Fort Cady Project

Overview

American Pacific Borate & Lithium Ltd (“APBL” or “the Company”) is developing the Fort Cady borate-lithium project (the “Project”) situated in the Barstow Trough of the central Mojave, located in the southeastern desert region of San Bernardino County, California. The Project is located near the town of Newberry Springs, approximately 50km east of the city of Barstow and 4km south of Interstate 40 (I-40) and the BNSF rail line (Figure 1). The Project area occurs approximately half way between Los Angeles (California) and Las Vegas (Nevada) around 200km from both cities. A hectorite clay mine, which is one the largest employers in the area, is directly adjacent to the Project.

Location of Fort Cady Project in California, USA

Figure 1. Location of Fort Cady Project in California, USA.

Borate application

Borosilicate glass: fibre optics

Project History

In total, over US$50m has been spent on the Fort Cady project, including licence acquisition, drilling and resource estimation (non-JORC), well testing, metallurgical testing, feasibility studies and pilot plant infrastructure. In addition, the project has previously obtained all operating and environmental permits required for commercial solution mining operations.

Duval Corporation evaluated the Fort Cady deposit in the late 1970’s and early 1980’s, completing over 30 diamond drill holes upon which the maiden non-JORC resource estimate was defined. An additional 17 production wells were completed in the following years which were used for injection testing and pilot-scale operations.

The first phase of pilot plant operations were conducted between 1987 and 1988 (Figure 2). Approximately 450 tonnes of boric acid was produced via solution mining of the colemanite ore body. Given the promising results of the pilot-scale tests, concentrated permitting efforts for commercial-scale operations began in early 1990. Final approval for commercial-scale solution mining and processing was attained in 1994.

Extensive feasibility studies, detailed engineering and test works were subsequently undertaken in the late 1990’s and early 2000’s. This included a second phase of pilot plant operations between 1996 and 2001 during which approximately 1,800 tonnes of a synthetic colemanite product (marketed as CadyCal 100) was produced. Commercial-scale operations were not commissioned due to low product prices and other priorities of the controlling entity. APBL executed a Share Purchase Agreement with the project vendors (Atlas Precious Metals Inc.) in May 2017 to purchase 100% of the project.

Pilot Plant Operations

Figure 2. Pilot plant operations (in distance) ca.1987. Hectorite clay mine to right.

Borate application

Borosilicate glass: pharmaceuticals

Geology

The project area is located in the Barstow Trough of the central Mojave. The Mojave comprises a structural entity commonly referred to as the Mojave block, and is bounded on the southwest by the San Andreas fault zone and the Transverse Ranges, on the north by the Garlock fault zone, and on the east by the Death Valley and Granite Mountain faults. The central Mojave region is made up of a number of relatively low mountain ranges separated by intervening basins which are floored primarily by alluvium. The central Mojave area is cut by numerous faults of various orientations but which predominantly trend to the northwest.

A dominant feature of the region is the Barstow Trough, which is a structural depression extending northwesterly from Barstow toward Randsburg and east-southeasterly toward Bristol. The Barstow Trough is characterized by thick successions of Cenozoic sediments, including borate-bearing lacustrine deposits, with abundant volcanism along the trough flanks. The northwest-southeast trending trough initially formed during Oligocene through Miocene times. As the basin was filled with sediments and the adjacent highland areas were reduced by erosion, the areas receiving sediments expanded, and playa lakes, characterized by fine-grained elastic and evaporitic chemical deposition, formed in the low areas at the centre of the basins.

Exposures of fine-grained lacustrine sediments and tuffs, possibly Pliocene in age, are found throughout the project area. Younger alluvium occurs in washes and overlying the older lacustrine sediments. The project area is covered by Recent olivine basalt flows from Pisgah Crater, which is located approximately two miles east of the site (Figure 3). Thick fine-grained, predominantly lacustrine mudstones appear to have been uplifted, forming a block of lacustrine sediments interpreted to be floored by an andesitic lava flow.

The ore body is elongated in shape and trends northwesterly, extending over an area of about 380 acres at an average depth of approximately 400m to the top of the deposit. The eastern margin of the ore body appears to be roughly linear, paralleling the Pisgah Fault which lies approximately one mile to the west. The ore body consists of variable amounts of calcium borate (colemanite) within the mudstone matrix. X-ray diffraction analysis of the ore body mineralogy indicated the presence of the evaporite minerals anhydrite, colemanite, celestite, and calcite. The mineralogy of the detrital sediments included quartz, illite, feldspars, and the zeolite clinoptilolite. The deposit underlies massive clay beds which appear to encapsulate the evaporite ore body on all sides as well as above and below the deposit. This enclosed setting makes the deposit an ideal candidate for in-situ mining technology affording excellent containment of the leachate solution.

