minago-nickel

Minago Technical Report August 2021

An independent Minago mineral resource estimate (“MRE”) was published in August 2021.  Minago Nickel Project (“Minago Project”) is in Manitoba’s Thompson Nickel Belt (“TNB”) in Canada.

The mineral resource estimate (MRE) includes a Measured and Indicated mineral resource of 722 million lbs of contained nickel and an Inferred mineral resource of 319 million lbs of contained nickel. All resources occur within a mineral lease that is surrounded by 94 mineral claims plus a second mineral lease held by the Company, comprising a total area of 197 km². The Minago Project has been the subject of over $40 million in exploration, feasibility study and environmental permitting expenditures by various previous interests since early 2000, the most recent of these being by Victory Nickel Inc.

The MRE was prepared by Mercator Geological Services Limited (“Mercator”). AGP Mining Consultants (“AGP”) provided pit optimization and associated services. Stantec Ltd. (“Stantec”) provided site visit and professional support on environmental permitting review.

Table 1: Minago Project Mineral Resource Estimate – Effective July 2, 2021

Type	Ni % Cut-off	Category	Rounded Tonnes	Ni %	Ni lbs (millions)
Open Pit	0.25	Measured and Indicated	23,940,000	0.71	374.30
		Inferred	2,070,000	0.57	26.01
Underground	0.5	Measured and Indicated	20,290,000	0.77	344.97
		Inferred	17,480,000	0.76	292.88
Combined	0.25/0.50	Measured and Indicated	44,230,000	0.74	721.58
		Inferred	19,550,000	0.74	318.94

See notes following Table 1

1. Mineral resources were prepared in accordance with the CIM Definition Standards for Mineral Resources and Mineral Reserves (MRMR) (2014) and CIM MRMR Best Practice Guidelines (2019).
2. Open Pit mineral resources are defined within an optimized pit shell with average pit slope angles of 45⁰ and overall 13.3:1 strip ratio (waste : mineralized material). The 13.3:1 strip ratio is comprised of a 6.2:1 pre-strip component and a 7.1:1 deposit component.
3. Pit optimization parameters include: metal pricing at US$7.80/lb Ni, mining at US$1.77/t, processing at US$7.62/t processed, G&A at US$3.33/t processed, and an average sulphide Ni (NiS) recovery above the cut-off grade of 78% (ranging from 40% to 90%), based on previous metallurgical test programs. An average Ni recovery of 56% can be calculated using the average NiS recovery and the average ratio of NiS to Ni (72%) reported above the cut-off grade. Concentrate by-product credits were applied at metal prices of US$3.25/lb (Cu), US$2,000/oz Pd and US$ 1,000/oz Pt. A potential frac-sand overburden unit was assigned a value of US $20/t, a recovery factor of 68.8 %, mining cost of US $1.77/t, and processing cost of US $6.55/t processed.
4. Mineral resources are not mineral reserves and do not have demonstrated economic viability.
5. Mineral resource tonnages are rounded to the nearest 10,000

Project Setting

The Minago Project is located in the southern extent of Manitoba’s TNB. Manitoba Provincial Highway 6 and a high-voltage (230 kV) transmission line both transect the Minago project area. Vale currently mines and produces nickel concentrates in Thompson at the heart of the TNB, 270 km northeast of the Minago project. Its nickel concentrates are shipped by rail to its Sudbury smelter for processing to refined nickel.

Metallurgical Program Results

SGS 2008 Metallurgical test program developed a sulphidic nickel head grade-recovery curve for use in pit optimization and economic assessment of the project. Flotation development tests and locked cycle tests (LCT) were conducted on a master composite of open pit mineralization samples having grades of 0.54% total Ni and 0.36% sulphidic Ni. Results of this work indicated that a nickel concentrate containing 22.27% Ni and 10.43% MgO can be produced with an equivalent sulphidic nickel recovery of 77.2% and a total nickel recovery of 52.3%.

Exploration Potential

The TNB is the fifth largest sulphide nickel belt in the world based on contained nickel endowment. It contains over 18 defined nickel deposits and has supported over 5 billion lbs of nickel production since 1959. Several producing and past-producing mines are located along the same fold-structure at Thompson, known as the Thompson Dome, and occur within a few kilometers of each other. The Thompson, Birchtree and Pipe mines have collectively produced 150 million tonnes grading 2.32% nickel since 1958. Vale’s Thompson operations produced 23Mlbs of Ni in 2020 (Vale Annual Report, 2020, dated March 23, 2021).

