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FRONTIER LITHIUM FILES NI 43-101 PRE-FEASBILITY STUDY FOR PAK PROJECT IN NORTHERN ONTARIO 

TSX.V RELEASE | July 14, 2023 | TSX.V:FL; FRA:HL2; OTCQX: LITOF

Sudbury, Ontario, – Frontier Lithium ("Frontier" or "the Company"), Ontario's leading lithium developer, has recently filed the "Pre-Feasibility Study for the PAK Project " technical report (the "Technical Report"). As communicated in a news release dated May 31, 2023, this Technical Report outlines the preliminary feasibility assessment of the 100% owned PAK Project, located north of Red Lake in Ontario, and a proposed hydrometallurgical plant that would convert spodumene concentrate feedstock into lithium chemicals. The Technical Report confirms the vertically integrated project could be North America’s largest and lowest-cost producer of lithium hydroxide, supplying the rapidly growing electric vehicle industry on the continent.  
The Technical Report is effective as of the 31^st day of May 2023, the summary press release is located at here. The full Technical Report is available on SEDAR (www.sedar.com) and can be located here.

Pre-Feasibility Study Highlights: A 24-year total project life, with after-tax pay back of capital expenditures in less than 5 years following commercial production 

• Life of Project Cash Flow (unlevered) of US$8.07 billion over 24-year total project life;
• Total initial capital expenditure estimate of US$468 million for the technical grade concentrator and expansion capital ofUS$576 million for the chemical grade concentrator and chemical plant with a contingency of 20% included.
• Sustaining Capital of US$90 million ;
• Post-tax Net Present Value at an 8% base case discount rate ("NPV ₈ ") of US$1,739 million and IRR of 24.1% [see Tables and Figures below];
• Post-tax net "undiscounted" Cash Flow (before initial capital expenditures) of US$5.98 billion ;
• Annual Average EBITDA of US$251.3 million ;
• Chemical plant producing 12,520 tonnes of battery-quality Lithium Hydroxide Monohydrate (LiOH-H ₂ O) per year with an average selling price of US$22,000 per tonne and a 7,360 tonnes of battery-quality Lithium Carbonate per year with an average selling price of US$20,500 per tonne;
• PAK and Spark deposits are open along strike and to depth;
• All-in cash costs of US$7,433 per tonne of Lithium Carbonate Equivalent; and
• After-Tax Pay Back of Capital Expenditures is 4.9 years after the start of commercial operations.

 
In addition, with regard to this particular release, the Company hereby presents the following sensitivity analysis tables and figures that were hitherto undisclosed. The sensitivity analysis reveals that the USD:CAD exchange rate and battery grade (“BG”) lithium hydroxide price have the most significant influence on both the Net Present Value (“NPV”) and Internal Rate of Return (“IRR”) compared to the other parameters, based on the ranges evaluated. Overall, the NPV and IRR of the Project is positive over the range of values used for the sensitivity analysis when the sensitivities are analyzed individually. 

PFS OVERVIEW

1.  LITHIUM CHEMICALS FOR THE NORTH AMERICAN ELECTRIC VEHICLE MARKET

• The PAK Project has the ability to produce 7,360 metric tonnes of lithium carbonate and 12,520 m.t. of lithium hydroxide annually. This production tonnage meets the specific requirements of original equipment manufacturers (OEMs), such as automotive companies operating in the North American electric vehicle market. As the electric vehicle market continues to evolve and expand, the ability to adapt and meet changing customer demands becomes crucial. The lithium chemicals to be produced by Frontier Lithium will be tailored to the needs of the industry, supporting the growth of electric vehicles manufacturing in the region and building in optionality for the future demand profiles through adjustments in production capacity and product mix to align with future market trends and customer preferences.

2.  A PHASED APPROACH

• The development of the PAK project and hydromet chemical plant will be completed in phases to allow for efficient resource allocation, to minimize upfront capital expenditure, and de-risk project execution. The first phase will focus on the production of spodumene concentrate to generate revenue and support the concurrent development of necessary infrastructure to build the proposed mine-to-lithium hydroxide chemical plant facility.  Implementing a phased approach also enables a more streamlined and controlled project development process, enabling a thorough understanding of the resource base and an optimization of the refining process in advance of chemical plant construction. This approach ensures that the subsequent refinery build-up is well-informed, efficient, and aligned with market demand.

3.  GROWING REGIONAL DEMAND

• The North American electric vehicle market is experiencing significant growth, with strong commitments of over CAD$25 billion to build Ontario battery capacity by 2030. This strong regional growth provides a favorable market environment for the lithium project. The project can capitalize on its strategic North American location, the growing demand for electric vehicles and the need for lithium chemicals to support battery production.
• The commitments to build Ontario battery manufacturing capacity indicate a long-term future in sustainable transportation and the development of the electric vehicle ecosystem. By supplying locally produced lithium chemicals, the project can contribute to the regional supply chain, reduce dependence on imports, and strengthen the overall resilience and competitiveness of the North American electric vehicle market.

4.  OPPORTUNITIES FOR FURTHER UPSIDE

• The project offers opportunities for further upside through the potential conversion of additional mineral resource to mineral reserves. The PFS reserve calculation includes only one-third of the identified resources. None of the 32.4 million tonne of inferred mineral resources were included in the PFS mineral reserves. This indicates significant exploration potential and the possibility of scaling the project.
• Frontier has a strong track record in resource exploration and development, and the continued exploration efforts within the PAK Lithium Project could uncover additional mineral resources. The potential to tap into additional resources ensures the project will be responsive to future market demands and supports long-term sustainability.