Thunder Bay North Critical Minerals

• Located 60km southeast of the Lac Des Iles project previously owned by North American Palladium which was recently acquired for C1$ billion by Impala Platinum Holdings.
• Significant drilling on the TBN project with over 800 holes drilled to date.
• Close to $100 million in past exploration on the TBN project historically by past owners.
• Total insitu Indicated Resource of 14,553,324 tonnes at an average grade of 8.12 g/t PtEq containing 3,798,581 ounces PtEq and a total insitu Inferred Resource of 8,077,595 tonnes at an average grade of 4.07 g/t PtEq containing 1,057,646 ounces PtEq.
• Completed a Preliminary Economic Assessment ("PEA") in December 2021. Highlights included:
  • Pre-tax net present value (NPV) of $425.0 million, and after-tax NPV of $293.0 million, at a 5% discount rate.
  • Pre-tax internal rate of return (IRR) is 31.1%, and the after-tax IRR is 25.2%.
  • Capital payback is 2.6 years from start of production.
  • Revenue's average $239.8 million per year from sale of PGE and Copper mineral concentrates.
  • Total mined metal production over a 10-year mine life based on the present resource base is expected to be 629 k oz Platinum, 618 k oz Palladium, 111 M pounds Copper, 57 M pounds Nickel, 38 k oz Gold, 850 k oz Silver, or 2,886 k oz PtEq insitu.
  • 65.2% of total mineral production occurs in the first 5 years.
  • Operating margin of 59% in the first 5 years and Life-of-Mine Operating margin of 53%.

The TBN project is situated approximately 50km northeast of the city of Thunder Bay, within the Thunder Bay Mining Division, in Ontario, Canada.  The property is located in close proximity to excellent infrastructure and is accessible using a series of logging roads branching from Armstrong Highway 527, which in turn branches from the Trans-Canada Highway 11-17 a short distance east of the city of Thunder Bay.

Figure 1: Project Location

The TBN project is located in close proximity to several operating mines which include the Lac Des Iles mine owned by Impala Platinum Holdings and the Eagle mine owned by Lundin Mining.

Figure 2: Project Location & Claim Block

The PEA was prepared by Nordmin Engineering Ltd. ("Nordmin") of Thunder Bay, Ontario, and includes a new stand-alone milling complex and waste storage facility (WSF) with mill feed from both the Current deposit and the Escape deposit.

PEA Key Metrics

Table 1: Key Financial and Project Metrics

Mine Operations

The proposed Thunder Bay North operation involves underground mining at an average rate of 4450 tonnes per day (tpd) (3600 tpd in ore and 850 tpd in waste) with an accompanying process plant with a matching 3,600 tpd capacity. Shown in Figure 3 is the proposed site plan with the mineable Current and Escape deposits.

Figure 3: Proposed Site Plan with Mineable Current and Escape Deposits

The Current deposit is accessed via a portal from surface and has a 12-month pre-production development period, which allows for the Current deposit main decline system to connect to the Current main fresh air raise and provide secondary egress for the mine. Contractor decline development is assumed for the 12-month pre-production period as well as the following 2 years.

The Escape deposit is accessed via a separate portal from surface. The main decline development begins 12 months after the Current deposit decline begins and continues for 3 years, until the decline connects with the Escape main fresh air raise. Contractor decline development is assumed for the Escape deposit.

The Current deposit pre-production development period is followed by a production ramp-up period and achieves full production (3,600 tpd) in the first quarter of year 1. The Current deposit production commences in the Current and Bridge mining zones and continues in these areas for the first 3 years. In year 4, the Escape deposit begins production in the High Grade Zone (HGZ) at 1,800 tpd and the Current deposit production rate is reduced to 1,800 tpd. Figures 4 and 5 show long sections of the proposed Current deposit and Escape deposit.

Figure 4: Current Deposit Long Section (Facing South-West)

Figure 5: Escape Deposit Long Section (Facing South-West)

The underground production was scheduled based on 3,600 tpd mill feed and 850 tpd waste, excavated using a fleet of 10-tonne load-haul-dump loaders (LHD), and hauled with 40-tonne trucks, using the Current and Escape declines to haul material to surface.

The underground mining inventory was determined using Deswik's Mineable Shape Optimizer (MSO) software tool. The MSO uses the geological block model to generate shapes (e.g., stopes) based on economic and geometric parameters as listed. The mining underground inventory is a combination of the four mining areas (Current, Bridge, Beaver-Cloud, and 437) within the Current deposit and the two mining areas (HGZ and Boundary) within the Escape deposit. The underground inventory spans along a strike length of 3.3 km and to a depth of 700 m within the Current deposit and spans along a strike length of 1 km and to a depth of 500 m within the Escape deposit. The underground stope inventory is constrained by a crown pillar, extending 30 m below the unconsolidated sediments below Current Lake.

