SRG:CC - SRG Announces Positive Economic Results of Updated Feasibility Study for Lola Graphite Project

(TheNewswire)

• SRG Announces Positive Economic Results of Updated Feasibility Studyfor Lola Graphite Project

• Annual Production Doubled to 94,000 tpa Graphite in Concentrate

• Modest Increase in Capital Costs of US$185 Million Compares Favourablyto Industry Average Capital Intensity

• After-Tax NPV8% of US$218 Million and IRR of 25% over 17 years

• Financing, Offtake and Strategic Partnership Discussions Progressing

PRESS RELEASE FOR IMMEDIATE RELEASE

Montreal, QC - February 27, 2023 - SRG Mining Inc. (TSXV:SRG)(“SRG” or the “Company”) today welcomes the positive resultsof an independent Updated Feasibility Study (“UFS”) for thehigh-quality Lola Graphite Project in the Republic of Guinea. The LolaGraphite Project 2023 UFS evaluates a doubling in annual productioncapacity from the previous 2019 Lola Graphite Project FeasibilityStudy to an average of 94,000 tonnes of graphite flakes in concentrateper annum (“ktpa”) over its 17-year life of mine. The UFS was prepared by DRA Global Limited (“DRA”).

Highlights of the Updated Feasibility Study for the Lola GraphiteProject include:

• After-tax net present value (“NPV”) at a real 8% discount rate ofUS$218 million.

• After-tax internal rate of return (IRR) of 25%.

• After-tax project payback period of 3.2 years.

• Pre-production capital costs, including contingency, estimated atUS$185 million compare favourably to industry standards.

• Life-of-mine average cash operating costs of US$585 per tonne ofconcentrate.

• Life-of-mine average concentrate production doubled to 94ktpa, with anaverage concentrate grade of 95.4% graphite.

The UFS was prepared in compliance with CanadianNational Instrument 43-101 – Standards of Disclosure for MineralProjects (NI 43-101).

The UFS is the first phase of the Company’s integrated businessmodel aimed at the creation of a mine-to-market active anode materialproducer, hosting a large high-purity graphite production mine andconcentrator in Africa and a value-added, coated spherical purifiedgraphite (“CSPG”) conversion facility in Europe, North America,Middle East or Africa. The Company anticipates publishing the fullyintegrated business model in Q2 2023 upon completion of theindependent preliminary economic assessment (“PEA”). DorfnerAnzaplan GmbH, a leading consultancy and engineering company forindustrial, specialty mineral and metal projects, based in Hirschau,Germany, is in final phases of completing the PEA.

The UFS focuses on an open pit mine which targets the oxide and freshrock reserves of the Lola Graphite Project, which have an estimated6.4 Mt of Proven Reserves grading 4.38% Cg and 34.5 Mt of ProbableReserves grading 4.09% Cg. The processing plant will consist of aconventional crusher, concentrator, floatation, dewatering andscreening circuit. The Company anticipates exporting the final productby road through the port of Monrovia in the Republic of Liberia.

“The Updated Feasibility Study is the latestvalidation that Lola Graphite Project has the resources to become oneof the world’s largest graphite producers at attractive capital andoperating costs,” said Mr. Matthieu Bos, President and ChiefExecutive Officer of SRG. “Discussions are continuing with potentialstrategic partners and lenders to support our advance towards thedevelopment of the first graphite mine in the Republic inGuinea.”

“These results are the culmination of many monthsof studies to de-risk the project and add to its robustness usingreasonable estimates and assumptions,” Mr Patrick Moryoussef, ChiefOperating Officer of SRG added. “The cost estimates of the projectreflect Q4 2022 market prices of equipment and raw materials which arelikely at the peak of the current inflationary cycle. Basicengineering will focus on improvements in the front-end of the plant,tailings management, connection to the national electricity grid andreducing the mining footprint.”

Economic Sensitivities

Over the life of the mine, the Lola Graphite Project is expected toproduce an average of 94 ktpa of saleable graphite flakes inconcentrate. At an average sale price of US$1,400 per tonne, thisrepresents US$131M annual revenue incurring average operating costs ofUS$585/t representing US$54M operating cash flow annually. Given thevolatility of graphite prices in recent years and the bilateral natureof the sales contracts, a sensitivity analysis of the project’seconomics is presented below.

Table 1: Updated Feasibility Study Sensitivity Analysis

1. Base Case, based on consensus pricing

2. Excluding Year 1 and 17 which don’t representsteady-state production

Mineral Resource and Reserve Update

The resource estimate was established using data from boreholesdrilled and sampled up to December 1, 2018. The total resourceestimate of the Lola Project includes Measured and Indicated Resourcesof 54.0 Mt grading 3.98% Cg, and Inferred Resources of 12.3 Mt grading3.6% Cg. The resource estimate has been prepared using a cut-off gradeof 1.0% Cg for oxides and 1.4% Cg for fresh rock.

