APPIA RARE EARTHS & URANIUM CORP.
For the nine months ended June 30, 2022
Appia Rare Earths & Uranium Corp.
Management's Discussion and Analysis - June 30, 2022
The following management's discussion and analysis ("MD&A") of the financial condition and results of operations of Appia Rare Earths & Uranium Corp. ("Appia" or the "Company") constitutes management's review of the factors that affected the Company's financial and operating performance for the three and nine months ended June 30, 2022. The MD&A was prepared as of August 25, 2022 and should be read in conjunction with the unaudited condensed interim financial statements for the three and nine months ended June 30, 2022, the ("Financial Statements") and the audited financial statements for the year ended September 30, 2021, including the notes thereto. Unless otherwise stated, all amounts discussed herein are denominated in Canadian dollars. These Financial Statements of the Company have been prepared in accordance with International Financial Reporting Standards ("IFRS") as described in Note 2 to the Financial Statements.
Appia is a Canadian mineral exploration company listed on the Canadian Securities Exchange under the trading symbol "API", and in the USA the shares commenced trading on the OTCQX platform as "APAAF" on June 14. Graduating to the OTCQX marks an important milestone, demonstrating its qualifications and building visibility among U.S. investors. In Germany the shares trade under the symbols A0I.F, A0I.MU and A0I.BE. Appia is focused on the rare earth element ("REE") deposits at Alces Lake, particularly high priced "critical REE's", and on exploring high-grade,near-surface uranium deposits in the Athabasca Basin area.
ALCES LAKE HIGH-GRADE REE PROJECT
In June, complete WRCB assay results from its 2021 drilling program were announced and the discovery of a new rare earth element ("REE") bearing zone in the WRCB area of Alces Lake. Additional assay results from 2021 drilling in the Western Anomaly area of the Alces Lake claims block were announced in July.
On July 26,2022 Appia announced that the Company had completed the 2022 drilling / exploration program on the 100%- owned Alces Lake high-grade rare earth elements and gallium property, Athabasca Basin area, northern Saskatchewan.
In the 2022 drilling program, a total of 37 holes were drilled into WRCB to continue delineation of the high-grade REE mineralization and also delineate previously undrilled targets in Danny (adjacent to WRCB) as well as additional drilling into the Wilson/Wilson North zone. New WRCB drilling also extended the trend of the REE mineralization by approximately 120 metres along strike to a total of 280 metres of strike-length mineralization. The WRCB accumulation remains open in both the northwest and southeast directions. Please refer to the July 26 news release for maps and drill locations. The release is posted on SEDAR and the Company's website.
Appia Rare Earths & Uranium Corp.
The last of the core samples for assay have been sent out to the two labs which are processing the Alces Lake samples. Appia anticipates receiving assay results from the early part of the 2022 drilling program in the near future and will evaluate and analyze these in-house prior to public release.
The most significant new drilling area in 2022 was in the Magnet Ridge (previously Augier area), located approximately 1.5 kilometres south-southeast of WRCB on a well defined regional geologic corridor. A total of 34 holes (5,318 metres) were drilled into the primary Magnet Ridge target that outcrops on surface. A nearby (and possibly geologically related) prospect on Magnet Ridge West saw another 10 holes (2,025.9 metres) drilled. The rocks in these two prospects appear to be geologically similar to the 2021 discovery AMP zone at WRCB, which also outcrops on surface. Appia is waiting on Magnet Ridge and Magnet Ridge West assay results to evaluate and analyze these exciting new zones.
Drilling on-trend and in-between WRCB and Magnet Ridge was also conducted, with 5 holes and 1,044 metres of drilling done, primarily at the Strocen prospect.
Keying off results in the WRCB-Magnet Ridge trend on the eastern limb of the large regional fold at Alces Lake, Appia conducted the first drilling program on the previously undrilled West Limb. Six holes with a total of 1,014.9 metres were drilled and encountered indications of elevated radioactivity. Lastly, drilling of five holes was conducted on the Western Anomaly. Following up on the 2021 assay results for this new exploration area, two holes (393 metres) were drilled at Sweet Chili Heat, two holes (393 metres) at Diablo and one hole (166.5 metres) at Buffalo. Mineralization was encountered in all three target areas and assay results will be analyzed and evaluated once received.
