Strategic Resources Inc. announced results from the Pre-feasibility Class 5 level engineering study conducted by BBA on its 4 million tonne per annum merchant pelletizer project. The Project will be located on the Company's existing leased area at the Federal Port of Saguenay, where the Provincial and Federal Governments are currently building a CAD 111 million multi-user conveyor system, which the Project would utilize. The Project will focus on direct reduction ("DR") grade pellet feed that will be used in the green steel industry and is the only greenfield advanced development project of its kind in Canada.

Strategic intends to work with its major shareholders, including Investissement Québec, to decide on the best strategy to fund this Project. Strategic is continuing dialogue with iron concentrate producers, iron concentrate traders and financing groups in order to secure iron ore concentrate feed and potential financing partnerships. The Project is an iron ore pellet project (DR Grade) near available infrastructure, situated on the Port of Saguenay Industrial Development site, in the Province of Québec.

The Study evaluated the construction of the pellet processing facilities, including the storage of the feed material and final products and all related infrastructure to produce DR grade pellets from iron ore concentrates. The Project is expected to benefit from several competitive advantages including: Location near available infrastructure including natural gas and hydro-electric power. The Port of Saguenay is an all-year operational deep-sea port with access to the Great Lakes and the Atlantic.

A supportive Provincial government which identified high-purity iron within their critical minerals plan. Existing Permits for the establishment of a metallurgical facility which includes a pellet operation. The Project consists of a pelletizer at the Port Saguenay site to process iron ore concentrate into DR grade pellets in order to supply the growing global electric arc furnace steel production market.

The process flow sheet includes the multi-user conveyor system, iron ore concentrate and pellet receiving, handling and storage areas and a 4 million tonne per annum Metso pelletizing plant. The economic evaluation of the Pelletizer was performed using a discounted cash flow model on a pre-tax and post-tax basis. The capital and operating cost estimates were developed based on using First Quarter 2024 costs and assume a constant cost basis throughout the cash flow model.

The Internal Rate of Return ("IRR") on total investment was calculated based on 100% equity financing. The net present values were calculated with a discount rate of 8% and an assumed 50-year project life. The Project is expected to produce a DR grade pellet.

There is an increased focus on reducing global greenhouse gas emissions in the steelmaking processes as the steel industry experiences a structural shift in its production methods. This dynamic is expected to create additional demand for higher-purity iron ore products, as the industry transitions towards using alternative technologies to produce liquid iron, such as the use of Direct Reduced Iron ("DRI") in Electric Arc Furnaces instead of Blast Furnaces ("BF") and Basic Oxygen Furnaces. The market is expected to experience significant growth in pellet demand in the coming years and forecast global pellet demand could reach +180 million tonnes by 2027 (Source: Macquarie).

Notably, almost all new pellet demand will be coming from the DRI market segment. This highlights the need for investment in new pellet production to meet the growing demand for the DRI market. With the planned DRI expansion and reduction in BF output, it points to strong market fundamentals for agglomerated iron ore (BF and DR pellets) this decade.

Higher grade premiums and Value in Use ("VIU") index prices should be realized due to the potential pellet deficits. The Study's Base Case pricing is based on recent market pricing and does not account for potential stronger demand by the time the Pelletizer is completed. The Pelletizer scope and costs are based on an indicative "order of magnitude" estimate provided by Metso for the design, supply, delivery, and installation of a 4 million tpa pellet plant.

The initial capital cost is -30/+50% AACE - International Class 5. The Metso proposal represents 57% of the total project capital requirement. BBA has performed an independent assessment of the Pelletizer costs based on internal data and adjusted the Metso proposal to allow for winterization, civil works, and growth. The contingency associated with initial capital costs has been set at $42 million and is made up of 20% on direct and indirect costs excluding the pellet plant, plus 5% on the pellet plant cost.

The Project benefits from the permitting work completed and has an estimated construction period of approximately 25 months following a final investment decision. Initial commission would occur in month 27 and commercial production would occur in month 30. Strategic will continue to finalize the requested information from the Provincial Government as part of the application to amend its existing environmental authorization for the project.

The timeline for the completion of the amendment once submitted is approximately 6 months. To progress the project development plan, Strategic will consider various steps which may include process testwork, confirmation of iron concentrate and additives supply, development of the engineering including the material handling systems and certain feasibility, basic and detailed levels of engineering for the plant, certain site geotechnical and environmental work, application to modify the existing environmental authorization, details on the contract strategy, finalize Metso scope and contract, finalize agreements on services with the port authority, natural gas supply, electricity supply, additional land leasing for the storage areas and final construction and ramp up schedules, among other activities related to the project development.