Leading Edge Materials (TSXV.LEM) is developing a portfolio of projects located within the borders of the European Union, with the vision to supply sustainable and secure sources of critical raw materials to European industrial ecosystems.
Lyndsay from Stockhouse Publishing recently sat down with Leading Edge Materials CEO, Kurt Budge to discuss prospects within the current geopolitical climate as the company awaits a key decision on strategic project designation from the EU on their Norra Kärr HREE project in Sweden.
The following is a transcription of the above video, and The Market Online has edited it for clarity.
Lyndsay: From a macro perspective, let’s look at how different regions are responding to geopolitical tension around critical raw materials and compare North American and European approaches. How is North America addressing its dependency on critical raw materials amid the rising geopolitical tensions?
Kurt: I guess the country that’s catching most of the headlines is the U.S. with the new President and what we’ve seen is a real focus on U.S. interests. This was taking place before the new president took office first with overtures to Greenland and Greenland’s mineral resources. Then more recently reaching out to Ukraine, specifically rare earth elements. And within Leading Edge, have the Norra Kärr heavy rare earth element project.
There’s a definite self-interest when it comes to the U.S. and I think that’s a stark difference with Europe, which is much more a collaborative region looking for everybody’s interests.
Lyndsay: Absolutely. There’s so many people that are just scratching their head going, okay, so which way do we look first? So how is Europe responding to supply chain risks related to critical raw materials, particularly, concerning that reliance on China and Russia?
Kurt: Europe has been discussing critical raw materials for many, many years. I think the conversation, especially when it comes to rare earths has been Norra Kärr, specifically our project, has been in the conversation for a decade. What we saw last year is policy development. So you had the Critical Raw Materials Act, and then there’s a lot of companies waiting for the first round of Strategic Projects to be awarded that status.
Really that’s going to be a catalyst for project development of primary raw materials mines. So Europe is very focused on establishing regional supply chains, not necessarily all the supply chain on the continent, but definitely as much capability within the European borders as possible. Leading Edge is very well positioned because all our projects, and we have one mine, are located in within the EU, and we’ve got critical raw materials across the portfolio, so heavy rare earth elements, natural graphite, and then cobalt, nickel and polymetallics in Romania.
Lyndsay: What impact does North America and European policies on domestic production of critical materials have on global trade dynamics then?
Kurt: What’s happening in this land grab that’s taking place is you’ve had this introduction of new policy in Europe and now it’s about real action. The real action will happen when this first round of Strategic Projects gets awarded, which should be by the end of next month. We’ve applied for Norra Kärr, our heavy rare earth element project to get that status. That status is there to address two key issues, and it offers other benefits. The two key issues which have frustrated mining development are around permitting and access to capital, and it’s supposed to address both of those.
In Europe we are looking — it’s a bit strange because I’m a British CEO talking about Europe but feel very European — it’s about establishing as much of the supply chain on the continent. Even in that context, China will remain a very strong partner to Europe. It’s not a case of turning off Chinese supply and the trade relationship with China, but it is doing something that’s healthy, which is creating some diversification of where we procure our critical raw materials from.
Lyndsay: You mentioned about the strategic project status for your project, a game changer for sure, what are the key components and timeline of Leading Edge Materials’ rapid development plan then?
Kurt: We put out that announcement almost two weeks ago now, about a Rapid Development Plan and really we’re trying to change the mindset. This is because we know that projects can be developed much more quickly in other jurisdictions around the world.
Really, we have to change our mindset within Europe about how quickly we make things happen. Strategic Project status is one way, because that’s, as I touched on, is going to address these obstacles in the past which have been around permitting and access to capital.
That’s going to be a real shift. What it will do is introduce a legal timeframe for permitting an extraction project, which for our upstream development at Norra Kärr is going to mean 27 months. Given that the last company I worked with it took seven and a half years to get a permit, 27 months sounds pretty good to me.
That’s really framing it in one way, but we want to think how can we move forward to production in the shortest possible timeframe. One of the opportunities we have with Norra Kärr is it’s actually not really a mine, it’s a quarry. We’re moving material, crushing, milling, and doing some magnetic separation. Within that process we produce two and maybe three products, but the two main products are the heavy rare earth element concentrate and then an industrial mineral, nepheline syenite.
In the announcement we put out recently, we put a fair degree of emphasis on the nepheline syenite. The reason we did that is because in our preliminary economic assessment back in 2021, we actually took really conservative pricing around the nepheline syenite. We had three product streams and said it’ll probably sell at anywhere between $12 and $65 a ton.
