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presentation and Q&A session will be held in English and transferred via
webcast. You will have the opportunity to post questions online throughout the
webcast session. The webcast will be available on:
https://channel.royalcast.com/landingpage/hegnarmedia/20210813_5/
Important events in the second quarter of 2021 and year to date:
CORPORATE
Successful capital raise of NOK 80 million
In February 2021, Nordic Mining completed a private placement with gross
proceeds of NOK 80 million. The capital raise enabled the Company to participate
in Keliber’s equity issue in March/April to retain an ownership of 14.3%. The
remaining funds will be used towards securing financing for the Engebø project,
and preparing for execution, as well as development of the Group’s position
within the seabed mineral resources area, and for general corporate purposes and
business development.
ENGEBØ RUTILE AND GARNET PROJECT (100% ownership)
Updated Definitive Feasibility Study reconfirms Engebø as a world class mineral
project
In May 2021 Nordic Mining ASA completed the Updated Definitive Feasibility study
(“UDFS”) for the Engebø Rutile and Garnet project. The UDFS is an update of the
DFS which was completed in January 2020. The UDFS confirmed Engebø as a
sustainable and economically robust mineral project with reduced financing risk,
improved financial resilience, and attractive financials returns.
Key UDFS economic figures and highlights:
·
· Pre-tax NPV@8% of USD 355 million
· Pre-tax IRR of 22.5%
· Post-tax NPV@8% of USD 260 million
· Post-tax IRR of 19.8%
· High-margin cash flow and short pay-back support bankability:
· Initial capital investment of USD 218 million reduced from USD 311 million
in DFS, maintaining a Run-of-Mine (ROM) of 1.5 Mtpa
· Life of Mine EBITDA of USD 2.1 billion, corresponding to an EBITDA-margin
of 68%
· Life of Mine Operating Cash Flow of USD 1.7 billion
· Free Cash Flow the first 10 years of full operations of USD 51 million per
annum
· Pay-back period of 4.4 years from start of production
· Reduced environmental footprint:
· 99% reduction in consumption of approved chemicals in the production
process (compared with the 2016 environmental permit)
· ~ 80% reduction of CO2 emissions
· ~ 40% reduction of the process plant facilities footprint
Long-term offtake agreements signed for the full rutile production from Engebø
In July 2021 Nordic Mining signed term sheets for offtake of rutile with a
reputable Japanese trading house and Kronos (US), INC., a globally leading
pigment producer and, which subject to the entering into of the final offtake
agreement, will secure sales for all the annual production of rutile for the
first five years of production. The term sheet with the Japanese trading house
builds on the Heads of Agreement signed in January 2019 for offtake of rutile
and participation in the financing for the Engebø project.
The parties will start the process of finalizing the final offtake agreement,
which in respect of the Japanese trading house will be negotiated in parallel
with negotiating their participation in the financing of the Engebø project.
Engineering, Procurement and Construction and Project Management Consultant
partners commissioned for construction
Nordic Mining signed in May 2021 Letters of Intent with Sunnfjord
Industripartner AS, Åsen & Øvrelid AS, Nordic Bulk AS, and Normatic AS as
partners for Engineering, Procurement and Construction (together EPCs) and
leading engineering companies Hatch and Sweco as Project Management Consultant
(PMC). The Letters of Intent are a formalization of EPCs contributions towards
the UDFS and the optimized contracting and execution strategy developed as part
of the UDFS. The PMC will be integrated in the owners’ team, reporting to the
Engebø Project Director, and will be responsible for process design, and overall
engineering coordination and integration of the selected partners for
Engineering, Procurement and Construction. The parties plan to formalize the
final EPC and PMC contracts during Q3 2021.
Following the commissioning of the EPCs and PMC the Company has started Pre
-Construction work to advance selected Detailed Engineering activities earlier
than UDFS project schedule, increasing flexibility on schedule for construction
activities.