Following the results of the 2021 aerial geophysics survey, Appia more than doubled the acreage of the Alces Lake claims blocks. Appia is about to embark on a total 4,864-line km of high resolution radiometric and aeromagnetic surveys over three unsurveyed sections of the Alces Lake block. The northwest portion of the block has a planned 2,152-line km, the south portion of the block will have 2,487-line km surveyed and the eastern side of the claims block will have an additional 225-line km collected. The aerial surveys are expected to be completed in August 2022, weather permitting.
Appia also expects to provide an update in the near future on plans for the 2022/23 uranium exploration program on the claims blocks located on the eastern edge of the Athabasca Basin.
As part of a metallurgical collaboration with CanmetMINING focused on beneficiation testwork for the Alces Lake Rare Earth Project, the Company in May 2022 extracted a bulk sample from the Alces Lake discovery. The primary focus for the test program will be to optimize and enhance the development of an Alces Lake Project flowsheet and to confirm other material testwork that has been previously conducted by other parties on the Alces Lake monazite.
Federal R&D assistance is provided through a collaboration agreement with CanmetMINING, under their Critical Minerals Research, Development and Demonstration program. This program targets research and development for upstream critical minerals processing and aims to stimulate the development of battery and permanent magnet value chains in Canada.
The test work is anticipated to include grinding, flotation, magnetic separation, ore sorting, and dense medium separation (DMS). CanmetMINING scientists will work closely with the Company and its consultants for mineral processing. The objective is to design and execute a comprehensive and optimal testing approach that will produce a high-grade rare earth mineral concentrate from the Alces Lake mineralized material.
A total of 0.9 tonnes of mineralized material was extracted from the Alces Lake Deposit with 0.6 tonnes shipped to SGS Canada's Lakefield facility in Ontario for crushing and sizing ahead of test work. The remainder of the sample will be shipped at a later date. Upon completion of the preparatory work, the sample will be shipped to CanmetMINING for the test programs.
CanmetMINING is a science and technology branch of the Lands and Metals sector of Natural Resources Canada, is a world- class leader in the development and deployment of green mining innovation technologies. Much of its research is undertaken in partnership with industry, provincial governments, other federal departments, universities and international agencies.
CanmetMINING's $47.7M Critical Minerals RD&D Program was funded through the Federal Budget 2021 to develop domestic critical raw materials value chains, and position Canada as a global supplier of choice for critical mineral products. R&D is focused on 3 key priority research areas: battery minerals, the Mining Value from Waste Program (MVfW), and rare earth elements and other critical minerals. This collaboration with Appia under the REE and other critical minerals area seeks to advance the production of permanent magnet raw materials in Canada.
Appia Rare Earths & Uranium Corp.
Appia's 2022 drilling program included drilling significantly deeper holes to determine continuity at depth and along the identified REE mineralization trends, as the Company works toward making a maiden resource estimate in accordance with NI 43-101 requirements.
The Alces Lake project encompasses some of the highest-grade total and critical* REEs and gallium mineralization in the world, hosted within a number of surface and near-surface monazite occurrences that remain open at depth and along strike.
The Alces Lake project is located in northern Saskatchewan, the same provincial jurisdiction that is developing a "first-of-its-kind" rare earth processing facility in Canada (currently under construction by the Saskatchewan Research Council, with the Monazite Processing Unit scheduled to become operational in 2023). The Alces Lake project area is 35,682 hectares (88,173 acres) in size.
In January 2022 Appia announced the acquisition of contiguous new mineral claims in the Athabasca Basin area, northwest Saskatchewan. Portions of the newly acquired Otherside claims block were previously held by Appia.
The Otherside claim block is 27,291 contiguous hectares (67,437 acres) located approximately 50 kilometres south of Fond du Lac. The claims were staked on the basis of similar geological and geophysical signatures to the Company's Loranger property as well as other known high-grade,large-tonnage uranium deposits in the Athabasca Basin including Fission Uranium Corp's Triple R deposit, NexGen Energy's Arrow deposits and others. Otherside straddles a 40 km long corridor hosting multiple discrete conductors with associated magnetic gradients and gravity lows, within the north central Athabasca Basin.
Appia now holds a total of 69,344 hectares (171,351 acres) of land on four uranium claims (Otherside, Eastside, North Wollaston and Loranger) as shown in Figure 1 below. Appia recently completed 925-line kilometres of airborne radiometric survey over North Wollaston and an additional 379-line kilometres of airborne radiometrics over Loranger to supplement the existing database on these properties.