Minago has generally similar structural, geological and mineralogical characteristics as deposits located on the Thompson Dome to the north. Nickel mineralization defining the new MRE of the Minago Project remains open at depth and along strike.

Substantial volumes of nickel mineralization that are presently defined by drilling in the Nose Zone and North Limb Zone were excluded from the current MRE by the cut-off grades applied. The Company believes that some of this mineralization could be included in the MRE at higher nickel prices. The current optimized pit shell has a maximum depth of approximately 350 meters below surface.

Table 2: Minago Project MRE Sensitivity Study At Lower Cut-off – Effective July 2, 2021

Type	Ni % Cut-off	Category	Tonnes (‘000)	Ni %	Nickel (‘000 lbs)
Open Pit	0.15	Measured and Indicated	33,750	0.59	438,995
		Inferred	3,610	0.45	35,814
Underground	0.3	Measured and Indicated	31,910	0.65	457,271
		Inferred	33,640	0.6	444,981
Combined	0.15/0.3	Measured and Indicated	65,660	0.62	897,483
		Inferred	37,250	0.59	484,520

Regionally, historical drilling completed 5 km to the south of the Nose Zone (“South Target”), and 3 km to the northwest of the North Limb Zone (“O Limb Target”) by Amax Exploration from 1969 to 1971 encountered nickel mineralization similar in style to that at Minago. The Company believes that these two specific areas represent high priority targets for further exploration and potential resource expansion.

Environment Act License

In August 2011, the Minago Project achieved a major milestone when the Environment Act License (“EAL”) was issued by the province of Manitoba. The prior operator of the project subsequently filed a Notice of Alteration (NOA) to the EAL, in December 2013, related to relocation of the tailings management area to address First Nation concerns. Silver Elephant has re-engaged the Manitoba Government regarding the NOA status for the 10,000 tonne-per-day open-pit mining operation at Minago. The Agriculture and Resource Development Department (“ARDD”) has confirmed that the NOA can still be completed and the Company is currently working with ARDD to finalize the NOA approval, leading to issuance of an updated Environment Act License, which is expected by early 2022.

A socioeconomic assessment was conducted and the prior operator signed a Memorandum of Understanding (MOU) with First Nation groups in 2008. The Company is re-engaging the First Nations with traditional territories that include the project site to work toward renewal of the MOUs in 2021.

Several initiatives are being considered or taken to minimize the carbon footprint of potential future mining operation at Minago. For mining, the Company will examine the use of a fully electric mine fleet. For ore and waste processing, the crushing, milling and flotation processes would be powered by renewable hydroelectricity, which accounts for 97% of all electricity generation in Manitoba.

The Agriculture and Resource Development Department (“ARDD”) has expressed support for the Minago Project, which would supply much needed Class 1 high-purity nickel to make nickel-lithium batteries used in electric vehicles.

Company Remarks

The Company believes Minago has potential to support future production of Class 1, high-purity nickel for application in nickel-lithium batteries used in electric vehicles.

The Minago MRE demonstrates that the Minago Project is one of Canada’s largest undeveloped sulphide nickel deposits. In the next 12 months, the Company intends to carry out core drilling programs at Minago to expand existing mineral resources, address updating of environmental permitting established in 2011 to operate the project, and update historic Feasibility study.

Cautionary Note Regarding Forward-Looking Statements

Certain statements contained in this news release, including statements which may contain words such as “expects”, “anticipates”, “intends”, “plans”, “believes”, “estimates”, or similar expressions, and statements related to matters which are not historical facts are forward-looking information within the meaning of applicable securities laws. Such forward-looking statements, which reflect management’s expectations regarding the Company’s future growth, results of operations, performance, and business prospects and opportunities, are based on certain factors and assumptions and involve known and unknown risks and uncertainties which may cause the actual results, performance, or achievements to be materially different from future results, performance, or achievements expressed or implied by such forward-looking statements.

These factors should be considered carefully, and readers should not place undue reliance on the Company’s forward-looking statements. The Company believes that the expectations reflected in the forward-looking statements contained in this news release and the documents incorporated by reference herein are reasonable, but no assurance can be given that these expectations will prove to be correct. In addition, although the Company has attempted to identify important factors that could cause actual actions, events, or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events, or results not to be as anticipated, estimated, or intended. The Company undertakes no obligation to publicly release any future revisions to forward-looking statements to reflect events or circumstances after the date of this news or to reflect the occurrence of unanticipated events, except as expressly required by law.