The Current and Escape deposits will be mined via a combination of conventional underground long-hole open stope and drift & fill mining methods, backfilled with a combination of cemented paste back fill (CPB), cemented rock fill (CRF) and unconsolidated rock fill (URF). Stopes are designed to be accessed and excavated via overcut and undercut development cross-cut drifts, which connect to the main declines. The main declines provide ventilation, haulage to surface, and mine access.

Mineralogy

Copper is contained primarily as chalcopyrite and approximately two-thirds of the nickel is in sulphide form, primarily as pentlandite. The remaining nickel is mostly hosted by magnesium-silicate minerals, chiefly serpentine and olivine. The platinum, palladium, and gold mineralization is very fine grained, however they are closely associated with all sulphide minerals, including pyrite and pyrrhotite, and recovery of the sulphides will therefore bring along the majority of the precious metal values. Gangue silicates consist of serpentine, amphibole, chlorite, mica and feldspar. Copper and nickel sulphide material liberation indicate a moderately fine grind is required for good recovery of the sulphides.

Metallurgical Test Work

A flotation development program was completed on one master composite and ten variability composites from the Current deposit and three variability composites from the Escape deposit. Flowsheet options considered include separate copper and nickel concentrates, separate copper and bulk concentrates, and a single bulk concentrate. A flowsheet was developed, consisting of primary grinding to a P80 (80% passing) of 65 microns, sequential flotation of copper bearing minerals, followed by nickel or bulk flotation. Regrinding of the copper rougher concentrate to a P80 of ~25 microns followed by two stages of cleaning achieved concentrate grades of ~25% copper. Nickel concentrate grades up to 11% nickel were achieved with fine regrinding to a P80 < 20 microns, but resulted in low nickel and PGE recoveries to a selective nickel concentrate. Replacing the nickel concentrate with a bulk concentrate eliminates the Ni regrind and improves overall metal recovery. Platinum, palladium and gold recovery is closely linked with sulphur recovery. High recoveries of the precious metals are possible if all the sulphides are floated, however the rejection of any of the sulphide minerals leads to an attendant drop in PGE and gold recovery. Table 2 shows the consolidated concentrate average milling recovery for each payable metal.

Table 2: Consolidated Average Milling Recovery

Mineral Processing

The conceptional process plant has been designed as a conventional milling operation with a capacity of 3,600 tpd. Run of mine (ROM) mineralized material will be reduced to P80 of 300 mm by a single jaw crusher. Crusher discharge would be transferred to a surface stockpile, from which material would be reclaimed by two active apron feeders. A front-end loader would be utilized on occasion to minimize size segregation and to motivate the pile during the winter period.

A conventional semi-autogenous grinding (SAG) and ball mill grinding circuit is proposed. The conceptual design targets a grind size P80 of 65μm, utilizing a SAG size of 6.7 m diameter by 2.8 m (EGL) long and a ball mill size of 4.5 m by 7m (EGL) long. The SAG mill is closed-in with a pebble circuit where pebbles are crushed prior to being recycled to the SAG feed. The ball mill will be closed-in with hydrocyclones, with cyclone overflow reporting to the copper rougher circuit. Figure 6 shows the conceptual process plant flow diagram.

Figure 6: Conceptual Process Plant Flow Diagram

The flotation circuit will produce two separate marketable concentrates. A copper-PGE concentrate will be the primary float, utilizing a regrind stage of the rougher float product prior to two subsequent stages of cleaning. Cu-PGE concentrate will be thickened and dewatered via a filter press prior to being stored in a covered stockpile prior to shipment.

Copper rougher tails will be pumped to a bulk concentrate flotation circuit which consists of rougher stage, and four subsequent cleaning stages. The bulk concentrate product will be thickened and dewatered via a filter press prior to being stored in a covered stockpile prior to shipment.

Copper-PGE concentrate is anticipated to amount to approximately 53 Tpd (Dmt), with an assumed target moisture content of 8% which amounts to an annual concentrate production of 20,650 Wmt. The remaining bulk concentrate production will be approximately 119 Tpd (Dmt), with an assumed target moisture content of 8% which translates to an annual concentrate production of 46,500 Wmt.

It is anticipated that the two separate concentrate products will be shipped by truck to separate regional smelters suited to handle the separate marketable concentrate products.

