Mr. Martine Turenne reports

FPX NICKEL DELIVERS PFS FOR BAPTISTE NICKEL PROJECT WITH AFTER-TAX NPV OF US$2.01 BILLION AND 18.6% IRR

FPX Nickel Corp. has released results from the preliminary feasibility study (PFS) for its 100-per-cent-owned Baptiste nickel project in central British Columbia, with an after-tax net present value (8 per cent) of $2.01-billion and internal rate of return of 18.6 per cent at $8.75/pound Ni. The PFS has been prepared in accordance with National Instrument 43-101 and demonstrates the potential to develop a high-margin, long-life, large-scale and low-carbon mine with unparalleled flexibility to produce either a high-grade concentrate (60 per cent nickel) for direct feed into the stainless steel industry (the base case) or further refining into battery-grade nickel sulphate, cobalt precipitate and copper concentrate products for the battery material supply chain (the refinery option). All amounts are in U.S. dollars unless otherwise indicated.

Highlights:

• After-tax NPV (8 per cent) of $2.01-billion and IRR of 18.6 per cent at $8.75/lb Ni;
• 29-year mine life producing an average 59,100 tonnes per year of nickel;
• Phased development approach, with expansion following the 3.7-year after-tax payback period;
• Life-of-mine (LOM) average C1 operating cost of $3.70/lb Ni ($8,150/tonne), assuming no byproduct credits;
• LOM average annual pretax free cash flow of $578-million during operating years;
• Strategic product flexibility, with a base case high-grade nickel concentrate (60 per cent nickel) for direct feed to the stainless steel industry, plus a refinery option to produce battery-grade nickel sulphate.

"The PFS firmly establishes Baptiste as a key strategic asset in the development of Canada's critical minerals supply chain," commented Martin Turenne, FPX's president and chief executive officer. "Despite the inflationary pressures observed in the mining industry in recent years, the study has yielded after-tax NPV and IRR superior to those observed in the 2020 preliminary economic assessment, reflecting greater engineering maturity and incorporating the several optimizations identified by our class-leading project team in regards to resource modelling, mine planning, process recovery and site design. The Baptiste project represents a significant opportunity for first nations, the governments of British Columbia and Canada, and FPX to work together to develop a project that creates substantial and sustainable benefits while protecting the environment for future generations. We look forward to continued collaboration with local indigenous groups, and the provincial and federal governments to support the development of Canada's critical minerals ecosystem and to leverage health, economic and social benefits for local communities."

Webinar and presentation

The company's management will host a live webinar on Wednesday, Sept. 6, at 10 a.m. Eastern Time (7 a.m. Pacific Time) to provide an overview of the PFS results and to answer questions from participants.

The results of the PFS are summarized in a corporate presentation available on the homepage of the company's website.

PFS overview

The base case outlines an open-pit mining project in central British Columbia which will produce an average of 59,100 tonnes of nickel per year in concentrate over a 29-year mine life. The project will be developed in a phased approach, with an initial mill throughput rate of 108,000 tonnes per day (phase 1), followed by an expansion to 162,000 tonnes per day (phase 2) financed from free cash flow after the initial after-tax payback period of 3.7 years. The mining strip ratio averages 0.41 in phase 1, and 0.56 over all for life-of-mine (excluding capitalized prestripping).

The project will utilize a conventional processing flowsheet with SAG (semi-autogenous grinding) mill-based grinding followed by magnetic separation, froth flotation and a flotation tailings leach circuit, as previously described in the company's June 27, 2023, news release. Overall Davis tube recoverable (DTR) nickel recovery is estimated to average 88.7 per cent for the life of mine, with 93 per cent of the nickel produced contained in a high-grade flotation concentrate (60 per cent nickel) and the balance (7 per cent of nickel produced) contained in a mixed hydroxide precipitate (MHP) produced from a tailings leach circuit.

