From the Canadian Environmental Assessment Agency to Critical Elements Corporation re: non-conformity of the Environmental Impact Statement

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Document Reference Number: 14

901-1550, ave d'Estimauville
Québec (Québec) G1J 0C1

901-1550 d'Estimauville Avenue
Quebec, QC G1J 0C1

Quebec, May 9, 2018

BY EMAIL

Mr. Jean-Sébastien Lavallée
President and CEO
1080 , Côte du Beaver Hall
Suite 2101
Montreal (Québec) H2Z 1S8

SUBJECT: Update of the Environmental Impact Statement for the Rose Lithium-Tantalum Mine Project—Non-Compliance with Guidelines and Missing Information (File No. 005327)

Dear Sir:

On March 19, 2018, the Canadian Environmental Assessment Agency (the Agency) received the updated Environmental Impact Statement (the EIS) for the Rose Lithium-Tantalum Mine Project (the Project) prepared by Critical Elements Corporation (the proponent).

The Agency compared the EIS, the project impact statement guidelines and the letter sent by the Agency on August 25, 2017. This activity, performed in cooperation with the Environmental Assessment Technical Committee, revealed that the impact statement is incomplete, because it does not satisfy some of the guidelines' requirements and fails to fill the gaps noted in the letter dated August 25 2017. Below is a list of the sections from the Agency's guidelines for which further information is required. It is recommended that you refer to the description of the sections in the guidelines, as well as the letter dated August 25, 2017, for details concerning the information requested.

The information and clarifications requested on the following pages must be provided so that the Agency can continue the technical analysis of the EIS of the project and initiate the public comment period on the EIS Summary. Justification must be given if no information is provided for one of the elements requested in this letter.

The examples provided in this information request are not exhaustive and are provided for guidance purposes only. All relevant information that would address the elements noted in this request must be provided.

Section 4. Environmental Impact Statement Summary

The Summary in both official languages must take into account all the changes made to the EIS stemming from the information and clarification requested in this letter.

Section 5.6. Project Components

The following documents must be provided to facilitate the analysis of project components:

AMEC Foster Wheeler TX16017703-01000-RGE-0001-0. 2017. Rose Project—Feasibility Study, Tailings Storage Facility, 14p. 3 appendices

Hume, C., 2017. Update to Rose Pit Geotechnical Model and Open Pit Stability Assessment, Mine Design Engineering, Report #0308_R1701-01-1, 47p.

Section 5.7. Project Activities

The EIS must include a schedule including time of year, frequency, and duration for all project activities.

Mine water management must be described and documented for all phases of the project (construction, operation, closure and restoration). With respect to the construction phase, the proponent pointed out that surface runoff will be collected, but this information is insufficient. Management measures for surface water during construction are required to assess the effects on the quality of the water of the receiving environment.

The EIS must:

• detail how water will be managed at the mine site during construction work in a specific section of the study.
• provide relevant maps that show the evolution or changes to the water management infrastructure during the construction phase in line with the progress of the work.

The description of water management during the operation phase must include sufficiently detailed information to enable the Agency to carry out the analysis of the project effects. The EIS must include, but is not limited to, a description of:

• the capacity of the water treatment system depending on the mine water collected before its treatment in the accumulation basin.
• design details of the planned watercourse crossing on the segment connecting lakes 6 and 7 and the nearby fish habitat characterization. This design should take into account groundwater input pumped to Lake 6 from the peripheral wells.
• a description of the planned developments and their receiving environment for the following discharge points:
  • of effluent entering stream A.
  • of water from dewatering of lakes 1 and 2 in stream A and lake 3 respectively.
  • of groundwater from the peripheral wells in lakes 3, 4 and 6. This description must include, in particular, all the facilities planned for the reoxygenation of groundwater and the stabilization of their temperature, before discharge into the receiving environment.

Section 9. Baseline Conditions

9.1.2 Biophysical Environment

Atmospheric Environment and Climate

Since data on the characterization of ambient air quality in the study area is lacking, the proponent presented initial baseline specific concentrations for northern mining projects (north of the 51^st parallel) as defined by the MDDELCC (Table 6-58 of the EIS). However, respirable particulate matter of less than ten microns (PM₁₀) and volatile organic compounds (VOCs) were not considered in the description of ambient air quality. These substances are part of the key air contaminants and were requested in the guidelines.