Fort Cady Project Surface Geology

Figure 3. Fort Cady Project surface geology (plan view) highlighting APBL projects.

Borate application

Ceramic glazes

Fort Cady Borate-Lithium Project

The Fort Cady borate-lithium project is focused on building on the extensive historical studies completed on the project. APBL’s programme of works is primarily focused on defining a maiden JORC Code (2012) mineral resource estimate for borate and lithium. Historical drilling results were previously used to define three non-JORC mineral estimates, including 115Mt @ 7.4% B2O3 (Duval Corp., 1982). A lithium mineral estimate of 80Mt @ 313ppm Li was also defined within part of the borate formation (PT GMT, 2015). The full source details of the above estimates are listed in the Independent Geologists Report in the July (2017) Prospectus. In conjunction with establishing a JORC resource estimate, the Company is undertaking geotechnical studies aimed at assessing the viability of underground mining the thicker, high-grade core of the borate deposit (Figure 4). These activities will also be incorporated into finalising a Scoping Study to highlight the project financial metrics.

Following the drilling programme, APBL conduct selective metallurgical studies and pilot-scale testing to optimise the process design for recovery of boric acid and lithium carbonate. Finalisation of the well engineering and process design will be expedited given the previously completed feasibility studies conducted by former owners. All the aforementioned activities will be incorporated into a Definitive Feasibility Study to highlight the economic potential of the Fort Cady borate-lithium project and have it construction ready.

Duval Corp Drilling

Figure 4. +5% B2O3 grade x thickness zone defined from Duval Corp. drilling.

Borate application

Textile fibreglass

Hector Extension Lithium Project

In addition to APBL assessing the leachability of lithium from within the borate-bearing rock formation, the Company is assessing the sourcing lithium-enriched brines to use as leachate make-up water for solution mining and processing. Ambient brines within the borate ore body have previously been determined to contain up to 91ppm lithium which would be liberated as a function of solution mining. The Company is also assessing its land tenure for structurally hosted lithium-enriched brines towards the centre of the Hector basin. It is postulated that lithium-enriched brines would migrate in this direction during basin formation due to the high mobility of lithium ions. It is also postulated that repeated episodes of volcanism and associated hydrothermal processes have upgraded the lithium concentrations in ground waters (Figure 5). This has the potential to allow the Company to produce a lithium by-product stream from which lithium salts could be produced.

Schematic East-West Cross-Section of the Fort Cady Project

Figure 5. Schematic east-west cross-section of the Fort Cady Project.

Borate application

Thin-film-transistor (TFT) LCD screens

Permitting

The status of the key permits required for commercial-scale operations at Fort Cady are highlighted in Figure 6. The project area as defined in the Land Use permits and EIS/EIR consists of approximately 6,500 acres, 343 acres of which would comprise disturbed lands. The Company holds land title to approximately 4,409 acres in or adjacent to the approved project area. Phase 1 of the operation comprises a well field and solution mining operation and processing facility with the capability of producing 90,000 tonnes of boric acid per year. Phase 1 operations detailed in the active land use permits and consists of:

  • a 273-acre ore body well field;
  • a process water supply well network used to produce and route process water;
  • a 10-acre processing facility;
  • 43.5 acres of ancillary facilities, including a natural gas pipeline to serve a cogeneration power facility and an electrical transmission line;
  • a 16-acre deposition area to store gypsum;
  • a railroad spur to provide bulk shipment capability; and
  • a system of access roads to connect site facilities providing access to local road and highway corridors.

The Company will also assess expansion of the solution mine well field and production facilities to produce up to 250,000 tonnes per year of boric acid (Phase 2).

Status of Key Permits required for Pilot- and Commercial-Scale Operations

Figure 6. Status of key permits required for pilot- and commercial-scale operations.

Borate application

Biocides

Solution Mining

The project will employ in-situ solution mining. In-situ technology was developed commercially in the 1970’s and has been applied to the commercial production of uranium, copper, salt, potash and soda ash. The use of in-situ technology to mine boric acid from the underlying borate deposit on-site was developed on the Fort Cady property in the 1980’s. Searles Valley Minerals currently utilises the in-situ solution mining technique at its borates and soda ash mine approximately 140km northwest of the Project area.

