation to the required grades. The spodumene concentrate will then be thickened, pressure filtered with a 5% moisture content, and stored in a dome with a capacity of 24 hours and then be transported by trucks and trains to the port. The flotation tailings will be thickened, vacuum filtered to 15% moisture or less, and trucked to the waste rock / tailings piles where it will be dry stacked.

The spodumene plant will operate 24 hours per day, 7 days per week, and 52 weeks per year. The process plant was designed with an operating availability of 90%. The crushing circuit was designed using an operating availability of 50%. The plant has a capacity of 1,610,000 tonnes per year or 4,900 dry tonnes per day including availability.

The process plant flowsheet developed by Bumigeme Inc. is presented in Figure 4.

Figure 4 Rose Process Flowsheet

Metallurgy

Bench scale metallurgical testing was performed at ACME Metallurgical Limited in Vancouver in 2011. The results from these tests were used for the PEA study. Three composites: the Rose (main structure), the Rose Sud-Est (Southeast structure), and Tantalum (secondary structure with higher tantalum and lower lithium content) were subjected to various metallurgical tests.

SGS Canada Inc. in Lakefield conducted tests from 2013 to 2015 to improve lithium and tantalum recoveries. In 2015 SGS Canada Inc. developed a conceptual flowsheet based on a series of bench scale tests on various samples from the Rose deposit. The proposed flowsheet consists of conventional three-stage crushing and single stage grinding followed by magnetic separation for the recovery of tantalum, mica flotation, and spodumene flotation. This flowsheet was the basis of the process plant design.