Clean Air Metals' management have received indicative terms from selected smelters and refiners. The source of smelting terms is specifically excluded, as smelting terms are confidential in nature. The net payable for a metal is calculated as the payable content of the contained metal, less a minimum deduction (in g/t for palladium, gold, platinum and silver and a % for copper), if applicable. Table 3 shows the net payable rates and deductions for the copper concentrate and sulphide concentrate.

Table 3: Smelter Payable % and Deductions

The treatment charges (TC) and refining charges (RC) are charges deducted from the payable value of the concentrates to account for the costs of smelting and refining. The TC and RC are influenced by global supply and demand and governed by mine and smelter economics based on copper prices and operating costs. The TC and RC applicable to each concentrate may be based on variable annual negotiations, fixed rates and/or market benchmarks. Table 7 shows the TC and RC charges for the copper concentrate and bulk concentrate. The TC and RC shown in Table 4 was calculated from a 2-year trailing benchmark from CRU (Aug'19 - Jul'21).

Table 4: Smelter TC/RC

CRU Consulting (a division of CRU International Ltd), provided the two-year trailing average metal prices used in the revenue projections for the PEA. Nordmin applied these 2-year trailing averages to the minable mineral resource and economic model within the PEA. Currently there are no metal streaming or hedging agreements in place.

Onsite Project Infrastructure

Waste Storage Facility

The conceptional WSF will be located to the north of the Plant Site with sufficient offsets from local waterbodies and contain a maximum of 6.0 million tonnes of potentially acid generating (PAG) filtered tailings and 1.3 million tonnes of PAG waste rock. The WSF will be constructed in two stages, with the initial WSF designed to contain 1.3 million tonnes of filtered tailings and 0.4 million tonnes of waste rock to support the first two years of mining. The WSF footprint will be expanded during Year 2 of operations and then the entire WSF footprint will be used to place the waste and raise the facility using the upstream construction method to establish a paddock.

The foundation materials in the area typically consist of a veneer of silty sand with varying gravel content overlying competent bedrock. The overburden will be removed from the WSF footprint to expose the bedrock and drains will be strategically installed to route any collected seepage to perimeter water collection ponds. A starter perimeter berm consisting of non-PAG waste rock from underground mine development, locally quarried rockfill, and locally processed filter zone material will be placed to allow for initial waste placement. The filtered tailings will be transported to the WSF using conveyors and the material will be placed and compacted with a dozer and compactor. The PAG waste rock will be hauled to the WSF and strategically co-disposed with the tailings. Waste and the perimeter berm materials will be placed in generally level lifts across the entire WSF footprint to raise the facility. This approach will prevent ponding of water on the WSF surface and allow any runoff to shed from the WSF. During the winter months, snow will be removed from the interim surfaces as the material is placed.

The WSF will be progressively reclaimed during operations by placing the overburden removed from the foundation excavation on the perimeter embankment slopes and establishing vegetation. A soil cover will be placed on the final WSF surface and vegetation will be established on the cover at closure.

Water Management

Water management for the WSF will include a series of water collection ditches and ponds along the toe of the WSF. The collected water will be pumped to a central water management pond (WMP), which will also be used to collect contact water from the plant site and other site infrastructure. The WMP will provide temporary storage of contact water during normal operations. A floating pump and pipeline will be installed at the WMP to convey the contact water to the mill for re-use in the process or to a water treatment facility. It is expected that the site will operate under a hydrological surplus and contact water will need to be treated, as required, and discharged over a portion of each year. The WMP will also temporarily store runoff from the environmental design flood (EDF) and safely pass runoff resulting from the inflow design flood (IDF) via a spillway.

Offsite Project Infrastructure

Power

Power is assumed to be supplied via a new 230 kV E-W tie line running to the south-east of the project site (expected completion date of 2022) that is accessed by construction of approximately 6 km of new 230 kV power lines. The estimated cost of an electrical substation and power to site is at an estimate costed of $9.36 million.

Access

Access to the mine site is in discussion with a major forestry company via a combination of upgrades to existing logging roads and construction of new roads, totaling 10.5 km, connecting to Highway 527 to the West, at an estimated cost of $1.82 million.

Capital Costs Summary

The initial project capital cost is estimated at $367.2 million, including a contingency allowance of 20% to 25% for major items. The duration of the detailed design and construction phase of the project is estimated at 24 months. The capital cost estimates are detailed in Table 5.

Table 5: Total Capital Cost Estimates

Operating Costs Summary

The operating cost estimates are detailed in Table 6.

Table 6: Total Operating Cost Estimate

Financial Analysis and Sensitivity

The expected project cashflows were modelled using a simple discounted cashflow model, using a discount rate of 5%. The project cashflow is scheduled annually and uses an exchange rate of 1.3 CAD to USD. All values are in CAD, unless stated otherwise.

