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Summary of important events in the third quarter of 2022 and year to date:
KEY EVENTS
· Keliber share sale for EUR 46.9 million closed
· Engebø Project value increases by over 70% to around USD 450 million
· Over 75% of the project financing for Engebø secured
· Nordic Rutile wins over Artic Mineral Resources in appeal case
· Full rutile production the first 5-years sold; second offtake agreement
signed
· Engebø early construction works advances
CORPORATE
Keliber share sale for EUR 46.9 million closed in September 2022
In June Nordic Mining ASA accepted to sell its shares in Keliber Oy (“Keliber”)
to Sibanye Stillwater Limited (“SSW”) for a cash consideration of EUR 157.28 per
share, in total EUR 46.9 million, under a voluntary offer (“Voluntary Offer”)
provided by SSW to the shareholders of Keliber. The share sale was closed on 15
September 2022 with the transfer of shares and settlement of the cash
consideration on 20 September. Following the sale, Nordic Mining holds no shares
in Keliber. Please see note 4 for further information.
ENGEBØ RUTILE AND GARNET PROJECT (100% ownership)
Engebø Rutile and Garnet Project value increases by over 70% to around USD 450
million
In October 2022, Nordic Mining revised the project economics for the Engebø
Rutile and Garnet Project based on the latest available data and assumptions.
The revised analysis confirmed significant improvements in the key financials
compared to the Updated Definitive Feasibility Study (“UDFS”) from 2021 with
unlevered post-tax NPV@8% of USD 453 million (up from USD 260 million) and post
-tax IRR of 24.4% (up from 19.8%).
High-margin cash flow and short pay-back support bankability (unlevered):
· Remaining initial capital investment of around USD 207 million (down from
USD 218 million)
· Life of Mine EBITDA of USD 3.1 billion (up from USD 2.1 billion),
corresponding to an EBITDA-margin of over 75% (up from 68%)
· Life of Mine Operating Cash Flow of USD 2.5 billion (up from UDS 1.7
billion)
· Free Cash Flow the first 10 years of full operations of over USD 60 million
per annum (up from USD 51 million)
· Pay-back period of around 4 years from start of production (down from 4.4
years)
Nordic Mining has secured over 75 % of the project financing for Engebø
In October 2022 Nordic Mining issued, through its wholly owned subsidiary Nordic
Rutile AS (“Nordic Rutile”), USD 100 million in a new 5-year senior secured bond
for the Engebø Rutile and Garnet Project. The bond has fixed coupon of 12.5% per
annum and an issue price of 90%, giving a calculated yield to maturity of around
16.3%. The bond issue was well subscribed by domestic and international quality
investors such as pension funds, long-only credit funds, hedge funds and family
offices. The settlement of the bond is expected be on or around the 9 November
2022. The net proceeds from the bond will be used for the development of the
Engebø Rutile and Garnet Project.
Further to the bond, Nordic Mining ASA has conditionally agreed a USD 55 million
investment from leading mining investment firm Orion Resource Partners
(“Orion”). The proposed investment will comprise of a USD 50 million non
-dilutive royalty instrument to Nordic Rutile AS and USD 5 million in equity,
which will be contributed to Nordic Mining ASA. The royalty instrument is
intended to be secured, subordinate to the senior secured lenders to Nordic
Rutile AS, subject to the terms of an Intercreditor Agreement. The investment
from Orion is subject to the parties signing binding agreements and the
satisfaction of certain conditions and approvals.
This secured, combined with the funds from the sale of the shares in Keliber Oy
for EUR 46.9 million, over 75% of the project financing package for the Engebø
Rutile and Garnet Project of USD 277 million, which will include a project
reserve of USD 30 million. The transaction structure, terms, and timing of the
remaining project financing will be announced in due course.