The project will be supplied with low-carbon power from the BC Hydro provincial electricity transmission grid, resulting in an estimated scope 1 and 2 carbon intensity of 2.4 tonnes carbon dioxide/tonne nickel produced, placing Baptiste within the lowest decile of global nickel production. The project will be accessed by a road system consisting of upgrades and expansions to an existing forest service road (FSR) network. All mine tailings and waste rock are proposed to be managed within a single integrated facility that will utilize open-pit prestripping material and waste rock for embankment construction.

Base case economics are presented herein, based on a $8.75/lb nickel price.

The refinery option outlines an off-site refinery to upgrade a portion of nickel in concentrate to produce 40,000 tonnes per annum (tpa) of battery-grade nickel sulphate for the electric vehicle battery supply chain, with the balance of concentrate continuing to be directly supplied to the stainless steel industry. Along with battery-grade nickel sulphate, this option also supports the valorization of cobalt and copper as refinery byproducts. The refinery option presents incremental capital expenditure of $448-million with an incremental operating cost of $1.02 per pound of nickel (C1 cost of 79 cents/lb Ni, including credits for cobalt and copper byproducts), resulting in total NPV (8 per cent) of $2,127-million. further discussion of the refinery option is contained within the refinery option section near the end of this news release.

Mining and mineral reserves

The Baptiste deposit will be mined as a conventional large-scale truck and shovel operation with up to 60 million tonnes (Mt) of material mined per year during phase 1 and up to 120 Mt of material mined per year during phase 2. The mining operation will feature 250-millimetre blast-hole electric drills, 42-cubic-metre electric excavators and 300-tonne haul trucks working on nominal 10 m high benches. A flexible combination of dozers, graders, wheel loaders and excavators will form the core of the support equipment fleet.

The mineral resource estimate (effective Nov. 14, 2022; see FPX news release) for the project is based on updated drilling from the 2021 season, informing the Baptiste deposit geological model. Taking advantage of the resource shape and local topography, mining will commence at the south of the deposit before moving northwest and northeast, respectively. This approach provides two distinct advantages during the initial operating years, including a higher average mill feed grade and a lower mining strip ratio. This approach allows capital advantages through the deferment of mining equipment to sustaining costs, as well as a lower mining operating cost during phase 1.

A summary of the PFS mine plan is presented herein.

The probable mineral reserves for the project are estimated at 1,488 Mt at an average grade of 0.13 per cent DTR nickel (0.21 per cent total nickel), resulting in 1,933,000 tonnes of contained DTR nickel metal (3,125,00 tonnes of total nickel metal) over the 29-year mine life. Included in waste material for the PFS are 44 Mt of inferred material at an average grade of 0.113 per cent DTR nickel.

Metallurgy and process facilities

The PFS metallurgical test work program involved multiple bench- and pilot-scale campaigns (see FPX's June 27, 2023, news release). The overall processing strategy takes advantage of awaruite's unique characteristics in a simple flowsheet utilizing well-proven unit operations. The estimated life-of-mine DTR nickel recovery for the PFS is 88.7 per cent, as presented herein. Based on average grade of 0.21 per cent total nickel, this equates to a 55-per-cent total nickel recovery.

The process plant will be developed in two phases, with the phase 1 plant capable of processing 108,000 tonnes per day (tpd) of ore, and the phase 2 expansion bringing total processing capacity to 162,000 tpd. Processing facilities utilize conventional unit operations and configurations in comminution, magnetic separation, flotation and tailings leach.

In consideration of ore grindability, low abrasivity and low power cost, comminution will consist of primary gyratory crushing, followed by SAG mill and ball mill grinding. Based on awaruite's intense magnetic response, a coarse primary grind of 250 mm allows approximately 84 per cent of the fresh plant feed to be diverted directly to final tailings in the primary magnetic separation stage. Followed by two stages of regrind and cleaner magnetic separation, a further 12 per cent of fresh plant feed is diverted to final tailings, resulting in a magnetics only concentrate consisting of awaruite and magnetite. This results in a flotation circuit which only needs to treat less than 5 per cent of fresh plant feed.