A simple tax model was constructed using a depletion model for depreciation estimates. No opening balance of tax credits or eligible prior expenditure was used. Table 7 summarizes the estimated total LOM cashflows. The column at the right is the NPV (cost) of those cashflows. Table 8 summarizes the post-tax revenue and cost NPV sensitivity, Table 9 summarizes the post-Tax discount rate NPV sensitivity, Figures 7 and 8 summarize the post-tax revenue NPV sensitivity and post-tax cost NPV sensitivity, respectively.

Table 7: Key Financials

Table 8: Post-Tax Revenue and Cost NPV Sensitivity

Table 9: Post-Tax Discount Rate NPV Sensitivity

Figure 7: Post-Tax Revenue NPV Sensitivity

Figure 8: Post-Tax Cost NPV Sensitivity

Updated Mineral Resource

Nordmin examined and modelled the mineralization within the Current and Escape deposits for the purpose of grade concentration and isolation of composites, while including lithological, geochemical, and structural correlations between rock types that are influencing the mineralization at each respective deposit. Wireframes were initially created on 10 m to 20 m plan sections and adjusted on vertical section views to edit and smooth each wireframe where required. When not cut off by drilling, the wireframes terminate at the contact of the conduit or due to lack of drilling, whichever was most appropriate. No wireframe overlapping exists within a given domain, but all domains are independent of each other.

Domain wireframes were modelled for seven grade elements, including combined Platinum ("Pt") and Palladium ("Pd"), Gold ("Au"), Silver ("Ag"), Copper ("Cu"), Nickel ("Ni"), Cobalt ("Co"), and Rhodium ("Rh"). Each domain was built using geology, mineralization, and grade bin for a combination of Background grade ("BG"), Low Grade ("LG"), Medium Grade ("MG"), and High Grade ("HG"). Background grades were isolated through applying the overall conduit wireframe.

The Mineral Resource Estimate (MRE) is predominately based on an unchanged geological model and methodologies utilized to calculate the 2021 MRE. The differences in the Current deposit relate to the incorporation of approximately 7,200 m of infill drilling within the Lower Bridge/Upper Beaver area and the corresponding reinterpretation of the infill drilling and incorporating updated metal prices, metallurgical and smelter recoveries.

The Thunder Bay North Critical Minerals Project 2021 PEA, while based largely on MSO analysis in continuous mineralized material within the indicated mineral resource category, is preliminary in nature and includes an economic analysis that is based in part on Inferred Mineral Resources. Inferred mineral resources are considered too speculative geologically for the application of economic considerations that would enable them to be categorized as Mineral Reserves and there is no certainty that the results will be realized. Mineral Resources do not have demonstrated economic viability and are not Mineral Reserves. Table 10 shows the MRE grades and Table 11 shows the MRE contained metals.

Table 10: Thunder Bay North Critical Minerals Project Insitu Grade Profile (at US$93/tonne for Current & US$100/tonne for Escape Cutoff)

Table 11: Thunder Bay North Critical Minerals Project Insitu Grade Profile (at US$93/tonne for Current & US$100/tonne for Escape Cutoff)

Table 12: Thunder Bay North Insitu Resource Estimate (Effective Date November 1, 2021)

Table 13: Thunder Bay North Insitu Resource Estimate Contained Metal

Mineral Resource Estimate Notes

1. Underground Mineral Resources were prepared in accordance with NI 43-101 and the CIM Definition Standards for Mineral Resources and Mineral Reserves (2014) and the CIM Estimation of Mineral Resources and Mineral Reserves Best Practice Guidelines (2019). Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. This estimate of Mineral Resources may be materially affected by environmental, permitting, legal, title, taxation, sociopolitical, marketing, or other relevant issues.
2. Underground Mineral Resources are based on a 2-year trailing price deck (table 2 above) as of September 30, 2021.
3. Resource excludes all material immediately below Current Lake, above a minimum crown pillar thickness of 20 m which is assumed to be not recoverable by underground methods.
4. Minor variations may occur during the addition of rounded numbers.
5. Calculations used metric units (metres (m), tonnes (t) and grams/tonne (g/t)).
6. Assays were variably capped on a domain by domain basis.
7. Specific gravity was applied using Ordinary Kriging (OK) estimation.
8. Mineral Resource effective date November 1, 2021.
9. All figures are rounded to reflect the relative accuracy of the estimates and totals may not add correctly.
10. Reported from within a mineralization envelope accounting for mineral continuity.

