Appia Energy

JUNE 2019

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APPIA ENERGY TOMORROW’S RESOURCES INSPIRED BY YOUR SUCCESS

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Appia Energy Corp is a mining exploration company with two passions; exploration itself, and our technological future. We spoke with James Sykes, Vice President of Exploration and Development, about this passion, and the ways that Appia is setting itself apart from the competition in Saskatchewan.

Written by Alice Instone-Brewer

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ppia Energy Corp is a Canadian mineral exploration company searching for high-grade critical rare earth elements (REEs and uranium in the Athabasca Basin area of northern Saskatchewan, as well as developing the Elliot Lake mining camp in Ontario.

The Elliot Lake mining camp is famous as being a historic global source of U3O8, or Triuranium octoxide. This uranium compound is one of the preferred forms of yellowcake, as it is easy to transport to refineries. Over 300 M lbs of U3O8 have been mined from Elliot Lake in the past, and Appia believes that much more still remains to be unearthed.

Meanwhile, the Athabasca Basin is famous for hosting the highest uranium grade mines in the world. Global uranium deposit grades average at ~0.1 wt% U3O8, but here, the averages exceed this. For example, both the McArthur River and Cigar Lake mines in this area (operated by Cameco) have average grades exceeding 20 wt% U3O8, making them host to the ‘richest’ ores in the world. Meanwhile, their Alces Lake property in the Athabasca Basin is showing very promising, world-class grades of REEs, making this location Appia’s

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current flagship and most exciting piece in the company’s portfolio.

We asked James Sykes about Appia’s vision as a company, why it focuses on uranium and REEs, and what it hopes to achieve from these two locations:“We are hoping to delineate a sizeable resource (REE and/or uranium) that could be brought to the market. I like the philosophy of Appia, and why we work with REEs and uranium: both will continue to be needed as we progress into an energy-intensive and increasingly expanding technological society.”

“Rare earths are all about technology,” James continued. “They’ve been major players in technological evolution - that has pretty much been their application since day one. For example, Europium was used in the development of coloured TVs.” Europium phosphor was used to produce a brilliant red; prior to its use, the red on coloured TVs was weak, and so other colours had to be muted

to work alongside it. With the use of Europium, every colour could be clearer and more brilliant.

“TVs don’t use Europium anymore, but rare earths all have their place in the emergence of new technology.”

There are 15 – 17 elements under the REEs umbrella, meaning that even within this resource, the demand for different elements changes and cycles. Today’s market is driven by Nd, Pr, Dy and Er, but this is subject to constant change. However, one part of this resource group that is always in demand is the rare earth magnet. “These magnets are the smallest out there and yield the most production and power,” James explained. These magnets are used in a variety of technologies, from electric vehicles, medical equipment and wind turbine motors to everyday items such as headphones and fridges, and even emerging technologies such as hover capabilities.

With an ever-growing reliance on technology, our planet also has an ever-rising need for power, and this is where Appia’s uranium operations come in: “I’m a firm believer in nuclear technology. It is superior price-wise, there’s no denying that, but if you just look at the environmental side, it is probably the safest form of energy resource out there. It has the smallest footprint - it’s basically zero carbon emitting - and is most efficient. I’m a big believer in renewables as well, but I don’t think they can sustain a base-load grid.”

Because Appia is dual focused, it monitors both the REE and uranium markets closely. In the case of REEs, this has been no simple tale: “Currently, China monopolizes the industry with over 80% of global REE mining and production, but more than 90% of the final end use fabrication of REE-applications.” This means that not only does China produce most of the world’s REEs, but it uses most of them, too. This led to the country deciding, in 2010 and 2011, to no longer export the resource.

“The price of REEs spiked tremendously. Due to the lack of supply, the REE industry was in dire need of immediate supply. This, in turn, led to companies seeking inferior alternatives to REE products.” Although the situation resolved itself a few years later, the damage was already

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done; as James explained, “REE end-users now see the real monopoly that China has on the industry, and are therefore looking for nonChinese supply chains, fearful that China could do the same thing again. The USA-China trade war also has companies on their toes.”

This is good news for non-Chinese REE exploration companies – especially ones who were operating at the time - as they offer a reassuring potential alternative. Appia is a relatively new player in both REEs and uranium, and its competition have the advantages that come from being longer established. Regarding REEs, investors were free with funds during the 2010-2011 crisis, and so these companies were able to benefit from that level of enthusiasm.

More recently, there has been little interest in REE investment, though Appia saw this attitude turn around a couple of years ago thanks to renewed interest in technology such as wind turbines and electric vehicles. “In those two years, we’ve witnessed investor sentiment

change in that they are very interested in our Alces Lake world-class high-grade REE project.”

It is this promising project that has Appia feeling confident: “We are the newest players to the game, with quite possibly the chance to have one of the world’s best REE deposit(s).