Flotation utilizes well-defined conditions in conventional mechanical flotation cells. Roughing flotation followed by four stages of cleaning flotation produce a high-grade nickel concentrate (60 per cent nickel) which is then dewatered, briquetted and bagged for sale to market. Flotation tailings are subjected to mild atmospheric tank leaching conditions to recover nickel not recovered in flotation (approximately 6.5 per cent of DTR nickel). Leach solution is purified and nickel is subsequently precipitated to an MHP product (containing 45 per cent nickel) which is then dewatered and bagged for sale to market.

Other facilities

The proposed tailings facility design considers management of tailings and mine waste in a single integrated facility, utilizing open-pit prestripping material and waste rock for dam construction. Deposition of waste rock and tailings is considered within the open pit in the final years of operations. The tailings facility will incorporate cross-valley dams and is situated in close proximity to the open pit, with gravity flow of tailings for the first six years of operations, followed by the installation of a tailings pumping system in year 7.

The conceptual site water management plan includes management of site contact water in the tailings facility with collection of runoff water downstream of all other project infrastructure/disturbances. PFS water balance modelling indicates the site to be in an annual water deficit, requiring a modest allowance for freshwater makeup during operations, including for potable water requirements.

The project considers a full suite of on-site infrastructure and ancillaries. Both the construction and operation phases will be supported by an on-site camp facility.

The project will connect with BC Hydro's low-carbon grid, with multiple options having been validated through a formal BC Hydro study. The PFS considers a 230-kilovolt connection to the Glenannan substation located to the south of the project, with a line length of approximately 155 kilometres. The current FSR network will suitably support the early stages of site construction. The current road network will be upgraded, including minor expansions, at the end of the first year of construction, resulting in reduced travel times to site. No other off-site facilities are envisioned to be required for the project.

Project execution

The critical path runs through the environmental assessment (EA) and permitting process, with an anticipated EA decision in the first quarter of 2027. Approximately nine to 12 months off the critical path are engineering studies, with key events including the feasibility study and front-end engineering and design (FEED) ahead of the final investment decision (FID). Following a positive EA decision and permitting the project through 2027, the FID will approve the project to proceed with construction early works commencing in early 2028, followed by full construction and subsequent production of first nickel in the fourth quarter of 2030.

Capital cost estimate

Initial capital costs have been estimated in alignment with AACE (Association for the Advancement of Cost Engineering) Class 4 standards and have a stated accuracy of plus/minus 25 per cent. The PFS contributors completed engineering, design and costing inputs for their respective scope, with the overall estimate consolidated by Ausenco Engineering Canada Inc. Sustaining and expansion capital costs have been estimated in alignment with AACE Class 5 standards, and closure capital costs have been estimated on an order-of-magnitude basis.

The total initial capital cost for the project is estimated to be $2,182-million and is expended in years 3, 2 and 1 ahead of start-up at the commencement of year 1. Expansion capital cost is estimated to be $763-million and is expended ahead of expansion start-up at the commencement of year 10. Sustaining capital cost is estimated to be $1,281-million. Total closure capital cost is estimated to be $284-million. No salvage value is considered due to the 29-year mine life.

Operating cost estimate

Total operating costs are estimated to average $8.15 per tonne milled for life of mine, for an equivalent C1 cost of $3.70/lb nickel produced (exclusive of any byproduct credits). Phase 1 operating costs of $7.88/t milled are lower than the life-of-mine average, primarily due to the impact of the lower strip ratio in the early operating years. Inclusive of royalties, sustaining capital, expansion capital and closure capital, AISC (all-in sustaining cost) is estimated to average $4.17/lb nickel produced for life of mine.