Clean Air Metals has executed a definitive agreement with Benton Resources to acquire its:

• Right to purchase 100% of Panoramic Resource's Thunder Bay North (TBN) Property for C$9 million.
• Right to purchase 100% of Rio Tinto's Escape Lake Project for C$6 million.

The TBN project currently comprises of three separate claim blocks which include:

• Thunder Bay North Property consists of 300 unpatented claims (1456 cell units) covering an aggregate area of ~29,725ha.
• Escape Lake Property consists of 20 unpatented claims (20 cell units) with an area of 561.3ha. The property is located 2.1km west-southwest of the Current Lake Deposit and is completely surrounded by TBN claims.
• Escape North Property consists of 24 unpatented claims (67 cell units) with an area of 1722ha. The property is directly north of and adjacent to the northern boundary of the TBN claims.

Figure 9: Claim Block

The Project is hosted in the Quetico Terrane (subprovince) of the Superior Province of the Canadian Precambrian Shield (Figure 3).  The Quetico Terrane is interpreted as a fore-arc accretionary prism deposited during and after peak volcanic activity within the adjacent Wawa, Wabigoon, and Abitibi Terranes between 2,698 and 2,688 million years ago.  The terrane is about 70 km wide and forms a linear strip of moderately to strongly metamorphosed and deformed clastic meta-sedimentary rocks and their melt equivalents.

The TBN project consists of two main intrusive complexes which include:

1. Current Lake Intrusion
   The mineralized zones within this intrusive complex include Current Lake, Bridge, Beaver Lake, Beaver Lake East, 437 Zone, and South East.
2. Steepledge Lake Intrusion
   The mineralized zones within this intrusive complex include Steepledge North, Steepledge South, and Escape Lake.

Figure 10: Thunder Bay North Insitu Resource

Within the Project area, the main rock-types are Archean-age granitoid and metasedimentary rocks of the Quetico Terrane, and Meso-Proterozoic-age Keweenawan Supergroup mafic to ultramafic intrusive rocks and related intermediate to mafic hybrid intrusive rocks of the Mid-continent Rift (MCR). The MCR-related intrusive rocks within are considered to be part of the TBN Intrusive Complex which includes: the Current Lake, Steepledge Lake, Lone Island Lake, and 025 intrusions, all of which exhibit PGE-Cu-Ni mineralization.

The Current Lake, Steepledge Lake, and Lone Island Lake intrusions appear to be connected by the diffuse East West Complex which consists of a series of moderately-dipping hybrid sills and dykes that are confined to the Escape Lake Fault Zone which is part of the Quetico Fault system. The Current Lake PGE-Cu-Ni Deposit is hosted within the Current Lake Intrusion and the Escape Lake discovery is hosted within the Steepledge Lake-Escape Lake Intrusion.

Current Lake Intrusion

Between 1993 to 2000, most of the exploration on the Current Lake project was completed by local prospectors and consisted of general mapping, lithogeochemistry, soil sampling, and ground magnetic surveys.

The bulk of the exploration completed on the Current Lake deposit occurred from 2005 and on whenMagma Metals optioned the 26 claim Current Lake Property in 2005 and the Beaver Lake claim in 2006. Magma Metals was taken over by Panoramic Resources Limited in June 2012.  Work completed by Panoramic included a number of airborne and ground geophysical surveys, geological and structural mapping, petrological, baseline environmental studies. Between December 2006 and December 2012, Magma/Panoramic drilled 801 core drill holes (185,516m) on the property.

A first-time historic mineral resource estimate was completed by SRK Consulting Ltd (SRK) in 2009.  An updated historic mineral resource was calculated in late 2010 and a Preliminary Economic Evaluation was completed in February 2011 by AMEC Americas (AMEC). In January 2021, Clean Air Metals announced an updated 43-101 resource estimate.

Steepledge Lake Intrusion

Rio Tinto staked the Escape Lake block in 2006 and performed successive rounds of limited diamond drilling between 2010 and 2012. These programs yielded impressive drill intercepts highlighted by drill holes 12CL0009 and 11CL0005.  High-grade intercepts from these programs included an intercept of 33.4m at 7.28gpt Pt+Pd+Au and 2.26% Cu+Ni.

Between 2014 and 2016 Rio Tinto completed outcrop and boulder prospecting throughout the Thunder Bay North Property and reprocessed all Magma Metals/Panoramic geophysical data under an Earn-In JV agreement dated 2014.  During 2015 and 2016 Rio Tinto drilled 24 core holes (~9500m) into the Project with 7 holes (2418m) drilled into the TBN Property and 17 holes (7081.04m) into the Escape Lake Property.  In late 2016 Rio flew a semi-airborne HeliSAM survey over the Current Lake and Steepledge Lake intrusions.