Geomega Resources Inc. provided an update to shareholders on its rare earths recycling demonstration plant, including certain required project design modifications, and an update on site preparation activities that have started at the Saint-Hubert facility. Project engineering update: The past 6 months have been dedicated to bringing engineering to a sufficient level of completion that it could be tendered to the construction contractors for execution and completion of the rare earths recycling demonstration project. Procurement also progressed and various items were ordered while others were received at the Saint- Hubert facility during this period.

In parallel, permitting activities have been ongoing at both the municipality and provincial levels. The objective was to be able to start the construction activities in February 2024. As a result of providing all the requested data to the governmental authorities, Geomega was notified by the municipality of Saint-Hubert, a borough within the city of Longueuil, that the sewer system capacity is not currently able to accommodate the water discharges from the cooling tower that was to be installed for the demonstration plant.

Various solutions have been evaluated by Geomega, including in collaboration with city engineers, however none were appropriate for the project due to resulting increased costs, additional unforeseeable delays, and the overall feasibility of the proposed solution. As a result, Geomega had to undertake a design change for the rare earths recycling demonstration plant. Project design change from batch to continuous: Geomega?s engineering team has begun a design change for the rare earths recycling demonstration plant from a batch process to a continuous 24hrs operation with smaller equipment and lower demand for utilities, most importantly in regard to the cooling requirements (chillers with a closed loop operation instead of a cooling tower with regular water discharges into the municipal sewer system).

Despite the design change, the demonstration plant throughput capacity is planned to remain unchanged at 1.5 tonnes of feed material per day. Geomega?s engineering team believes that there are advantages to the change to continuous design: Continuous design is usually preferred over batch design in industrial operations and was the ultimate goal for the project in the long-term. Switching to this design now is much more applicable to the long-term market targeted by the Corporation, namely swarf recycling from NdFeB magnet factories that are being planned for Europe and North America.

The first priority of the demonstration plant remains to process end of life and scrap magnets; Continuous design simplifies the control system, improves the quality of the product and, therefore, has advantages on both the operating and capital costs of the demonstration plant; The smaller equipment should have better availability with shorter lead times which should help the project to remain within the Corporation?s timeline for the rare earths recycling demonstration plant. Geomega is aware that such a major design change may result in significant risks. The following are some of the primary risks that were considered and are being addressed by the management and engineering teams at Geomega: Engineering ?

Batch to continuous design change is an important modification and requires a major rework of engineering documentation. The current detailed engineering package can no longer be used for construction as is, except for some sections. The new engineering package will be using components from the previous design and will help reduce some delays; Procurement ?

The design change has a major impact on size of equipment and on equipment selection. An ongoing procurement review has already identified equipment that has been purchased and received but is no longer needed for the continuous design and has been already put for sale. Other equipment that has been ordered but not yet received was cancelled.

Replacement equipment is being selected as part of the ongoing engineering rework and will be ordered as soon as possible; Piloting ? The batch process was piloted in 2019 and 2020 with the main objective of scaling it up and then converting to continuous process. Implementing the scale up of the process and switching from batch to continuous in one step is not optimal.

On the other hand, the Corporation?s R&D team has been working over the last year on continuous piloting in other similar processes. That experience gained provides the management and engineering teams with the confidence that the continuous process now proposed for the rare earths recycling demonstration plant should achieve the set product targets; Feed material ? Dealing with end-of-life material always had a risk of feed variability which is better to adjust to with a batch design.

Switching to continuous design requires a more uniform feed which may have an impact on sourcing of material and might require blending and preparation of feed in a way that will not impose significant changes on the operation conditions.