Leading Edge Materials (TSX-V: LEM)(OTC: LEMIF) CEO Filip Kozlowski on Updates to the Norra Kärr Mining Lease Application

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the CEO of Leading Edge Materials, Mr. Filip Kozlowski. Filip, how are you today?

Filip Kozlowski: Hi, Gerardo. I'm okay. How are you?

Gerardo Del Real: I'm well. Listen, thanks for coming on on very short notice. I had a couple of readers and subscribers and long-time followers of Leading Edge Materials reach out to me on news this afternoon the headline read: Leading Edge Materials Updates On Norra Kärr Mining Lease Application. And this part is important. This is the mining lease, not the exploration lease, but the long and short of it is that the mining lease for now has been denied. And so, I wanted you to provide some context because I could tell you from the tone of a couple of the subscribers and followers of the company, they felt like this was just a no to the project and that's it. And I know personally, because we've spoken over the years and I know the process a bit more, that couldn't be further from the truth. But I wanted to get you on the record and I really appreciate you taking the time today.

Filip Kozlowski: Sure, and that's why I wanted to jump on this call. It's soon midnight here in Stockholm. It's important to avoid any misunderstandings and this mining lease application, I guess, it's one of the longest running stories in Swedish permitting history at the moment. So just the short background to what this application is all about, it goes back all the way to 2012 when the company applied for a mining lease to the mining inspector Sweden. In 2013, the mining inspector granted this mining lease with the support from the county and ministry board that has responsibility for the environmental impact analysis on that application. So at this time, which is now almost 10 years ago, the practice at this time was that the mining lease only covers the mining lease perimeter that you apply for and any surrounding facilities and operations are dealt with at a future stage in time at the environmental permit stage.

So the decision to grant the mine lease at that time was appealed to the government and the government in 2014 rejected appeal. Then the government's decision was appealed to the Supreme Administrative Court for Sweden. And in 2016, the Supreme Administrative Court, they upheld the appeal, basically making a new interpretation on the interplay between the Mining Act and Environmental Act, stating that facilities and operations that are outside of the mining lease era should also be part of the DIA at the mining lease application stage.

So, this forced the government to revert the owners granted mine lease back to the application stages. And that event is what's caused all the uncertainty since then in Sweden around permitting, really. How should this be dealt with? And I think it's important to remember that there's never been any specific ruling on the merits or on the risks of the project. It's more about the legal process. When in time should each individual step happen? So from 2016, we were then asked to update the mining lease application, which with would have been demanded by the Supreme Administrative Court. We did that.

Then in 2019, the counter ministry board came back and asked, "You now have to do Natura 2000 permits application, Natura 2000 being at a European union nature protection designation. So, this is the base still the bit that today, whether that is needed or not, but we said, "Okay, let's go ahead then and try to put something together towards that". So that process has been in motion. When I took over as the CEO last year, and with the new board of directors, when we went through the project and then decided we want to completely redesign this project in order to minimize the impact locally at site, there was no real logic around continuing with that Natura 2000 permit application because the project is going to look drastically different in the future.

And that's been communicated with mining inspectors on the county administrative board. So, well, the mining inspector is now done today is saying it's taken too long time. You haven't been able to demonstrate that you've been granted a Natura 2000 permit application. We agree with the Supreme and administer court that you need that before a mining lease can be granted. So we can’t grant you a mining lease. So hence we’re rejected now and you know, we're now in 2021, this whole journey started in 2012. And ironically enough last week, the parliament of Sweden voted through with the majority a motion to the government saying that on a Nature 2000 permit shouldn't be required at the mining lease stage of permitting. It should be dealt with at the environmental permit. So we're doing a bit of time traveling back and forth, but, and really can’t see why there are no more critical raw material mines being developed in Sweden to compete with China. So that's the sort of, as short as possible background and where we are today

Gerardo Del Real: To be absolutely clear. This doesn't mean that you're forfeiting Norra Kärr or anything remotely close to that. You still have the exploration license, the mining permit, the mining license is something that it sounds like the company was already looking or had been making adjustments to as it relates to the design much before this decision was made. And it sounds like the company plans on appealing the decision. And it also sounds like it's not just you, right? There's other big companies, major companies that have appealed the, the requirement for this Natura 2000 permit.

Filip Kozlowski: Yeah, no, for sure. So Boliden recently appealed to the Supreme administrative court saying the same thing that the Natura 2000 permits shouldn't be required at this early stage of a project. And, for us, the change is very little in the near term. We're moving forward to the redesign of the project and it's this new project. So to say that we formed a basis for the permitting going forward, and we will have to evaluate with our legal advisors, how this updated permitting should be most effectively progressed, but, we're inclined to appeal to the government as well. And you mentioned an important point, which is the term, the security of the project. And in terms of that, we still hold our tenure through the expiration license. That one has been extended to 2025. It was appealed last year, but earlier this year, the administrative court rejected that bill, it's been appealed again to the court of appeals, which is the higher instance. And sometime later this year, they will have to decide whether to grant legal data to.

Gerardo Del Real: It sounds like the lawyers in Sweden are doing very good for themselves.

Filip Kozlowski: That's for sure. I think that's a global phenomenon.

Gerardo Del Real: Indeed, listen. The two major catalysts, the next two major catalysts as it relates to Leading Edge are the studies that are being undertaken for the economic life cycle and economic studies for Norra Kärr and Woxna respectively, how are those coming along? Because, I'm looking forward to seeing what those look like.

Filip Kozlowski: No, and specifically for the Norra Kärr one, it would have been nice to already have had that new design of the project through the technical report, a preliminary economic assessment. When this happens in order, easier to describe what is the new project and how does that impact the permitting going forward about it? It's been tough, working remotely with the consultants over the last year, getting everything together. We are in the final stages. It hasn't only been negatively impacted in terms of timeline. There's all the positive aspects that we want to incorporate.

For example, there was a recent updated price forecast from Adamat Intelligence takes into account a significant increase in rare earth element prices. So it lasts six months and a huge uptake in demand from the electric vehicle industry and so on. So, it's both been challenging in terms of recent environments working remotely but those are positive aspects. And we've turned every stone up and down in terms of what can we do to increase the resource efficiency of the project and by doing so, minimize the footprint at the project site and that's immediately links into the forward path for the permitting where the more we can reduce the footprint at site. These should lead to a permit.

Gerardo Del Real: Excellent. Filip, thank you so much. I know you're freezing. I know it's late. Thank you for taking the time today for clarifying everything. And I'm looking forward to having you back on to talk about those studies, once those are published.

Filip Kozlowski: Absolutely Gerardo. Take care. Thank you very much.

Gerardo Del Real: Thank you.

Filip Kozlowski: Bye-bye.