Mr. Darrin Campbell reports

NAMIBIA CRITICAL METALS INC. ANNOUNCES POSITIVE PRELIMINARY ECONOMIC ASSESSMENT FOR THE SIGNIFICANTLY EXPANDED LOFDAL HEAVY RARE EARTH PROJECT "2B-4" WITH $632.7 MILLION PRE-TAX NPV

Namibia Critical Metals Inc. has released the results of its preliminary economic assessment (PEA) for the Lofdal heavy rare earth project 2B-4 in Namibia. This PEA aims at a significantly larger annual run-of-mine (ROM) and plant throughput of two million tonnes per year and longer mine life than the historical PEA of 2014 by mining from two subdeposits, namely Pit 2B and Pit 4. Further, the processing flow sheet was simplified to a direct flotation of the run-of-mine material and expanded to include a hydrometallurgical unit producing a greater than 98 per cent mixed rare earth oxide as final product instead of xenotime concentrate.

The Lofdal deposit has the potential for significant production of dysprosium and terbium, two of the most valuable heavy rare earth elements. The project is being developed in joint venture with Japan Oil, Gas and Metals National Corp. (Jogmec) targeting a long-term, sustainable supply of heavy rare earths to Japan.

Highlights:

• Net present value (NPV) of $632.7-million (U.S.) pretax and $391-million (U.S.) posttax;
• Internal rate of return (IRR) -- 34 per cent pretax and 28 per cent posttax;
• Life of mine (LOM) nominal cash flow of $1.1-billion pretax, $698.7-million posttax;
• Initial capital costs -- $207-million (U.S.) including a 30 per cent contingency;
• Capital payback period -- 3.2 years posttax;
• Approximate average annual production -- 2,000 tonnes TREO (total rare earth oxides) including 117 tonnes dysprosium and 17.5 tonnes terbium;
• PEA is based on mining of only 26 million tonnes resource or about 50 per cent of the 53 million tonnes in the mineral resource estimate issued in June, 2021;
• Estimated 16-year mine life with 13 million tonnes of low-grade stockpile likely expanding the life of mine;
• The price for rare earth oxides used: dysprosium oxide $587 (U.S.) per kilogram and terbium oxide $2,493 (U.S.)/kg;
• Average basket price of $91 (U.S.)/kg including third party separation costs.

Darrin Campbell, president of Namibia Critical Metals stated:

"This is a major step forward in establishing Lofdal as a world-class heavy rare project and a globally significant potential supplier of dysprosium and terbium, the two most valuable rare earth metals. This strong economic analysis supports the continued rapid development of Lofdal and we are moving forward with the next steps including prefeasibility study (PFS) of this extended mining operation over the next few months. This robust economic assessment is only on 50 per cent of our existing resource and we believe there is still considerable upside in exploration. Currently, processing testwork continues, and it is expected to further significantly improve recoveries in all processing steps which will allow the Lofdal project to become one of the major future sources of dysprosium and terbium globally."

Lofdal deposit

The Lofdal heavy rare earths deposit represents a district-scale (20 kilometre by 10 km) heavy rare earth element (HREE) mineralization in subvolcanic hydrothermal alteration zones. While high-grade zones (more than 0.2 per cent HREE) occur locally, the majority of the deposit resembles tens of m wide and km long zones of low-grade HREE-mineralization with an average grade of about 0.1 per cent HREE.

In order to develop the Lofdal project into a long-term producer of HREE, the company focused recent processing testwork on cost-efficient technologies to upgrade lower-grade material aiming at effects of economy of scale in a potential large-scale mining operation.

The company mined a total of 34,500 tonnes of mineralized material from a starter pit in the central Area 4 deposit in October, 2021 (press release Nov. 29, 2021). A 500 tonne sample was taken from the mineralized zone at a depth between 12 m and 15 m in order to minimize effects of surface-related oxidation. The material was blended to provide homogenized samples which are representative of the wider deposit at a grade of about 0.187 per cent TREO for bulk sample testwork.