Actually, the prices around that time were anywhere from a hundred to $500 a ton. So we really underplayed the significance to the economics of the project that nepheline syenite could make. Given
that we’re going to produce roughly 730,000 tons a year over a 25 year plus period, now’s the time within the context of our quarry to really focus on this market and see what contribution it can make to the overall project economics.
Lyndsay: Norra Kärr is one of the world’s most significant, heavy rare earth deposits with an unusual enrichment of the permanent magnet critical elements, so that will be an interesting outcome right there.
Let’s talk about the company’s Woxna graphite mine. What strategic options is Leading Edge Materials considering to enhance the value of the mine?
Kurt: It’s interesting. Benchmark Intelligence puts out a piece at the end of January, which said there’s going be 140% plus growth in the demand for natural graphite by 2030. Based on an average mine, that could be another 31 mines globally. In that context, you’re thinking, well, we have a mine, we have a million tons contained natural graphite in the ground, and we have a processing plant.
Now Woxna will require some investment to upgrade the plant and produce a product that the market wants. When Benchmark Intelligence shone a spotlight on Ukraine, there were two key mineralizations that they showed. One was rare earth elements and one was natural graphite. And we have both of those in the company.
Again, China has been dominant in this space. Europe wants to diversify, create some onshoring of regional capability. So within that overall setting, Woxna’s future looks much brighter than it has done for a long time. It’s not just about actually having the mine back in production, but the paramount issue is security of supply. We say it over and over again, but with the geopolitics, the impacts on global trade, how that all is all going to fall out, nobody really knows. It’s about locking in security of supply and in that context we see the opportunities to move forward, integrate and move downstream and partner up with the next player downstream who wants to have that security.
Lyndsay: Kurt, what about the company’s recent preliminary economic assessment influence, the future development plans for the Woxna Graphic Project?
Kurt: It wasn’t a PEA, but what we did say in the announcement this week was that we had a restart plan that was developed in 2022. What we’re doing now is we are updating that plan. Basically, we’re putting, as I would describe it, a fresh coat of paint on Woxna because it does have a long history. The market needs to be made aware that we’ve got a million tons of contained graphite in the ground.
If you want security of supply to come from a stable jurisdiction like Sweden, where we can basically power the operation with renewable power, and zero carbon footprint, come and talk to us. It’s a much brighter future for Woxna than it’s looked in a long while. We’re excited about Norra Kärr because we’re waiting for the Strategic Project status decision, and we’ve also got opportunities for Woxna in Sweden as well.
Lyndsay: You also have another project making waves as well. So tell us about the company’s exploration reliance program in Romania.
Kurt: Bihor Sud. I’m a mining guy not the geologist on the team, but we hired some new geologists to join the Romanian team. They started in mid-January. Bihor Sud is brownfield exploration, it’s a former uranium mine. We’ve access to kilometers and kilometers of underground development. It’s in gallery
G2 at the moment where we are going after polymetallic mineralization, so lead, zinc, silver copper. But also within the overall exploration program to date we’ve encountered Colbalt-Nickel. So I’ve said it time and time again, we’re actually in the guts of what we hope is a deposit. We’ve got visible mineralization, we’re just waiting for assays to come back from channel samples.
The hope is that over the next two months we can actually start to paint the picture for investors about what the opportunity really is with Bihor Sud. I’m using analogies around shining lights on stuff and spotlights, but really hoping that the exploration results over the next couple of months shine a light on the way forward for Bihor Sud.
Lyndsay: That’s the question I wanted to ask. You have so much in the bucket right now, what can investors look forward to in the coming quarters?
Kurt: Norra Kärr, a lot of progress really, but we have the Strategic Project status. We’re due to hear the first set of awards by the end of March. We’ve already said that we’re doing test work on the nepheline syenite and another product, potentially aegirine. We’re basically going to get a spec sheet that we can talk to the market about and see what the opportunities are as we move forward with pre-feasibility.
If we get a Strategic Project status, then we’ll press the button on pre-feasibility, which we said we’ll start in the second quarter and then later on in the year for Norra Kärr is a decision on the mining lease. Lots of progress with Norra Kärr.
With Woxna we’ve touched on, it’s putting a fresh coat of paint on the assets, updating that restart plan and then looking at the forward integration options and moving downstream. Additionally, try to tie up with somebody that wants to lock in that security of supply of natural graphite.
Then with Bihor Sud, there’s nothing more than exploration success. I’ve said in recent updates about Romania that we are looking to put both scale and grade on the picture. That we’re trying to show to the investors and something that we can mine. It’s plenty to keep my hands full
You can find Leading Materials on the TSX:V under the symbol LEM. For more information about the company visit leadingedgematerials.com.
Company shares last traded at $0.165.
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