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presentation and Q&A session will be held in English and transferred via webcast
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Important events in the third quarter of 2020 and year to date:
CORPORATE
Fully financed for ongoing DFS update and further into 2021
The Company continues to progress development activities for the Engebø project
strategically toward update of the Definitive Feasibility Study (DFS). Total
operating expenditures were reduced to NOK -6.0 million, compared to -7.7
million in the second quarter of 2020. The Group’s cash balance at 30 September
2020 was NOK 49.5 million. The Group has no interest-bearing debt and is fully
financed for the ongoing DFS update and further into 2021 based on current plans
and forecasts.
Strengthening of Management
The Group’s new CFO Christian Gjerde took up his position effective from 1
August 2020.
Titanium and lithium added to EU’s list of Critical Raw Materials
In September, the European Commission added titanium and lithium to its list of
Critical Raw Materials to reflect the changed economic importance of the
minerals in the transition towards a green and digital economy, and the need to
develop resilient value chains for Europe’s industrial ecosystems by reducing
dependency on third countries, diversifying supply sources and improving
resource efficiency and circularity.
ENGEBØ RUTILE AND GARNET PROJECT (100% ownership)
Definitive Feasibility Study reinforced Engebø as a world class rutile and
garnet project
In January 2020, the Company published the results of the DFS for the Engebø
project. The study reinforced Engebø as a world class rutile and garnet project
and outlines the execution plan for the project.
Financial highlights from DFS:
·
· Pre-tax NPV@8% USD 450 million
· Pre-tax IRR 21.9%
· Post-tax NPV@8% USD 344 million
· Post-tax IRR 19.8%
· Strong cashflow and short payback support bankability:
· Average annual free cashflow first 15 years of USD 70 million
· Net operating cashflow (undiscounted) of USD 2,160 million
· Initial capex of USD 311 million and deferred capex of USD 25 million
(underground)
· Pay-back period < 5 years
Engebø DFS update in progress - material reduction of CAPEX expected
Following the finalization of the DFS Nordic Mining initiated, as a result of
the uncertainties caused by the Covid-pandemic, a third-party Value Engineering
review was undertaken by engineering company Ausenco, with the purpose to
increase the project’s robustness to future market conditions. The review
identified specific opportunities to materially reduce the initial project
capital expenditure, and further improve the economic utilization of the Engebø
deposit.
In early October, Nordic Mining appointed engineering companies Hatch and Axe
Valley Mining to confirm and develop the opportunities identified to DFS-level
for an update of the Engebø DFS.
The DFS update will focus on the following optimization opportunities:
· Reduce process plant footprint by changing construction strategy, and fit
-for-purpose infrastructure, lay-out and buildings
· Early involvement of selected suppliers to optimize engineering and costing
of main construction packages
· Reduce carbon footprint by use of alternative technologies, including use of
electrical dryers
· Implement targeted mining strategy to maximize extraction of high-grade ore
and postpone and minimize waste rock mining
· Revisions to underground mining strategy that focus on high-grade ore and
increased overall extraction through the application of backfilling
· Optimize initial garnet capacity as a result of the market uncertainty
caused by the Covid-pandemic
Engebø operating license completes the main regulatory permits for the project
On 17 June, the Directorate of Mining granted the operating license for the
Engebø project. The license is granted for the life of mine of the project which
includes an open pit and underground phase. The license regulates operational
scope, methodology and procedures to secure safe and efficient production of the
mineral resources and follows the strict regulation practice for Norwegian
mining operations which implies high standards for environment, health and
safety. The operating license completes the main regulatory permits for the
project.
Environmental, Social and Governance at the core of Nordic Mining’s corporate
strategy
Nordic Mining is continuously investigating measures to further improve the
environmental and social aspects of the Engebø project. In June 2020, an
application was submitted to the Environment Agency for substitution of
chemicals that will be use in ore processing. The planned consumption is a 99%
reduction compared with the granted chemicals in the environmental permit of
2015. Further, Nordic Mining is evaluating, as part of the update of the DFS,
the use of (renewable) electric drying instead of natural gas to reduce climate
footprint, and optimizing plant lay-out and configuration in order to reduce the
physical footprint of the project.