Table 2: Lola Graphite Project Resource Statement

The Lola Graphite Project is characterised by its oxide surfacemineralization, which continues along strike and at depth into thefresh rock bed. For the UFS, mining operations considered themineralized material contained in the oxide weathered lateritic andsaprolitic zones, as well as the mineralized material contained in thefresh rock formation. The total reserve estimate includes Proven andProbable Mineral Reserves of approximately 40.9 Mt grading 4.14% Cg.To access these Mineral Reserves, 35.9 Mt of overburden and waste rockmust be mined, resulting in a low life-of-mine strip ratio of 0.88:1.

Table 3: Lola Graphite Project Reserve Statement

Mining and Processing

The Company anticipates using a contract-mining operation to mineapproximately 2.6Mtpa of ore and 2.3Mtpa of waste in a conventionaldrill-and-blast mining operation. The resulting average head-grade tothe processing facility is 4.14% Cg.

The mineral processing plant consists of a crushingarea and a concentrator where material beneficiation and concentratedewatering, screening, and packaging takes place. The processflowsheet includes crushing, grinding, rougher flotation, polishing,and cleaner flotation. The back end of the concentrator includestailings thickening, concentrate filtration and drying, dry screeningand bagging of graphite products, and material handling. All thetailings from the concentrator will be thickened and pumped to thelined tailings ponds. Reclaiming water from the tailings ponds hasbeen considered in the process design to minimize freshwater makeup tothe concentrator.

Figure 1: Processing Plant Lay-Out

Click Image To View Full Size

The graphite concentrate will be recovered by aconventional flotation process at an overall recovery over the life ofmine of 83.6%. Saprolite ore beneficiation process has an overallgraphite recovery of 73.1%, producing a graphite concentrate grade of95.4 % Cg. The addition of up to 45% of fresh rock in the feed blendimproves the average graphite recovery over the life of mine to 83.6%.Over the life of the mine, the processing plant is expected to producegraphite concentrate divided into four standard-size fractions: +48mesh, -48+80 mesh, -80+100 mesh and -100 mesh.

Table 4: Life-of-Mine Size Fraction Distribution

Note: Based on oxide Reserves. Numbers may not add dueto rounding (Year 17 not included)

The Company expects a 14-month construction period followed by a3-month commissioning phase and a 3-month ramp-up phase to reachsteady state production.

Table 5: Summary Technical Assumptions

Note: 2.        Excluding Year 1 and 17 whichdon’t represent steady-state production

Capital and Operating Costs

The projected capital and operating costs for the project arepresented below in Table 6 and 7 and have an accuracy of +/-15%. Thecosts include the Company’s contract mining operations, an owneroperated processing facility using its own power generators (5generators for a total installed capacity of 13 MW) as well as alogistics operation to the port of Monrovia. There is further scope toreduce these costs as the Company explores the viability ofthird-party contractors working in close collaboration with theCompany on certain elements of the operating cost. A key focus areafor the Company will be to investigate to possibility to connect theLola Graphite Project to the national electricity grid, which wouldyield significant savings on the pre-production capital costs. Theaverage annual sustaining capital expenditure over a 17-year period isUS$6M.

Table 6: Pre-production Capital Costs

Note: Numbers may not add due to rounding

Table 7: Operating Costs

1. Contract mining

Note: Numbers may not add due to rounding

Financing, Offtake and Strategic Partnership Discussions Progressing

The Company is advancing discussions with multipleparties who have expressed interest in providing financing to advanceSRG towards first production. The Company is very encouraged by thelevel of interest it has received from several high-quality investorsto provide both debt and equity financing to fund the construction ofthe first phase of the Lola Graphite Project. In addition to theexisting offtake agreements, several Western and Asian parties havealso expressed interest in a significant and long-term offtakeagreement for the Lola Graphite Project concentrate production. TheCompany has made available, large one-tonne samples from its bulksample pilot plant to prospective offtakers to complete the necessaryquality assessments ahead of progressing the discussions on commercialterms. As the Company is developing its downstreambeneficiation strategy several parties have expressed interest injoining forces with SRG to become a Tier One supplier to the Westernend markets.

SRG will provide further comment only if a specific transaction orprocess is concluded, or if further disclosure is required or deemedappropriate. There can be no assurance that the Company will pursueany transaction or that a transaction, if pursued, will be completed.

Quality Assurance and Control

For readers to fully understand the information in this press release,they should read the Technical Report in its entirety when it isavailable on SEDAR, including all qualifications, assumptions, andexclusions that relate to the information to be set out in theTechnical Report, which qualifies the technical information containedin the Technical Report. The Technical Report is intended to be readas a whole, and sections should not be read or relied upon out ofcontext.

The technical information contained in this news release has beenreviewed and approved by DRA QPs listed below and Marc-Antoine Audet,Ph.D. P. Geo, Geological Consultant, all Qualified Persons as definedby NI 43-101.

The complete NI 43-101 Technical Report pertaining to the UFS will befiled within 45 days and will be available on SRG's website and onwww.sedar.com.

The QPs who will prepare the Technical Report are:

• Mineral Resources: Dr. Marc-Antoine Audet, Ph.D. Geology, P.Geo.