The declaration by the World Health Organization that the COVID-19 infectious virus is a global pandemic has delayed parts of the exploration programs. Although Saskatchewan has not experienced the dire results in other Provinces, there are government- imposed restrictions on access to the properties and regulation of proposed activity.
To ensure safe work conditions are met for the workforce, the Company developed exploration guidelines that comply with the Saskatchewan Public Health Order and the specific Northern Saskatchewan Administration District Order in order to maintain social distancing and help prevent the transmission of the COVID-19 infectious virus.
The trade war between the USA and China is jeopardizing the availability of critical REEs. The Company's Alces Lake project contains some of the highest-grade total critical REE mineralization in the world.
A shortage of critical REEs has developed, largely a result of the increase in electric vehicle production. China continues to control the pricing of REEs, but its share of the world's REE production has dropped from 80% to 60% and China has lost some of its pricing power. Some of the REE concentrates is imported, processed in China to final form and re-exported.
Since the coup in Myanmar in February 2021 the Chinese are illegally mining across the border in areas controlled by a junta- sponsored militia. Myanmar is China's largest, rare earth source. In 2020 Myanmar accounted for 35,500 tons of concentrates,
Appia Rare Earths & Uranium Corp.
74% of Chinese imports of rare earths for refining, processing and sale around the world. Around ten rare earth mines have opened illegally across an uncontrolled border in Myanmar, with considerable environmental damage and pollution of the rivers. In mid 2021 the border was closed for six months, so there was a build up of mined material at the start of 2022, but prices have not dropped.
For the supply of critical REEs required by the defence industry and for electronics, Washington is working on plans to reduce the dependence on China for the supply of critical REEs. There is a growing cooperation between Canada and USA in finding and producing REEs in North America, a long-term objective. A bipartisan bill was introduced in the American Senate which would force the US defence contractors to avoid use of China-sourced rare earth metals; it would also seek to create a strategic stockpile in the US.
Cameco is reactivating the shut down McArthur River uranium mine over a period of time. Operations at Cigar Lake, the world's largest single largest uranium mine are increasing. Cameco is using its inventory of mined uranium and is expected to continue purchasing 5 million pounds on the spot market this year in order to satisfy its contractual delivery requirements and reported an increase of only 41% in its average realized price over the same period in 2021 due to the impact of fixed price contracts.
The uranium demand forecast shows an increase from China, and in 2021 known supply sources are projected to be unable to match demand. Industry opinion is that long term contract prices of US$60 per pound is needed before any new mining project advances. The spot price has climbed to over U$60 per pound. The World Nuclear Association recently projected an annual production shortfall of 50 million pounds in the near future, but there is idle production capacity available at this time.
The political stability of countries supplying the US with uranium and REEs has caused concern in the United States, as it relies on imports of uranium for reactors and for the supply of REEs required by the defence industry, for electronics and high strength magnets needed in the electric vehicle and wind farm applications.
Appia holds over 13,008 hectares (32,143 acres) encompassing five mineralized zones in the Elliot Lake area of northern Ontario. The zones are called Teasdale, Banana Lake, Canuc, Bouck Lake and Buckles Lake. The Elliot Lake area produced some 360 M lbs. of U3 O8 from 13 underground mines between 1955 and 1996 and is the only mining camp in Canada that had significant historical commercial REE production.
No work has been carried out in recent years, as the current market price for uranium oxide does not yet warrant additional work at this time.
The Company is considering the next stage of the Teasdale exploration and evaluation. The longer-term outlook for uranium prices is positive and the successful recovery of the REEs, particularly the critical elements of the total rare earths encountered, is very encouraging. Factors favourable for the project include the following:
At the end of the fiscal year 2020 the Company reviewed its accounting policy of expensing its exploration and evaluation expenditures and determined that the financial statements would be more relevant to the economic decision-making needs of users if the expenditures for the properties that the Company has an ongoing interest in would be capitalized as deferred expenditures until the projects reach a pre-development decision stage. Properties that have been abandoned or are not in the Company's near-term plans remained expensed.
Fiscal year 2022 quarterly financial statements are presented with exploration and evaluation costs shown as deferred assets. The 2020 financial statements were restated to retrospectively reflect the change in policy adopted for 2021. The effect of this voluntary change in accounting policy is more fully described in note 3 to the consolidated financial statements.
Appia Rare Earths & Uranium Corp.
This is an excerpt of the original content. To continue reading it, access the original document here.
Appia Energy Corp. published this content on 25 August 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 25 August 2022 15:57:06 UTC.