Nordic Rutile wins in Artic Mineral Resources appeal case in Borgarting Court of
Appeal
The Borgarting Court of Appeal ruled on 24 October 2022 in favor of Nordic
Rutile in Artic Mineral Resources (“AMR”) appeal of the ruling from Oslo
District Court. The appeal case took place 19-28 September 2022. The Court of
Appeal ruling confirmed the ruling from the Oslo District Court that Nordic
Rutile has exclusive right to all minerals in the Engebø deposit within the
limits of the Norwegian Mining Act, in line with the operating license granted
by the Ministry of Trade, Industry and Fisheries in May 2022. The court ruled
that AMR shall pay all legal expenses, which Nordic Rutile will now focus on
securing. AMR has informed that it will appeal the ruling of the appeal court to
the Supreme Court. Furthermore, two NGO’s have stated in the press that they
will summon the Norwegian Government claiming that Nordic Rutile’s disposal
permit granted by the Norwegian Government in 2015 is null and void. Nordic
Rutile has also received a litigation notice from an heir to the estate that
sold a property that will constitute parts of the company’s processing plant and
granted land access rights to Nordic Rutile. It must be expected that Nordic
Rutile may be summoned with a claim that the property sales agreement and land
access agreement shall be reversed. The company will vigorously defend itself
against the aforesaid legal actions.
Binding rutile Offtake Agreements secured for up to full production for the
first 5-years of operations
In October 2020, Nordic Mining ASA signed the final rutile offtake agreement,
through its wholly owned subsidiary Nordic Rutile AS, to secure committed sales
for up to the full annual production of rutile from Engebø for the first 5 years
of production, together with the offtake agreement signed with Iwatani
Corporation in June 2022. Iwatani will as part of their agreement make an equity
investment of NOK 191.7 million, corresponding to USD 20 million at the time of
the signing of the agreement, in Nordic Mining ASA for the Engebø Rutile and
Garnet Project. The agreement with Iwatani is subject to certain conditions
relating to the equity investment having been fulfilled and the offtake
agreements are inter alia subject to certain conditions precedent.
Engebø early construction works advances; enables optimizations of the
construction schedule
Nordic Mining commenced in April 2022 early construction works at Engebø.
Following the close of the sale of the stake in Keliber to SSW in September
2022, the Company resolved to contribute funds from the sale to continue to
advance the early construction works. The groundwork in the process area is
progressing in accordance with plan and we expect to be ready to start on
concrete foundations in December 2022. The sea filling of the bay which is
intended for future industry related to tailings will start early November and
will allow a shorter transportation route for the material from blasting at the
process area. The preparation of the tunnel portal is almost complete and work
on the transport tunnel leading into the vertical shaft will start early
November. The first half of the construction road up to the mountain is
completed and work is ahead on the remaining part. The main construction works
has been undertaken by local contractor, Sunnfjord Industripartner AS, under the
lump-sum EPC (“Engineering, Procurement and Construction”) contract signed in
November 2021. In addition, Detail Engineering on the process plant is ongoing
by Åsen & Øvrelid AS, Nordic Bulk AS and Normatic and we expect to complete the
main parts of this work in Q1 2023. This will allow start of mechanical and
electro installation work. The procurement of mechanical packages for the
process plant is ongoing and we expect to procure the packages during before
year-end 2022. The advancement of early works secures important project
developments that enables optimizations of the construction schedule.
Q3 remained firm for both TiO2 pigment production and titanium metal
Third quarter showed strong results for participants in the titanium dioxide
pigment market mainly driven by price increases combined with lower volumes. The
major pigment producers reported slower market conditions in Europe and China
and expect this to continue into Q4 due to de-stocking and the usual seasonal
lower demand for pigment in Q4. Titanium feedstock demand however is expected to
remain firm and high-grade feedstock producers report sold out conditions for
the remainder of the year.
When it comes to titanium metal, aerospace application demand remains robust due
to the revival of air traffic as well as demand for non-Russian products.
Titanium metal producers report strong demand and increasing sales prices.
Further, there is continuous strong demand for titanium metal into general
industrial and semiconductor applications.
Reported natural rutile prices in Q3 2022 has been in excess of USD 1,500/mt
FOB, with main producers expecting pricing to remain flat in Q4 2022.
There is ongoing growth in demand for high quality garnet in both waterjet
cutting and abrasive blasting. Drivers are mainly the investments in
infrastructure, oil and gas industry as well as shipbuilding and manufacturing.
The aerospace industry is an important driver as well. Nordic Mining is
experiencing strong interest for garnet from Engebø and is in process to
finalize a long-term offtake agreement.
Oslo, 8 November 2022
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. 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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