We know that the grades we are seeing at our Alces Lake project are world-class; we simply need to know how much is there.”

“Appia’s goal for the REE industry is to define an NI 43-101 mineral resource estimate for our Alces Lake REE project by the end of the year, and hopefully this will provide us with the beginning of a path to venture down for Canadian REE production.”

Turning to the uranium market, the resource’s price crashed and remained low ever since the Fukushima disaster, which also occurred in 2011. “It got to a price level so low that the world’s largest uranium mine supplies curtailed their operations in order to help lift the price, to make it affordable for the mines to continue

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operating. The price for converted uranium is also at a decade low. This whole scenario has set the industry for an uplift in all prices.”

Despite these challenges, and despite alternative energy sources both from fossil fuels and the increasingly popular renewable energies, James still believes in nuclear: “I think the next ten years will tell, but I can’t see nuclear power going anywhere - I see it continuing to grow. Even if it stays at a steady pace, at the same contribution, energy is growing in general. Given that, all things being equal, nuclear energy will grow as well.”

On both the REE and uranium front, one of the keys Appia feels it has to its advantage is simplicity: “The REE industry is complicated, and unlike many of our peers, we have simple mineralogy/metallurgy at Alces that uncomplicates a lot of potential mining and processing issues.” In part, this is because the REEs in this location appear to be hosted near the surface, which would greatly reduce

the time, complexity and expense of mining.

James explained that many of the existing REE deposits that have been found, but are yet to go into production, face delays because the deposits sit within carbonite – a granite-like rock mixed with carbon minerals such as calcite, which means the REEs could be within up to three to four different minerals. This greatly complicates the separation process and makes it a more costly undertaking – amongst other things, it uses a great deal of water. Appia’s findings appear to not only be near the surface, but are of a tighter and purer concentration: “We’re getting outcrops of 16% monazite. It’s in these tightly controlled bodies that you can easily dissociate from the rocks hosting these systems, so the dilution factor is minimal. These are also coarse grains, so it’s the same minerality and density throughout, again making the work easier.”

Searching near the surface is a route to success that the company is also applying to

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its uranium exploration: “Globally, there are numerous uranium deposits that are waiting for the price of uranium to climb higher before they make an attempt to go into production.

We have one in Elliot Lake but need the price of uranium (and/or REEs) to climb significantly higher before we move that project forward.

For the interim, we are focussed on making a uranium discovery in the Athabasca Basin area, outside of the Basin itself (which really negates the mining engineering issues of the area), and looking for something that is close to surface.”

“Unlike our peers, who are all exploring in the sandstone rocks, and at least 200m below surface, we are exploring for near surface openpit mining deposits. The Athabasca sandstone is a geological engineering nightmare, and underground mining requires huge costs to develop freeze curtains. The most profitable mines in the area have been earlier open pit models.” Discovering deposits that would be more costly and complicated to put into operation would risk greatly slowly down Appia’s ambitions, as they aim to not only sell on their discovery, but to see it go into operation themselves, and with an underground find, this could take some time: “A number of uranium deposits were discovered in the 1970s that have not gone into production because they are deep within the sandstone. Case in point, Cigar Lake, which was discovered in 1975, didn’t go into operation 2016.” Appia’s peers are searching deeper because it is commonly believed that there are no more rich deposits left in easy-to-reach locations, but James isn’t convinced, and is willing to take the gamble.

James has been with Appia since 2016, and has held the position of Vice President, Exploration and Development since March 2017. Between them, the small leadership team has over 100 years of exploration and development experience in the industry to their name, and personally, James has over 550 M lbs Athabasca U3O8 discovery to his.

As well as their portfolio and their surfacefocused approach, James feels that what sets Appia apart is the company’s team, as well as their partnerships. Within the team, he

credits much of their success to the strong working relationship between himself and the CEO, Founder and President, Tom Drivas: “What has worked extremely well at Appia is the dichotomy between myself and Tom. Tom is an amazing entrepreneur and has an outstanding knowledge of business and financial effectiveness, whereas I represent the technical side of things, focussing on the best target areas within a very broad area and driving us forwards.”

“We also have some key investors that have been with the company for a long time, and even some of the new investors remain very bullish on Appia and are committed to following us on our journey. We feel that we have very strong and direct relationships with our investors, old and new.”

Between this teamwork and the promising areas that Appia is exploring, it seems likely that James and his team’s passion will pay off. The company is currently waiting on results from its latest drill sites; once the summer is over, it will have a better idea of exactly what lays within its project locations, but until then, it is confident in the grades and patterns that have been seen. All geological clues point towards success, and in this game, clues and strategy are what it really comes down to. “If you like doing puzzles, that’s what it’s all about. It’s all just a puzzle.”