The Company is in process of planning for implementation of integrated
environmental and social management system to ensure environmental and social
issues are managed in accordance with IFC Performance Standards and the Equator
Principles, and all Norwegian permits and regulations.
Long-term fundamentals supportive for Engebø project
The market outlook for rutile and garnet remains uncertain in the short to
medium term as a result of the Covid-pandemic. For rutile, long term
fundamentals remain strong with global supply of rutile expected to be
continuously reduced in the coming year as mineral deposits are depleted, at the
same time as demand for rutile as a high-grade titanium feedstock is expected to
remain strong driven by its value and importance for industrial applications.
Rutile price in the first three quarters of 2020 is reported to be around USD
1,200 per tonne (FOB), which is above the long-term price used in the Engebø
DFS.
For garnet, demand has been impacted by reduced economic activity and lower oil
price, however prices are reported to remain relatively strong in Europe and
U.S. The main producers of garnet are today located in Australia, China, India
and South-Africa, with no production in Europe. European garnet buyers have
indicated that long-term supply of high-quality garnet from Europe is important
for supply security. Nordic Mining is in concrete discussions with companies for
long-term offtake agreements for a considerable portion of the expected garnet
production volume.
KELIBER LITHIUM PROJECT (16.3% ownership)
Electrical Vehicle market and shift to e-mobility driving lithium market outlook
Keliber’s updated DFS for the lithium project was presented in February 2019
based on production of lithium hydroxide. In 2020 lithium prices have been under
pressure driven by the uncertainties caused by the Covid-pandemic, however,
increase in Electrical Vehicle manufacturing and strong sales are improving the
lithium market outlook. EU indicated in their 2020 list of Critical Raw
Materials that Europe will need about 60 times more lithium, which is critical
for a shift to e-mobility, for EV batteries and energy storage by 2050. The
first European battery giga-factories are coming to production in 2021, and with
more giga-factories in project phase, including significant battery initiatives
in the Nordic countries. Keliber’s targeted position as a low-cost producer and
the first producer in Europe of battery grade lithium hydroxide is expected to
be an advantage when it comes to future sales to European battery manufacturers.
Depending of the rate of recovery of economies and the pace of transition
towards greener and more sustainable solutions, a substantial recovery the
lithium market is expected.
Ongoing project update and review
Keliber continues to advance the lithium project in various fields including
technical planning, permitting, ore potential, market assessments and financing.
This also includes activities to optimize the business case compared with the
updated DFS published in February 2019. Decisions have been taken to increase
the production capacity for lithium hydroxide from 12,000 to 15,000 tonnes per
year. Further, the concentrator plant will be moved closer to the main spodumene
deposits to increase efficiency and reduce environmental footprint.
Positive interest from external investors towards Keliber-project
Keliber is in the process to raise EUR 30 million to finance the remaining
planned project development activities up to project financing for project
construction. Keliber stated in their “Progress Report Q3 2020” that they are in
detailed discussions and negotiations with a handful of possible investors, and
that they expect to close the financing by end of 2020.
Further, the company state that discussions with investors are based on the
company’s latest projection of project economics with post-tax-IRR of 22%,
expected cost leader in lithium hydroxide in 2025 and growing lithium demand as
presented by Roskill in June 2020.
Oslo, 3 November 2020
Nordic Mining ASA
Nordic Mining ASA (www.nordicmining.com)
Nordic Mining ASA (“Nordic Mining” or “the Company”) is a resource company with
focus on high-end industrial minerals and metals. The Company’s project
portfolio is of high international standard and holds a significant economic
potential. The Company’s assets are in the Nordic region. Nordic Mining is
undertaking a large-scale project development at Engebø on the west coast of
Norway where the Company has rights and permits to a substantial eclogite
deposit with rutile and garnet. Nordic Mining also holds 16.3% of the shares in
Keliber Oy, which is developing a lithium project in Finland to become the first
European producer of battery grade lithium hydroxide.
In addition, Nordic Mining holds interests in other initiatives at various
stages of development. This includes patented rights for a new technology for
production of alumina and exploration of seabed minerals.
Nordic Mining is listed on Oslo Axess with ticker symbol “NOM”.
Kilde
