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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/20211109_3/
Important events in the third 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
ownership in Keliber was in September 2021 diluted to 12.7%. See note 3 for
further information. 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)
Lump sum EPC contracts signed with partners for Engebø Project construction
In November 2021 Nordic Mining signed, through its wholly owned subsidiary
Nordic Rutile AS, lump sum contracts for the Engineering, Procurement and
Construction (“EPC”) for the Engebø Rutile and Garnet project’s selected EPC
partners Sunnfjord Industripartner AS, Åsen & Øvrelid AS and Nordic Bulk AS. The
EPC contracts represent a formalization of the Letters of Intent signed between
the parties in June 2021 and comprise a lump sum price for the agreed scope of
work agreed in the EPC contracts. Nordic Bulk AS scope of work has been extended
to include the procurement of mechanical equipment for the crushing circuit. The
last EPC contract with Normatic AS is expected to be finalized and signed later
in November. In total the four lump sum EPC contracts will cover around 75% of
the total plant and mine capital expenditure of USD 203.4 million. The EPCs
partners will continue to work with the owners’ team to further advance selected
Detailed Engineering work originally part of the UDFS construction work.
In June 2021 the Company signed Letters of Intent with leading engineering
companies Hatch and Sweco as Project Management Consultant (“PMC”) for the
Engebø Rutile and Garnet project. 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.
Full victory for Nordic Rutile
In October Oslo District Court ruled in favor of Nordic Rutile on all items in
the court case against Artic Mineral Resources (“AMR”). The ruling confirms that
Nordic Rutile’s extraction rights are valid and that the company has the right
to extract and - within the limits of the Norwegian Mining’s Act - utilize
garnet and all other minerals on the Vevring side of the Engebø deposit, and
conversely fully rejects AMR’s claim. The ruling was expected, and Nordic Rutile
will now focus on securing awarded legal expenses of NOK 3.5 million.
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 are in 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 and
expect the final agreements to be signed by year-end.
Nordic Mining is currently in constructive discussions with selected partners
for offtake and distribution of garnet to Europe and overseas markets.
Processes ongoing with selected strategic investors related to participation in
project financing
In June 2021, Nordic Mining appointed Clarkson Platou Securities AS (“CPS”) and
SpareBank 1 Markets AS (“SB1M”) to advice on the project financing for the
Engebø project. Positive interest has been received from investor pre-soundings
undertaken this summer-autumn, and the Group is now in processes with selected
strategic investors related to possible participation in the project financing.
The formal financing process will be started in due course pending final
decision on the operating license by the Ministry of Industries, Trade and
Fisheries.
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 and
implementing a Waste Management Plan and a Closure and Rehabilitation 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.
Long-term rutile price expectations increase as result of increasing supply
uncertainty
Bulk rutile prices continued to increase in the third quarter of 2021 as the
already strong demand for high-grade feedstocks was inflated by low inventory
levels and shortages of chloride feedstock in North America and Europe. Reports
from western producers indicate that the strong and increasing demand will limit
their opportunities to rebuild inventories for the remainder of 2021, and that
this momentum could extend into 2022. Notwithstanding Iluka’s decision to delay
its suspension of operation from November 2021 to January 2022, the overall
supply impact is muted driven by the supply disruption at Rio Tinto’s Richards
Bay plant in South Africa. TZMI have on the back of this revised their 2020 bulk
rutile price forecast to over USD 1,400/mt FOB, corresponding to a price
increase of close to 15% compared to the forecasted average bulk price in 2021.
Real long-term bulk rutile prices are expected to remain in the range USD 1,300
-1,320/mt FOB, which is USD 120-140/mt above the long-term rutile price used in
the UDFS in May 2021.
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 (12.7% ownership)
Rallying lithium prices are boosting valuation of lithium development projects
Lithium development equities has seen a positive movement over the past year
driven by the massive increase in adaptation of EV’s and improved investor
sentiment towards the green transition, with the share prices of a Keliber peer
-group having increased by over 330% on average over the last year. The Group
have as per 30 September 20210 assessed the fair value the Keliber investment to
NOK 193.9 million per Q3 2021, which represents a fair value gain of NOK 72.6
million compared to the second quarter of 2021. See note 3 for details on fair
value assessment as per 30 September 2021.
Sibanye-Stillwater closes EUR 10 million second tranche of equity investment in
Keliber
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 line with the agreement the second tranche of SSWs initial
investment of EUR 10 million was closed in September 2021, making SSW the
largest shareholder in Keliber with a shareholding of 26.7%. Following the share
issue, Nordic Mining was diluted from 14.3% to 12.7% ownership in Keliber. The
first tranche of SSWs initial investment of EUR 15 million was closed in March
2021, and at the same time a share issue of up to 250,000 shares was opened to
existing shareholders of Keliber. Nordic Mining was allocated in total 58,975
shares in the share issue at a price of EUR 40 per share corresponding to 23.6%
of the share issue.
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.
Reserves of Keliber’s largest lithium deposit increased by 30%
Keliber announced on 15 September 2021 an update of the company’s ore reserve
estimate, with an effective date as of 31 August 2021. The update is based on
the revised mineral resource estimate, published in May 2021. Keliber’s total
proven and probable ore reserves have increased to 12.30 million tonnes,
representing a growth of 32 percent, compared to the previous estimate published
in December 2019. The ore reserves of the largest lithium deposit, Rapasaari,
have increased by 55 percent.
Keliber’s total proven and probable ore reserves are 12.30 million tonnes (2019:
9.37 million tonnes) at an average grade of 0.94% (2019: 0.98%) Li?O, using a
cut-off grade of 0.40% Li?O for the open pit ore reserves and a cut-off grade of
0.40-0.70% Li?O for the underground ore reserves. The Rapasaari deposit
represents 67% (2019: 56%) of Keliber’s total ore reserves.
The total measured and indicated mineral resources of Keliber is total 13.69
million tonnes (previously 11.77). Including the inferred mineral resources, the
total mineral resources are 15.62 million tonnes (previously 14.19). The average
Li?O grade of the Keliber’s combined mineral resources is 1.05%.
Keliber’s ore reserve and mineral resource estimates comply with the JORC 2012
code. See note 3 on fair value assessment of the investment in Keliber as per 30
September 2021.
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 Environmental Impact Assessment (“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 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, 9 November 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 12.7% 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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