Mr. Edward Lee reports

NEVADA CLEAN MAGNESIUM AND SCANMAG AS BEGIN THE TECHNICAL DEVELOPMENT WORK PROGRAM

Meloy Innovation and Technology Center AS (MITC), under the supervision of ScanMag AS, has begun the development work on Nevada Clean Magnesium Inc.'s material testing program in Norway with the technical assistance from James Sever, PEng, of Alpha Omega Inc. in Spokane, Wash., who is also the president and a director of Nevada Clean Magnesium. Details of the joint venture between Nevada Clean Magnesium and ScanMag through MITC were announced by the company on June 22, 2015.

The development will begin with the purchase of the thermo gravimetric analyzer (TGA) unit by MITC. The unit is expected to arrive within 10 days. After some minor modifications to the unit, the first of a two-phase program will commence. It will include confirmation testing of the dolomite from the intended orebody, as well as assessment of potential reductants. There is particular interest is in the performance of one alternative material, which is being assessed as an alternative reductant to the more expensive ferrosilicon.

The testing program is expected to be completed by the end of the year. If successful, the companies will proceed with designing and development of the pilot program. This will comprise the fabrication of multiple pilot furnaces and installation of the necessary supporting auxiliary equipment to operate at a small production level. The pilot facility will be designed to allow for the incremental installation of additional equipment to bring the plant to full-scale production.

Lothar Maruhn, chief executive officer of ScanMag AS, stated: "We had meetings in Oslo with Enova SF, a governmental funding institution established in 2001. Its purpose is to drive forward the changeover in Norway to a more environmentally friendly use of energy in both its consumption and generation. Enova SF does not support companies in a normal investment manner, but supports companies through grants during [research and development] and the pilot phase. Enova SF pointed out that they can support ScanMag's metal project with up to 40 per cent of the investments and some of the operational cost if ScanMag divided their project into three phases: a [research and development] segment; a pilot phase; and a main investment phase or scaling-up phase."

Mr. Maruhn went on to say: "ScanMag will start the [research and development] phase, not directly, but through MITC, with the testing of the alternate reductants as a suitable raw material replacing the more expensive [ferrosilicon] 75 per cent. This phase will look to be finished by the end of 2015 in order for the board of directors of ScanMag can make the resolution to go to the pilot phase."

He concludes: "ScanMag is currently going through the project and dividing it into the two remaining phases: the pilot phase and scaling-up phase, complete with milestones. The pilot phase will be started if and when MITC receives positive results from the [research and development] phase at the end of 2015. ScanMag and Nevada Clean Magnesium are expecting positive things to come from the testing program, and both are always looking to other alternatives and options when it comes to raw materials and equipment designs in order to achieve a profitable project."

Ed Lee, chief executive officer for Nevada Clean Magnesium, explained: "We are obviously very pleased the development work has started and is definitely a positive for the shareholders of Nevada Clean Magnesium. The process that is being developed and installed at ScanMag will be directly utilized at the Tami Mosi project in Nevada. By having the comfortable and stable relationship with ScanMag, it offers us the chance to address and eliminate the technical process risks that are typically inherent with new operating projects.

The timing is right for magnesium metal production, especially if it can happen within the United States. The metal has a bright future with more opportunities than ever before. The material applications for magnesium metal is constantly evolving and expanding for three major industry sectors, including auto manufacturers needing to meet the CAFE [corporate average fuel economy] standards for 2025, where the use of magnesium to lighten the weight is a natural fit; the aerospace industry with the recent acceptance of magnesium for use in passenger spaces in commercial airlines by the Federal Aviation Administration (FAA) and its European counterpart, the European Aviation Safety Agency (EASA); and the energy sector where there is a drive to replace the $10-billion lithium battery market with magnesium as a more efficient and environmentally friendly alternative for batteries for electric cars and dry-cell applications."

Qualified person

James Sever, PEng, a qualified person recognized under National Instrument 43-101, supervised the preparation and approved the scientific and technical content in the news release.

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