Summary of mining results

The proposed mining method is conventional open-pit mining. Mineralized rock and waste would be drilled, blasted, loaded by hydraulic shovels and hydraulic excavators into off-highway dump trucks, and hauled to the processing plant. The basis for the pit design work was the mineral resource block model that was developed by MSA as part of the mineral resource estimate (see National Instrument 43-101 technical report and press release dated June 30, 2021).

The proposed mining method is the development of a slot in front of the mineralized zone at each level. The centralized slot will enable waste mining on one side while mining mineralized material on the other side. This methodology will also facilitate separating mineralized material from waste material. The target ROM feed to the processing plant is two million tonnes per annum. The plant feed is mineralized material with a TREO greater than or equal to 0.1 per cent. In the current schedule, the production ramps up to this over four years. Mineralized material with TREO greater than or equal to 0.05 per cent and less than 0.1 per cent is sent to a stockpile so it may be processed at a later stage if economics allow.

The combined life of mine of the two pits is 16 years. Due to the nature of the deposit, the resultant pits are narrow and deep. No backfilling is contemplated.

An assumed maximum pit slope angle of 63 degrees is applied to all slopes other than the low wall side, which follows the orebody and is at approximately 50 degrees. With the inclusion of the ramp system, the overall high wall slope in Pit 4 is approximately 55 degrees.

During the PFS stage, a switch to underground mining will be considered for more cost-efficient mining of the lower levels in the current pit shell, as well as to expand mining toward deeper parts of the resource.

Summary of processing results

Flotation test program

The metallurgical bulk sample test program was amended to include flotation tests directly on the fresh, low-grade sample, bypassing initially planned XRT (X-ray transmission) and XRF (X-ray fluorescence) sorting, which would result in additional losses. Iron removal by magnetic separation was moved to postflotation on a smaller concentrate stream reducing capex (capital expenditures) and opex (operating expenses) with minimal losses.

Flotation testwork was carried out at SGS Canada Inc. in Lakefield, Ont., and at UVR-FIA GmbH in Freiberg, Germany. Both institutions cumulatively conducted over 120 individual flotation tests using several types of collectors, depressants and considered thrifting of physical flotation conditions.

The impact of high intensity conditioning ahead of flotation yielded clearly improved flotation performance.

Best flotation results in regard to upgrade, recoveries and operating costs were achieved using moderate dosages of the collector Florrea 3900 and Calgon as depressant. Cleaner flotation concentrates from positive test runs produced at an overall mass pull of 2.7 per cent to 3.9 per cent, with a product grade of 4 per cent to 6 per cent TREO and a recovery of up to 70 per cent TREO. More importantly, the high value HREE, mainly hosted in xenotime, showed significantly better recoveries (58 per cent to 75 per cent heavy rare earth oxides (HREO)) than the light rare earth elements (LRRO) (49 per cent to 58 per cent LREO). Flotation tests on finer grind material reached up to 75.2 per cent recovery for the HREO, which represents a significant upside potential currently tested.

After defining the optimal flotation conditions, bulk flotation tests were conducted in quadruplicate to produce a flotation concentrate for downstream hydrometallurgical testing. Four bulk flotation tests demonstrated repeatable flotation performances on the low-grade feed material.

Significant upside potential also remains in further optimizing flotation conditions.

Hydrometallurgical testwork and results

The mineral concentrate produced by bulk flotation was used for downstream hydrometallurgical testing. Four bulk flotation tests demonstrated repeatable flotation performances on the low-grade direct ROM feed material. The cleaner flotation from the bulk test runs produced a concentrate-grade TREO ranging from 4.7 per cent to 6 per cent. This flotation concentrate marks the third such concentrate tested at the laboratories of SGS in Lakefield, Ont., to determine the potential for producing a marketable rare earth product with minimal impurities. The previous hydrometallurgical testwork at SGS had demonstrated the acid bake route is preferred due to lower reagent costs and higher recovery of the heavy rare earths compared with the caustic crack route.