Mine operating costs are estimated to average $3.14 per tonne milled for life of mine, with lower costs during phase 1 ($2.59 per tonne milled) due to the lower strip ratio. Processing costs are estimated to average $3.63 per tonne milled for life of mine, with the phase 2 costs slightly lower due to increased throughput. G&A averages $1.09 per tonne milled for life of mine, benchmarking consistently with nearby major operating mines. Concentrate transport averages 29 cents per tonne milled for life of mine, assuming shipment of concentrates from Baptiste to East Asia.

The project is subject to a 1-per-cent net smelter return (NSR) which is payable on annual sales less transportation costs to market.

Economic analysis

At an assumed nickel price of $8.75/lb and a Canadian dollar:U.S. dollar exchange rate of 0.76, the project generates an after-tax NPV (8 per cent) of $2.01-billion, an after-tax IRR of 18.6 per cent and an after-tax payback of 3.7 years.

CRU, a leading provider of analysis and consulting in the mining, metals and fertilizer markets, prepared a market analysis report that looked at the global ferronickel (FeNi) market and considered the applicability of the Baptiste FeNi briquette to stainless steel production and the strong comparability of the Baptiste FeNi briquette to standard FeNi. Based on an average of the last six years of published data from a leading Western ferronickel producer, payability of 95 per cent of the LME nickel price has been assumed for the Baptiste FeNi product.

Based on published market data, the payability for nickel content in MHP ranged from 70 per cent to 90 per cent of the LME nickel price over the 2020 to 2022 period, with the low end of that payability range coinciding with the period of extreme market volatility and elevated LME nickel prices in the first half of 2022. For the purposes of the PFS economic analysis, payability of 87 per cent of the LME nickel price has been assumed for the Baptiste MHP product.

The PFS models provincial mining taxes in accordance with the British Columbia Mineral Tax Act, and combined provincial and federal income taxes. The PFS reflects the impact of the federal government's refundable critical minerals investment tax credit, announced in the 2023 federal budget, which is proposed to be equal to 30 per cent of the capital cost of eligible property for the extraction and processing of certain critical minerals, including nickel. The PFS estimates total LOM taxes paid of $6.3-billion (Canadian) including $2.5-billion (Canadian) to the Province of British Columbia and $3.8-billion (Canadian) to the government of Canada, implying an estimated LOM tax rate on taxable income of approximately 37 per cent.

As seen herein, the project is most and equally sensitive to nickel price and recovery; however, economics remain robust at levels below base case assumptions. In keeping with the long mine life, the project is more sensitive to operating cost than initial capital cost.

Refinery option

To demonstrate Baptiste's strategic flexibility to also produce nickel and cobalt for the battery material supply chain, a refinery option was developed to be discrete from the base case, envisioning the operation of a stand-alone refinery in central British Columbia. Located in an urban setting, the refinery would benefit from the infrastructure, services and labour which would be available at an integrated battery material processing hub, such as those being developed in Eastern Canada and other locations worldwide.

The refinery flowsheet has been optimized based on the results of FPX's hydrometallurgical test work program (see FPX's May 17, 2023, news release). Substantial improvements to the refinery flowsheet are centred in the optimization of the leaching circuit and the resultant simplification of downstream purification requirements.

The refinery is sized to produce 40,000 tonnes per year of nickel contained in battery-grade nickel sulphate. In addition, the refinery would produce approximately 700 tonnes per year of cobalt in MHP and 300 tonnes per year of copper in concentrate. For the refinery option, the balance of nickel produced at the Baptiste mine (over and above the 40,000 tonnes in nickel sulphate) would continue to be marketed as a FeNi product to the stainless steel industry.

Based on market data published by Asian Metal, the 2022 nickel sulphate price in China ranged from a low of $23,677 to a high of $33,036 per tonne of contained nickel. For the Baptiste nickel sulphate product, a premium of $1/lb ($2,205/tonne) to the assumed base LME Ni price of $8.75/lb ($19,290/tonne) has been applied in the refinery option economic analysis.

