Alba Mineral Resources plc announced the results of a preliminary feasibility study ("Feasibility Study") in respect of the establishment of a downstream processing plant to produce graphite active anode material from graphite concentrate produced from the Company's planned graphite mine at Amitsoq, South Greenland. The Feasibility Study, completed with a cost accuracy to AACE Class 4, was conducted by SLR Consulting Ltd. ("SLR"),an independent UK consulting firm withconsiderable global expertise in the field of mining and mineral processing, and was supported by a ca. £250,000 grant from Innovate UK's Automotive Transformation Fund.

The Feasibility Study was project managed by the Company and conducted by SLR Consulting Ltd. withcontributions from three expert consultants, namely Benchmark Mineral Intelligence, ProGraphite and Decision Risk Analytics. A key component of Li-based batteries is the active anode material ("AAM") which is composed of graphite in the form of coated spherical purified graphite ("CSPG"). Presently, China has a near monopoly, delivering more than 90% of the world's production of CSPG.

With the energy transition seeing a gradual replacement of the world's internal combustion engine vehicles with electric vehicles and a growing demand from Stationary Battery Storage Systems for solar energy farms and other uses, a 400% growth in demand for battery grade graphite is forecast by leading market analysts. There is therefore a political desire to urgently initiate production of domestically sourced and processed graphite for the European and North American battery industries. The raw material for production of CSPG is natural flake graphite concentrate.

The production of CSPG consists of a series of intermediate steps: first, the graphite concentrate is micronised to a standard particle size using a rotary impact mill. Then the graphite flake particles are introduced to a rounding impact mill or shaping mill, which turns the angular graphite flakes into rounded particles (speronized graphite). Purification then takes place via chemical leaching.

In the Feasibility Study, this involved initially assessing a two-stage leaching process using a mix of hydrofluoric, hydrochloric and nitric acids to arrive at the required >99.95% purity. Finally, the spherical purified graphite (SPG) is coated with pitch and heated in kilns for about 24 hours before using high-intensity magnet separation for the removal of any impurities introduced during machining. The end-product CSPG is then sold to the battery industry to serve as AAM in lithium-ion batteries.

For the Feasibility Study, SLR has used proven technology based on the use of equipment produced by Chinese manufacturers, including microniser impact mills, impact rounding mills, cyclones and air classifiers and filters, fitted with German electronic steering systems. The processing plant will consist of 16 parallel micronisation/spheronisation lines each equipped with five microniser mills and 13 spheroniser mills. The micronisation and spheronisation circuit is designed to provide a graphite product with high tap density (close to 1.0 g/cm3) and the ability to produce a range of characteristic particle sizes of d50 of 10 µm to 20 µm depending on specific settings and requirements from the battery industry. Purification will take place in four parallel leaching lines with a final stage of coating taking place in eight parallel lines with subsequent baking in kilns and final magnetic removal of any metal particles introduced during the processing.

The Discounted Cash Flow ("DCF") model provided as part of the Feasibility Study shows a Pre-TaxNet Present Value at 8% discount rate (NPV8) of $837 million with an Internal Rate of Return ("IRR") of 33.8%, while the After-Tax NPV8 is $545 million with an IRR of 25.3%. The corporate tax is set at 22%, which is an average number for northern European Countries. These NPV calculations are based on a 22-year production of 39,700t of CSPG per annum (from 80,000t of graphite concentrate at 95% graphitic carbon (C(g)), similar to the life of mine provisionally planned for the Amitsoq mine.

However, as previously stated, the resource at Amitsoq could sustain a longer mine life. Based on 22 years of production, the total gross revenue for the anode plant has been calculated at US$6.5Bn over that period, with total gross profit totaling $2.7 billion. The initial capital cost is $321 million which includes a 25% contingency, while the operating cost is $2,211 per tonne of produced CSPG.

This results in a 4-year payback period on capital from the start of production. The DCF model is based on a forecast price for CSPG of $7,500 per tonne and with two types of bi-product (undersize graphite material) attracting a forecast price of $300 per tonne. The Feasibility Study has assumed that the anode plant operation will purchase the key input raw material, graphite concentrate, at a forecast market price of $1,100 per tonne.

This is in keeping with the approach of carrying out the Feasibility Study for the downstream anode plant as an entirely stand-alone economic assessment, separate to the economic assessment of the Amitsoq graphite mine and primary processing plant. In practice, however, the cost to the anode plant operation of the graphite concentrate feedstock is expected to be determined by the cost of production of graphite concentrate from the Amitsoq mine rather than by market prices. One of the cost elements in the economic model relates to power consumption (ca.

250 GWh per annum) for all of the various stages of processing and amounts to ca. $318 per tonne of produced CSPG which is ca. 14% of the total operating cost of $2,211 per tonne of CSPG.

This makes the choice of a site very important in keeping operating costs down and reducing CO2 emissions. Accordingly, GreenRoc is reviewing several options for the location of the processing plant. The cost of labour is set at that for an average Northern European country.

In the near future, SLR will also look at an alternative purification technique using a combination of sodium hydroxide and acid mixtures other than hydrofluoric acid. Such sodium hydroxide-based purification is likely to beless expensive and have lower environmental impact and regulatory requirements than the standard hydrofluoric acid based technology. Early qualitative testwork conducted by ProGraphite on Amitsoq graphite suggests that the high purity requirement of 99.95% can be met using sodium hydroxide leaching.

ProGraphite is currently undertaking a series of tests to constrain the use of chemicals for this purification technique, the results of which will be incorporated in an update to the Feasibility Study. Another point of potential refinement is the costing for an onsite nitrogen gas production plant at the processing plant location.