A total of three acid bake and water leach tests were completed throughout the current test program to investigate the dissolution of rare earth elements (REE) and the behaviour of gangue minerals through the addition of sulphuric acid at elevated temperatures (300 degrees Celsius) and at a range of acid dosages (1 to 1.5 t/t concentrate basis). Under previously determined optimum conditions (2021 test program at SGS Canada), these tests showed very good REE recoveries with 96 per cetn for yttrium, 95 per cent for dysprosium and 94 per cent for terbium.

Results of the impurity removal and crude REE precipitation tests on the leached solutions corroborated chemistries with the previous test programs on the two flotation concentrates with low co-precipitation of REEs in the impurity removal stage (between 1 per cent and 9 per cent as compared with between 1 per cent and 15 per cent in previous) with similar precipitation of impurities. While the results are positive, there remains room to optimize these processes regarding opex and capex, as well as recoveries, in continuous pilot plant testing during the prefeasibility study.

The addition of a hydrometallurgical plant at Lofdal would create further jobs in the southern Kunene region of Namibia and provide a marketable product for export. The rare earth oxalate product with thorium and uranium levels below three parts per million (ppm) would be acceptable for import into Japan without restrictions or penalties.

Market analysis -- pricing

A price deck has been developed for the Lofdal project based on an internal review of pricing as well as peer reports (Mkango Resources LTD DFS July, 2022, and Search Minerals PEA June, 2022) which in turn were developed based on third party independent market forecast analysis.

The projected REO distribution for Lofdal concentrates is also presented in the table entitled: Pricing US$/kg. The projected basket price is $103.64 (U.S.).

Economic analysis

The economic analysis assumes that the project will be 100 per cent equity financed and uses parameters relevant as of September, 2022, under conditions likely to be applicable to project development and operation, and analyzes the sensitivity of the project to changes in the key project parameters. All costs have been presented in United States dollars and wherever applicable conversion from South African rand (ZAR) has utilized an exchange ratio of $16.07 ZAR to $1 U.S.

Mining and treatment data, capital cost estimates and operating cost estimates have been put into a base case financial model to calculate the IRR and NPV based on calculated project after tax cash flows. The scope of the financial model has been restricted to the project level and as such, the effects of interest charges and financing have been excluded.

For the purposes of the PEA, the evaluation is based on 100 per cent of the project cash flows before distribution of profits to the equity owners. Both pretax and posttax cash flows have taken 5-per-cent royalty payments into account.

At a discount rate of 5 per cent, the project is anticipated to yield a pretax IRR of 34 per cent with a NPV of $632,739,693, and a posttax IRR of 28 per cent with a NPV of $390,982,730. Cumulative cash flows are $1,110,393,637 pretax and $698,691,741 posttax over the 16-year LOM.

The project is expected to pay back initial capital within the first 3.2 years.

Recommendations

This PEA was based on the mineral resource estimate produced by The MSA Group in 2021. Significant upside potential exists down dip of Area 4 and Area 2B, as well as along the several-kilometre-long strike extensions of the mineralization in Areas 2 and 5. Therefore, with further exploration the ROM and/or lifetime of the Lofdal mine could be significantly increased.

Sorting of the ROM material was excluded from this PEA. However, historical and recent testwork at TOMRA showed several approaches for an optimization of the Lofdal mine. Further studies will focus on three ROM streams which will entail (1) higher-grade material directly supplied to the flotation circuit while (2) lower-grade material will run through a low-filter XRT sorting with an upgrade factor expected in the range of two to 2.5, and (3) very low-grade (stockpile) material, which will be XRT sorted with a high-filter aiming at upgrade factors in the range of 3.5 to four with relatively low recoveries around 50 per cent. The latter will also source about 13 million tonnes (Mt) of stockpile material which is not included in the current PEA.

While completing this PEA, further flotation tests are continuing at SGS aiming at further optimization of flotation. Specifically, grind size and collector dosage optimization bears significant upside for better recoveries and lower OPEX.