Initial capital costs for the refinery option have been estimated in alignment with AACE Class 5 standards. As seen herein, the refinery option economics are comparable with the base case.

Indigenous engagement

The Baptiste area is located on the traditional territories of Tl'azt'en Nation and Binche Whut'en and within several Tl'azt'enne and Binche Whut'enne keyohs, a traditional governance system of the Dakelh people of the Stuart-Trembleur Lake area. FPX has maintained regular engagement with Tl'azt'en Nation and Binche Whut'en, formalizing those activities with a memorandum of understanding (MoU) signed in 2012 with Tl'azt'en Nation, and an exploration and development memorandum of agreement (MoA) signed in 2022 with the Binche Keyoh Bu Society.

FPX acknowledges the potential impacts of resource projects and the concerns that indigenous communities may have for such activities occurring on their territories. The company has been working collaboratively and meeting with local communities to understand key valued species and habitats in order to avoid and minimize impacts, and to identify significant mitigations and enhancements that have the potential to create long-term environmental benefits for the local area. The company is committed to ensuring the rights of indigenous peoples are respected, and is focused on working with indigenous leadership to advance a modern mining project that is aligned with global sustainable development goals and that protects people and the environment. FPX looks forward to continuing to evaluate all aspects of the potential project, building on continuing geological and engineering studies, indigenous-led cultural and environmental baseline studies, and continued early engagement with all potentially affected communities.

Technical report

FPX intends to file on SEDAR and the FPX website within 45 days of this news release the technical report for the PFS prepared in accordance with the requirements of National Instrument 43-101, including a description of the updated mineral resource estimate and the mineral reserve estimate. For readers to fully understand the information in this news release, they should read the technical report in its entirety, including all qualifications, assumptions, exclusions and risks that relate to the PFS. The technical report is intended to be read as a whole, and sections should not be read or relied upon out of context.

PFS contributors

The Baptiste PFS included contribution from the parties listed herein, each of whom is a qualified person under NI 43-101.

Qualified persons Mr. Murray, Mr. Voordouw, Mr. Reimer, Mr. Flynn, Mr. Mysak and Mr. Garcia all visited the Baptiste nickel project site during the development of their respective PFS contributions. Additional information can be found in the pending technical report.

Qualified person

The PFS contributors prepared or supervised the preparation of information that forms the basis of the PFS disclosure in this news release.

Andrew Osterloh, PEng, senior vice-president, projects and operations, for FPX, is a qualified person as defined by NI 43-101. Mr. Osterloh has reviewed and approved the technical content of this news release.

About the Decar nickel district

The company's Decar nickel district represents a large-scale greenfield discovery of nickel mineralization in the form of a naturally occurring nickel-iron alloy called awaruite (Ni3Fe) hosted in an ultramafic/ophiolite complex. FPX's mineral claims cover an area of 245 square km west of the Middle River and north of Trembleur Lake, in central British Columbia. Awaruite mineralization has been identified in several target areas within the ophiolite complex including the Baptiste deposit and the Van target, as confirmed by drilling, petrographic examination, electron probe analyses and outcrop sampling. Since 2010, approximately $30-million has been spent on the exploration and development of Decar.

Of the four targets in the Decar nickel district, the Baptiste deposit has been the focus of increasing resource definition (a total of 99 holes and 33,700 metres of drilling completed), as well as environmental and engineering studies to evaluate its potential as a bulk-tonnage open-pit mining project. The Baptiste deposit is located within the Baptiste Creek watershed, on the traditional and unceded territories of Tl'azt'en Nation and Binche Whut'en, and within several Tl'azt'enne and Binche Whut'enne keyohs. FPX has conducted mineral exploration activities to date subject to the conditions of its agreements with the nations and keyoh holders.

About FPX Nickel Corp.

FPX Nickel is focused on the exploration and development of the Decar nickel district, located in central British Columbia, and other occurrences of the same unique style of naturally occurring nickel-iron alloy mineralization known as awaruite.

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