Financial advisors appointed for financing of the Engebø project
In June 2021, Nordic Mining appointed Clarkson Platou Securities AS and
SpareBank 1 Markets AS to advice on the project financing for the Engebø
project. Pre-sounding with selected and strategic and financial investors to
explore available equity and debt structures has started and the process to
engage an Independent Technical Engineer for the financing transaction is
ongoing. The formal financing process is planned to start later this year, with
aim to conduct and execute financing by year-end 2021.
Implementation of environmental and social management systems
The Company is implementing an integrated and comprehensive Environmental and
Social Management System (ESMS) for the Engebø project to ensure environmental
and social issues are managed in accordance with International Finance
Corporation’s (IFC) Performance Standards and the Equator Principles, as well as
Norwegian permits and regulations.
The Company has implemented a Stakeholder Engagement Plan to strengthen and
build sustainable stakeholder relations prior to, and during construction, and
further into the production phase, and is in the process of finalizing a Waste
Management Plan. The management plans have been reviewed by the international
mining consultancy firm SRK Consulting (SRK) to ensure compliance with the IFC
standards. A local resource group has been established with participation from
key stakeholder groups to participate in the Company’s environmental monitoring
program.
Revised discharge permit granted
In January 2021, the Environment Agency granted a revised discharge permit
implying a substitution of chemicals from the original permit, commenting that
the significant reduction in chemical consumption will have lower impact on the
environment than the previously planned consumption.
Increasing demand for high-grade feedstock and supply uncertainty underpins
fundamentals for Engebø
Rutile demand continues to strengthen with recovery in Europe and USA in the
aftermath of the Covid-pandemic. Demand for high-grade feedstock is reported to
have been particularly strong in the US as result of chlorine supply challenges
for pigment production, with pigment producers having to increase the usage of
rutile to optimize production and capacity utilization in line with the
increasing demand. The average rutile price in the first half of 2021 is
reported to be around USD 1,230 per tonne (FOB), which is up around USD 30 per
tonne compared to the first quarter of 2021.
In May 2021, Iluka announced that it will suspend the production of rutile in
Sierra Leone from November this year as a result of poor economic performance.
This will reduce the global supply of rutile by more than 140,000 tons per year.
Iluka has indicated that the operations can be suspended for up to two years,
and if no progress is made, that the mine could move into closure. Furthermore,
the force majeure situation at Rio Tinto’s Richards Bay plant in South Africa
has made the plant’s future stability of high-titanium slag supply uncertain.
This represents a considerable short to medium term supply uncertainty, which
will continue to drive a tightening of the rutile market, with downstream users
now more active in securing rutile raw materials, and with spot supply of rutile
being very tight.
The garnet demand in 2020 was impacted by reduced economic activity and lower
oil price. Prices of garnet to end-customers in the main markets in Europe and
USA have to a large extent been reported to remain unaffected, despite demand
having contracted with an estimated 20-25%. The existing main producers of
garnet are in Australia, China, India, and South-Africa, with no production in
Europe. In the USA, domestic production is significantly short of the demand.
Various garnet buyers have indicated that long-term supply of high-quality
garnet from Europe is important for supply security and efficient logistics.
Nordic Mining has provided garnet samples for testing, and the results compare
well with industrial reference qualities. Positive discussions continue with
potential distributors for long-term offtake agreements.
KELIBER LITHIUM PROJECT (14.3% ownership)
Measured and Indicated Mineral Resources of Rapasaari deposit increased by more
than 30%
In May 2021, Keliber increased the Measured and Indicated Mineral Resources of
the Rapasaari deposit to 8.10 million tonnes. This is an increase of 31% from
the previous resource estimate. Including Inferred Mineral Resource, the
increase is 17.4%. The total Measured and Indicated Mineral Resources of Keliber
now total 13.69 million tonnes (previously 11.77). Including the Inferred
Mineral Resources, the total Mineral Resources are 15.62 million tonnes
(previously14.19). The average Li?O grade of the Keliber’s combined Mineral
Resources is 1.05%.