A baseline study of ambient air quality in the project areas and in the airshed likely to be affected by the project must:

• identify and quantify existing gas emissions, including but not limited to, the following contaminants: (MP₁₀ and VOCs).
• compare PM₁₀ emissions with the thresholds set in the World Health Organization (WHO) guidelines for air quality.

Terrestrial Environment-Geology and Geochemistry, acid rock drainage and metal leaching, mine water

The EIS presents a characterization of waste rock and mine tailings. However, the proponent must provide complete geochemical results for all expected mine material. If the proponent proposes to store mining materials without a sealing structure against seepage and proposes to use the waste rock and other granular materials to build its roads and other structures, a relevant characterization of the expected mining materials is required to support the information.

The EIS must present:

• a complete characterization (results and the conclusions of the analysis) of geochemical tests of expected mining materials (particularly for ore and overburden).
• kinetic test results and any information on leaching and acid generation tests (if applicable) for all expected mining materials (waste rock, tailings, overburden and ore).
• information that demonstrates that the sampling performed is representative for all expected mining materials (for example, for waste rock, the sufficiency of the number of samples and the in-depth distribution of samples taking into account the size of the deposit in space).

On page 6-64, the EIS notes that "[.] dewatering discharge will be loaded with suspended solids, metals and nitrates [.]" This information does not allow the Agency to undertake its analysis. The EIS must provide:

• the assessment of water quality from pit dewatering.
• the assessment of the quality of the water coming from the flow through or on the laydown areas of the various mine waste (waste rock pile, tailing sites, paddocks, overburden dump, infrastructure, etc.).
• the assessment of exfiltration rates through the various retaining structures, including sedimentation or accumulation ponds.
• the assessment of the water quality of the effluent that will be discharged into the receiving environment of stream A to determine treatment requirements on those discharges.

Water resources and aquatic wildlife

The EIS must provide:

• a characterization of fish and fish habitat in all water bodies and streams where effects are apprehended. This characterization must be carried out, but not limited to, in lakes 4, 6, 7, 14, 16, 18 and 19 and in stream C (from lake 4), M, N and F (from lake 6). The proponent will have to consider the species present to determine the timing for carrying out the characterizations. ^Footnote 1
• a description of the homogeneous sections of the watercourses that were characterized in 2011 and 2016 as well as for the watercourses that will be characterized in 2018, including the length, width and flow facies of these watercourses.
• a thorough assessment of serious harm to fish habitat. The areas of fish habitats accessible that will be subject to permanent destruction or modification must be clearly defined. It should be noted that beaver dams are not obstacles that are considered impassable by Fisheries and Oceans Canada. The proponent must therefore take this into consideration in its assessment.
• a full update of the effects on fish and fish habitat will be required based on field work that will be carried out in 2018. Note that the effects assessment must first be done without taking into account mitigation measures because in the event that these measures would not be implemented or would be different from what was planned, Fisheries and Oceans Canada would not be able to assess the magnitude of the potential effects on fish habitat.

Species at Risk and Species of Conservation Concern

The proponent must complete the information as it pertains to the presence, in the study area, of two (2) species of bats, the Little Brown Myotis and the Northern Myotis, which are listed in Schedule 1 of the Species at Risk Act (as endangered). Human infrastructures can be favorable environments for these mammals. The proponent must:

• proceed with an inspection of the camps or buildings in the study area to detect the presence of bats ^Footnote 2.
• adjust the EIS according to the results of this inspection.

9.1.3. Human Environment

To complete the background information on First Nations, the EIS must include baseline information on the health and socio-economic conditions of the Waskaganish First Nation, including the functioning and health of the socio-economic environment, encompassing a broad range of matters that affect communities in the study area in a way that recognizes interconnections, system functions and vulnerabilities. Specific aspects that will be considered include, but are not limited to:

• consumption of country foods (also known as traditional foods) including food that is trapped, fished, hunted, harvested or grown for subsistence or for medicinal purposes, outside of the commercial food chain.
• commercial activities (e.g. fishing, trapping, hunting, forestry, outfitting).
• recreational uses.