In simplified terms, the solution mining technique to be utilised at Fort Cady involves:

  • Pumping lithium-enriched brines and/or brackish water from approved water well sites to the processing plant site
  • Pumping the warm (38°C) and weak hydrochloric acid (5% HCl) make-up solution into the ore body approximately 425m below the surface;
  • A chemical reaction between the acid and the alkaline elements in the ore body (colemanite) which forms boric acid in the solution; and
  • The pregnant leach solution then being extracted to the surface by a reverse-pumping process (Figure 7).
Schematic Showing Well Field and Solution Mining Production Holes

Figure 7. Schematic showing well field and solution mining production holes.

Borate application

Fertiliser micronutrient

Processing

The Company is in the process of optimising the process design for the Project. Current work programmes are building on the extensive amount of metallurgical and pilot-scale test work previously conducted on the Project. It is envisaged the optimised flow design will be broadly based on that utilised during the first pilot plant operation between 1987 and 1988. Following is a brief summary of the process design as envisaged by APBL. A simplified process flow chart is shown in Figure 8.

The pregnant liquor recovered during solution mining will spend a short amount of time in a clarifier tank. The overflow stream would go to the first stage night cooling thickener where boric acid will crystallise during night time cool temperatures and settle out. The crystals will then be removed as a slurry and sent to a belt filter separation and washed in the recovery plant. The lower grade tail solution will be treated by liquid – liquid solvent extraction (“SX”), using the alcohol based reagent iso-octanol. Liquid – liquid solvent extraction allows the plant footprint to be reduced as several purification steps are eliminated as are most of the evaporation ponds.

The crude crystals are refined and hydrochloric acid is regenerated through the reaction of calcium chloride with less costly sulphuric acid. This reaction also causes some gypsum to be formed which is settled out of solution. Lithium salts are planned to be similarly produced using liquid – liquid SX and chemical precipitation.

Following drying, the finished technical grade products of high purity will be bulk packaged and shipped to industrial consumers by rail spur from the property. The raffinate solution tail grade is expected to be very low in boric acid. Hydrochloric acid is added to the raffinate to adjust it to the correct strength. The solution is then re-injected into the ore body for additional leaching.

Simplified Process Flow Chart for the Fort Cady Project

Figure 8. Simplified process flow chart for the Fort Cady Project.

Lithium application

Lithium-ion batteries

Infrastructure

The project area is exceedingly well served by infrastructure. (Figure 9). The I-40 highway and the main BNSF rail line serving Los Angeles run alongside each other just 4km to the north of the project area. There is a major gas pipeline also running along this infrastructure corridor and the main electricity trunk line owned by Southern California Edison runs directly through the project area. The area is served by Barstow-Daggett county airport located just 20km away from the project site, on the way to Barstow.

Air Photo Highlighting the Existing Infrastructure in the Project Area

Figure 9. Air photo highlighting existing infrastructure in project area.

Borate application

Soaps and detergents

Benefits

The Planning Commission of the County of San Bernardino (“the Commission”) in approving the Conditional Use Permit and Reclamation Plans for the Project in 1994 identified that development of the Fort Cady mine would generate the following social and economic benefits. Many of these still hold true, including:

  • The Barstow area is currently experiencing a high unemployment rate. Phase 1 project construction is expected to take nine months and require approximately 76 workers.
  • The project is expected to employ approximately 80 full time workers during the operational life of Phase 1 of the project, approximately 65 of whom would be from the local area. Most of the workers, with the exception of skilled engineers, geologists, and the operation manager, would not require specific mining-related skills; in-situ mining equipment (pumps and other related machinery) can be operated by local trained workers, and no prior experience is considered necessary.
  • With approximately 80 employees, the Project would be one of the largest manufacturing employers in the immediate Barstow area.
  • In addition, the project would not only be a source of wages and salaries for local residents, thus adding another source of personal income to the local economy, but also the construction itself would require various goods and services from local suppliers.
  • Sales taxes on these purchases as well as those on taxable retail purchases of project personnel would accrue to city and county governments.
  • The proposed action is expected to result in local governments experiencing a small but positive cash flow, as revenues from sales and property taxes should exceed the incremental costs of providing public services to the project.
  • Recovery of a valuable resource from the site which will contribute to the state and national economy.

Borate application

Borosilicate glass: OLED displays

Competent Persons Statement

The information herein that relates to exploration results and historical mineral estimates is based on, and fairly represents, information and supporting documentation compiled by Lachlan Rutherford (PhD, MBA) the Company’s Head of Strategy & Corporate Development. Dr Rutherford is a competent person who is a member of the Australian Institute of Mining & Metallurgy, and a full time employee of the Company. Dr Rutherford has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a competent person as defined in the 2012 edition of the JORC Code. Dr Rutherford consents to the inclusion of the matters based in this Prospectus on his information noted in the form and context in which it appears.

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