Qualified persons and NI 43-101 technical report

An NI 43-101 compliant report entitled "Preliminary Economic Assessment on the Lofdal Heavy Rare Earths 2B-4 Project, Namibia" will be filed on SEDAR within 45 days. SGS Canada is the principal author under the supervision of Michael Archer who is a qualified person in accordance with NI 43-101 -- Standards of Disclosure for Mineral Projects.

Sections of the report dealing with property description and location, accessibility, climate, local resources, infrastructure and physiography, history, geological setting and mineralization, deposit types, exploration, drilling, sample preparation, analyses, and security and data verification were completed by The MSA Group under the supervision of Jeremy Witley, BSc hons, MSc Eng, and Swinden Geoscience Consultants under the supervision of Scott Swinden, PhD, PGeo, who are qualified persons in accordance with NI 43-101.

The section of the report dealing with mineral resource estimates was completed by The MSA Group under the supervision of Mr. Witley, BSc hons, MSc Eng.

Sections of the report, dealing with mining methods, and mine capital and operating costs were completed by SGS Canada under the supervision of Bill van Breugel, BSc hons, PEng, who is a qualified person in accordance with NI 43-101.

Sections of the report, dealing with mining design and schedules were completed by BBMC RSA under the supervision of Johann Hager, BEng hons, MEng Mining, PEng, who is a qualified person in accordance with NI 43-101.

Each of Mr. Archer, Mr. Witley, Mr. Swinden, Mr. Hager and Mr. van Breugel have reviewed and approved the technical disclosure in this press release.

Rainer Ellmies, PhD, MScGeol, EurGeol, AusIMM and vice-president of Namibia Critical Metals, is the company's qualified person and has reviewed and approved the geological data in this press release.

About Namibia Critical Metals Inc.

Namibia Critical Metals holds a diversified portfolio of exploration- and advanced-stage projects in Namibia focused on the development of sustainable and ethical sources of metals for the battery, electric vehicle and associated industries. The two advanced stage projects in the portfolio are Lofdal and Epembe. The company also holds significant land positions in areas favourable for gold mineralization.

Heavy rare earths: The Lofdal dysprosium-terbium project is the company's most advanced project being fully permitted with a mining licence (ML 200) issued in 2021. The project is being developed in joint venture with Japan Oil, Gas and Metals National Corp.

Namibia Critical Metals owns a 95-per-cent interest in the Lofdal project with the remaining 5 per cent held for the benefit of historically disadvantaged Namibians. The terms of the Jogmec joint venture agreement with the company stipulate that Jogmec provides $3-million in term one and $7-million in term two to earn a 40-per-cent interest in the Lofdal project. Term three calls for a further $10-million of expenditures to earn an additional 10-per-cent interest. Jogmec can also purchase another 1 per cent for $5-million and has first right of refusal to fully finance the project through to commercial production and to purchase all production at market prices. The collective interests of Namibia Critical and historically disadvantaged Namibians cannot be diluted below a 26-per-cent carried working interest upon payment of $5-million to Jogmec for the dilution protection. The JV agreement is structured such that no Namibia Critical equity will be issued and it is totally non-dilutive to Namibia Critical shareholders. To date, Jogmec, has approved financing term one and two expenditures totalling $7.8-million.

Other exploration projects: The company's exclusive prospecting licenses (EPLs) prospective for gold are located in the central Namibian gold belt, which hosts a number of significant orogenic gold deposits, including the Navachab gold mine, the Otjikoto gold mine and, more recently, the discovery of the Twin Hills deposit. At the Erongo gold project, stratigraphic equivalents to the metasediments hosting the recent Osino gold discovery at Twin Hills have been identified, and exploration is progressing over this highly prospective area. The Grootfontein base metal and gold project has potential for magmatic copper-nickel mineralization, Mississippi Valley-type zinc-lead-vanadium mineralization and Otjikoto-style gold mineralization. Interpretation of geophysical data and regional geochemical soil sampling have identified first gold targets.

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