• Mineral Reserves and Mining: DRA Global Limited, Ghislain Prevost,P.Eng. M.A.Sc.

• Mineral Processing: DRA Global Limited, Volodymyr Liskovych, P. Eng.,PhD.

• Capital Cost Estimation: DRA Global Limited, Alex Duggan, M.Sc,P.Eng.

• Hydrogeology: DRA Global Limited Schadrac Ibrango, P.Geo., PhD.

• All Other Sections: DRA Global Limited, Elie Accad, P.Eng., MBA

By virtue of education and relevant experience, the aforementioned areindependent “Qualified Persons” for the purpose of NI 43 – 101,except for Dr. Marc-Antoine Audet, Ph.D., who was previously aDirector of the Company.

About DRA Global

DRA Global Limited (ASX: DRA | JSE: DRA) is a diversified globalengineering, project delivery and operations management group,headquartered in Perth, Australia. It has more than 4,500professionals and a proven track record in undertaking independentassessments of Mineral Resources and Mineral Reserves, projectevaluations and audits, technical reports and independent evaluationson behalf of exploration and mining companies, and financialinstitutions worldwide

About SRG Mining

SRG Mining is a Canadian-based mining company focused on developingthe Lola Graphite Project located in the Republic of Guinea, WestAfrica. The Lola Graphite Project has Proven and Probable Reserves of41Mt at a grade of 4.14% Cg. SRG aims to develop a fully integratedsource of battery anode material to supply the European lithium-ionand fuel cell markets. With attractive operating costs, proximity toEuropean end-markets and strong ESG credentials, the Company is poisedto become a reliable supplier while promoting sustainability andsupply chain transparency. SRG is committed to generating sustainable,long-term benefits that are shared with the host countries andcommunities where it operates.

For additional information, please visit SRG’s website at www.srgmining.com .

Contact :

Matthieu Bos Matt Johnston

President & CEO CorporateDevelopment Advisor

Email: m.bos@srgmining.com Email: m.johnston@srgmining.com

Neither the TSXV nor its Regulation Services Provider (as that term isdefined in the policies of the TSXV) accepts responsibility for theadequacy or accuracy of this release.

Forward-Looking Statements

This press release contains"forward-looking information" within the meaning of Canadiansecurities legislation. All information contained herein that is notclearly historical in nature may constitute forward-lookinginformation. Generally, such forward-looking information can beidentified by the use of forward-looking terminology such as“double”, “highlight”, “favourable”, “include”,“aimed”, anticipates”, “estimate”, “will”, “become”,“assume”, “expect”, “continue”, “result”,“project”, “advance”, “progress”, “result”,“confirm”, “increase”, “potential”, “demonstrate”,“deliver”, “believe”, or variations of such words and phrasesor state that certain actions, events or results "may","could", "would" or "might".Forward-looking information is subject to known and unknown risks,uncertainties and other factors that may cause the actual results,level of activity, performance or achievements of the Company to bematerially different from those expressed or implied by suchforward-looking information, including but not limited to: (i)volatile stock price; (ii) the general global markets and economicconditions; (iii) the possibility of write-downs and impairments; (iv)the risk associated with exploration, development and operations ofmineral deposits and mine plans for the Company’s mining operations;(v) the risk associated with establishing title to mineral propertiesand assets including permitting, development, operations andproduction from the Company’s operations being consistent withexpectations and projections; (vi) fluctuations in commodity prices,finding offtake takers and potential clients or enforcing suchagreements against same, (vii) prices for diesel, process reagents,fuel oil, electricity and other key supplies being approximatelyconsistent with current levels; (viii) production and cost of salesforecasts meeting expectations; (ix) the accuracy of the mineralreserve and mineral resource estimates of the Company; (x) labour andmaterials costs increasing on a basis consistent with the Company'scurrent expectations; (xi) there being no significant disruptionsaffecting the operations of the Company whether due to COVID-19restrictions, the war in Ukraine, artisanal miners, access to water,extreme weather events and other or related natural disasters, labourdisruptions, supply disruptions, power disruptions, damage toequipment or otherwise; and (xi) asset impairment (or reversal)potential, being consistent with the Company's current expectations.and other risks and factors described or referred to in the sectionentitled "Risk Factors" in the MD&A of the Company andwhich is available at www.sedar.com, all of which should be reviewedin conjunction with the information found in this news release.

Although the Company has attempted to identify important factors thatcould cause actual results to differ materially from those containedin the forward-looking information, there may be other factors thatcause results not to be as anticipated, estimated or intended. Therecan be no assurance that such forward-looking information will proveto be accurate, as actual results and future events could differmaterially from those anticipated in such forward-looking information.Such forward-looking information has been provided for the purpose ofassisting investors in understanding the Company's business,operations and exploration plans and may not be appropriate for otherpurposes. Accordingly, readers should not place undue reliance onforward-looking information. Forward-looking information is given asof the date of this press release, and the Company does not undertaketo update such forward-looking information except in accordance withapplicable securities laws.

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