Keliber’s Mineral Resource estimates comply with the JORC 2012 code, and are
reported at a cut-off grade of 0.50% Li?O.
Building international partnership with leading international mining company
In February 2021, Keliber entered into an investment agreement with the leading
international mining company Sibanye-Stillwater Limited (SSW) for an initial
phased equity investment of EUR 30 million for approximately 30% shareholding in
Keliber. In March, the first tranche of the initial investment was closed with
SSW subscribing for shares for EUR 15 million, and at the same time a share
issue of up to 250,000 shares was opened to existing shareholders of Keliber. In
the issue, which was conducted in March/April 2021, Nordic Mining was allocated
in total 58,975 shares at an issue price of EUR 40 per share corresponding to
approximately 23.6% of the share issue, to retain an ownership of 14.3%. SSW
plans to play a key role as an industrial anchor investor in the project
financing planned for mid-2022 and has in accordance with the investment
agreement the option to secure a majority shareholding in Keliber, following the
completion of the updated Feasibility Study.
Project update and review
Keliber continues to advance the lithium project including technical planning,
permitting, ore potential, market assessments and financing. The company have
decided 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. Basic engineering work is ongoing related to the concentrator,
tailings disposal solutions and the chemical plant.
Environmental permit applications for all main activities have been submitted.
The EIA report for the concentrator and main mining areas was submitted to the
authorities in November 2020. In June 2021 Keliber submitted applications for
environmental and water management permits for the Rapasaari mine and the
Päiväneva concentrator, following the Vaasa Administrative Court rejection of
the appeals to the permits. The environmental permit application for the Kokkola
chemical plant was submitted in December 2020. In June 2021 the ELY Centre for
South Ostrobothnia issued a reasoned conclusion on the updated Environmental
Impact Assessment (EIA) report for the Kokkola chemical plant stating that the
plant does not have a significant environmental impact. Keliber expects the
permit decision by end of 2021.
Keliber is expected to complete an update of the DFS early in 2022.
Electrical Vehicle market and shift to e-mobility driving lithium market outlook
In the first part of 2020, lithium prices were under pressure driven by the
uncertainties caused by the Covid-pandemic. In the second half of the year,
economic activity including electrical vehicle manufacturing picked up and the
market balance for lithium was tightening. The ongoing and expected recovery of
economies and the pace of transition towards greener and more sustainable
solutions are expected to fuel the lithium market in the coming years.
In the 2020 list of Critical Raw Materials, the European Union indicated that
Europe would 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 battery manufacturers.
NORDIC OCEAN RESOURCES (NORA) (100% ownership)
Nordic Mining has taken pioneering initiatives related to seabed mineral in
Norway through the subsidiary Nordic Ocean Resources (NORA) giving the Company
valuable knowledge for business development. NORA participated in the MarMine
project on marine mineral resources coordinated by the Norwegian University of
Science and Technology (NTNU). Research assessments indicate an attractive
potential for discovery of metallic ore deposits with possible significant
economic values within Norway’s exclusive economic zone.
In 2019, the new Seabed Minerals Act came into force as result of systematic
mapping of seabed minerals by the Norwegian Petroleum Directorate. Prior to
opening for seabed mineral extraction, an environmental impact assessment must
be carried out and in January 2021 the Ministry of Petroleum and Energy on
issued a hearing for a proposal for an impact assessment program.
Nordic Mining have, in light of the positive developments on the regulation of
seabed minerals, and increased focus on how the Norwegian mining industry can
play an important role on seabed minerals to support the green transition,
increased the efforts to commercializing the Groups understanding and
positioning on seabed minerals developed through the pioneering initiatives of
NORA.
Oslo, 13 August 2021
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 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 14.3% 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 Euronext Expand Oslo with ticker symbol “NOM”.
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