Section 10. Effects Assessment

Greenhouse gas emissions (GHS) — Estimate of the greenhouse gas emissions

The technical notes submitted by the proponent must contain sufficient information to enable the Agency to assess the GHG emissions data presented in the EIS. According to technical note 3 submitted in 2017, GHG emissions for the construction and operation phases only were significantly higher than those presented in technical note NT-2 of 2018, which includes all phases of the project (88 kilotonnes of carbon dioxide equivalent units per year (CO_{2 eq} / year) for 2017 compared to 38 kT of CO_{2 eq}/year for 2018). In addition, the two technical notes submitted by the proponent do not allow the Agency to verify the assumptions and calculations of GHG emissions for each phase of the project.

The EIS must provide:

• details that demonstrate that all sources of GHG have been identified and have been properly estimated. The different equipment, vehicles and other elements of the project must be clearly presented. The level of detail provided must, in particular, make it possible to determine the source of the estimates of the quantities of fuel (diesel and other) and natural gas used.
• detailed calculations and methodology used for GHG estimation, particularly by integrating the different equations and quantity calculations of GHG from different sources and by presenting examples of calculations (references are not sufficient). The extent of transportation activities that have been considered in the calculations must be provided. The estimate should be carried out annually, by project phase, as well as for the duration of the project. The information should be presented by substance and should then be summarized in CO₂ equivalent units per year (CO_{2 eq}/year).

Potential adverse impacts of the project on potential or established Aboriginal or treaty rights, and related interests

The EIS must present the Waskaganish First Nation views on:

• the effects of changes to the environment on Aboriginal peoples (health and socio-economic conditions) pursuant to paragraph 5(1)(c) of the Canadian Environmental Assessment Act, 2012.

The EIS must present the Cree First Nations of Nemaska, Eastmain and Waskaganish views on:

• potential adverse impacts of the project on potential or established rights under section 35 of the Constitution Act, 1982 ^Footnote 3, including title and related interests, in respect of the Crown's duty to consult, and where appropriate, accommodate Aboriginal peoples;
• the efficacy of the proposed potential mitigation/accommodation measures.

The EIS must provide:

• changes made to the project design and implementation directly as a result of discussions with the Cree First Nations of Nemaska, Eastmain and Waskaganish.

Accidents and Malfunctions

The proponent presents a risk assessment and provides some information on the potential effects in case of accidents and malfunctions as well as the species that might be affected.

However, the information presented does not make it possible to evaluate accurately the effects on the environment worst-case accident scenarios. For each accident scenario, the components that could be affected and the potential environmental effects must be accurately presented. The proponent must:

• provide maps, at appropriate scales and explanations, that identify sensitive features and environments that may be affected (including species at risk) during probable accidents and link them to the risk factors (for example location of petroleum equipment, storage of chemicals, explosives, dikes, etc.);
• provide detailed explanations for each accident scenario, how the protective measures identified will reduce the risk of accidents and effects on the identified components.

Other Considerations

In order to facilitate the participation and review of the EIS by the Waskaganish, Eastman and Nemaska Cree First Nations, the Agency is asking the proponent to translate chapters 4 and 8 of the EIS.

Following receipt of the requested information, the Agency will have 15 days, which is not included in the legislated timeline set out in the Canadian Environmental Assessment Act, 2012, to determine whether the requirements under the guidelines have been met. If the Agency does not reach a conclusion after 15 days, the timeline will restart the next day. After this period, the Agency will notify you whether any additional information is required or whether the EIS is considered compliant with the guidelines. Questions and comments on all the information submitted could be sent to you on a later date.

Please forward the information requested by the same means as the EIS was sent. If you require clarifications regarding this request for information, feel free to contact me by telephone at 418-648-7832 or by email at the following address raymond.chabot@ceaa-acee.gc.ca.

Sincerely yours,

<Original signed by>

Raymond Chabot
Project Manager

c. c.Pernilla Talec, Cree Nation Government
Étienne Frenette, Health Canada
Peter Unger, Natural Resources Canada
Joanie Carrier, Fisheries and Oceans Canada
Karine Gauthier, Environment and Climate Change Canada
Rosemarie Lavoie, Transport Canada