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Summary of important events in the first quarter of 2023 and year to date:
KEY EVENTS
· Final investment decision for Engebø Project, following completion of
project financing
· Nordic Rutile USD 100 million senior secured bond listed on Nordic ABM
· Engebø construction on track to start production in 2024
· Binding offtake agreements for full production of minerals for the first 5
-years of production
· Memorandum of Understanding for offtake of pyrite
· Rutile demand weakened in Q1 due to subdued pigment demand
· Supreme Court to hear appeal by Artic Mineral Resources
CORPORATE
Final investment decision for Engebø Project, following completion of project
financing
In March 2023, Nordic Mining secured the remaining equity component of the total
USD 277 million project financing package for the Engebø Project in a private
placement of NOK 940 million. The private placement was resolved by the
Extraordinary General Meeting and Board of Directors on 3 March 2023 and
contributed to Nordic Rutile on 8 March 2023, satisfying all relevant financing
conditions for the long stop date. The gross proceeds from the private
placement, together with the equity from the sale of the shares in Keliber, the
USD 100 million in senior secured bond issued by Nordic Rutile in November 2022
and USD 50 million non-dilutive royalty financing agreement entered into between
Nordic Rutile and mining investment firm Orion Resource Partners (“Orion”) in
February 2023. The royalty agreement entails that Orion will pay USD 50 million
to Nordic Rutile as a fixed, one-time consideration for the right to receive a
11 % royalty of the gross revenue from the sale of products from the Engebø
Project for up to 90 years. Nordic Rutile has the right to buy back 50% of the
royalty against a reduction in the royalty payments to 5.5%. The royalty
financing will hold second priority lien on senior security package, subject to
the terms of an Intercreditor Agreement. The financing agreements, including the
royalty agreement, are subject certain pre-disbursement conditions precedent
order for Nordic Rutile to draw down any amounts under the financing, including
i.e. that all equity contributed to Nordic Rutile has been spend towards the
development and construction of the Engebø Project. The royalty agreement will
not have any accounting effects until drawdown of the one-time consideration of
USD 50 million, except transaction costs related to completion of the royalty
financing agreement. Please see note 7 for more information on financial costs.
The project financing package of in total USD 277 million is expected to fund
all costs and expenditures to bring the Engebø Project into commercial
production, including a project reserve of USD 30 million.
In April 2023, the subscription period for a subsequent offering in Nordic
Mining of up to 216,666,667 new shares at a subscription price of NOK 0.60 per
share expired. The final number of valid subscriptions received in the
subsequent offering was 136,544,091, of which all was allocated in accordance
with the allocation criteria set out in the prospectus. The new capital was
registered in Norwegian Register of Business Enterprises and the shares issued
on 28 April 2023. The gross proceeds from the subsequent offering were
approximately NOK 81.9 million.
ENGEBØ RUTILE AND GARNET PROJECT (100% ownership)
Nordic Rutile USD 100 million senior secured bond listed on Nordic ABM
In April 2023, Nordic Rutile AS USD 100 million 5-year senior secured bond with
ISIN NO0012734112 was listed on Nordic ABM with ticker NORUT01 PRO with listing
date 12 April 2023.
Engebø construction on track to start production in 2024
Following completion of project financing of the Engebø Project in March 2023
the four lump-sum EPC (“Engineering, Procurement and Construction”) contracts
with Sunnfjord Industripartner AS, Åsen & Øvrelid AS, Nordic Bulk AS and
Normatic were fully activated. The local groundworks contractor, Sunnfjord
Industripartner AS, has undertaken the groundworks on the process plant area and
preparatory works for underground infrastructure at Engebø under the lump-sum
EPC contract since April 2022. The process plant area has been prepared for
concrete work on the first two buildings, administration and control room
building, and workshop, and we expect to prepare the remaining parts on bench
level 22 on schedule during May 2023. Blasting of the underground crushing
chamber and raise drilling of the vertical ore pass is well under way and we
expect to complete the work on schedule during May. The mine access road to the
open pit tunnel portal and is around 95% complete. Local EPC building
contractor, Åsen & Øvrelid AS, has started the concrete work on the
administration and control room building, and workshop and we expect that work
on the remaining buildings will start in Q2 2023. Currently, the Project has
around 70 workers at Engebø.
Detail Engineering on the process plant is ongoing by Nordic Bulk AS and
Normatic AS. The main parts of the Details Engineering are expected to be
completed in H1 2023, with subsequent bulk procurement and fabrication of steel
to start in Q2 2023. This will allow start of mechanical and electric
installation work and project team is now focusing on detail planning this phase
together with the EPC partners. Further ramp-up of personnel on site is expected
in this period.
The four lump-sum EPC contracts cover around 57% of the remaining plant and mine
capital expenditure of USD 167 million as of 31 March 2023, excluding
commitments of around USD 10 million.
The full financing and final investment decision of the Engebø Project in March
2023 allowed Nordic Mining to move forward with the fabrication of long lead
mechanical packages for the process plant. The client provided items (“CPIs”)
are procured directly by the Group and are made with leading global suppliers of
sustainable solutions for the mineral industry, including agreements with Metso
Outotec and Mineral Technology, suppliers of sustainable end-to-end
technologies, solutions, and services for the minerals industry globally, for
delivery of a comprehensive mining processing technology packages. The current
estimates for delivery time and costs for the CPI packages are in line with
expectations, with start of the main mechanical installations expected during Q3
2023. In total, around 78% of the mechanical packages of around USD 30 million
are under contract at the date of this report, with price and delivery agreed.
The Project team is working with a plan for logistics and quality surveillance
of the production.
Binding offtake agreements for full production of minerals for the first 5-years
of production
In 2022, Nordic Rutile entered into two rutile offtake agreements, the first
with Iwatani Corporation for close to 60% of the planned rutile production for
the first 5-year and the second agreement in October 2022 for up to the
remaining annual planned rutile production for the first 5-year. The
consideration under the rutile offtake agreements will be based on the market
price for 95% natural rutile concentrate, adjusted for actual TiO? content, as
determined from TZMI index or annual price discussions between the parties.
In January 2023, Nordic Rutile entered into a global exclusive offtake agreement
the full planned garnet production from Engebø for the first 5 years of
production. The offtake agreement is for the supply and delivery of minimum
total of 762,500 metric tonnes of garnet concentrate in the 5-year contract
period, up to a total of 785,000 metric tonnes, which is the full planned garnet
production the first 5-years of production. Further to the initial garnet
offtake, the parties shall discuss extension of the cooperation, comprising for
example joint marketing, sales, and distribution of garnet from the Engebø
Rutile and Garnet Project. The consideration under the garnet offtake agreement
will be based on a pre-agreed price schedule.
Nordic Mining has with the rutile and garnet offtake agreements secured
committed sales for up to the full production of all minerals from the Engebø
Rutile and Garnet Project for the first 5 years of production, all with highly
reputable buyers. The offtake agreements are inter alia subject to certain
conditions precedent.
Memorandum of Understanding for offtake of pyrite
In February 2023, the Group entered into a Memorandum of Understanding (“MoU”)
for a long-term joint cooperation for the offtake of pyrite from the Engebø
Project. Pyrite (Iron sulfate) is a mineral that is present in the Engebø
Eclogite-ore and that will be separated in the process of purifying the rutile
concentrate. Nordic Mining will in partnership with Green Trail Holding Ltd, a
trading company with over 30 years of experience, together pursue market
opportunities for pyrite as a new mineral production stream. Pyrite has
previously been considered as a residual waste stream from the Engebø Project.
The successful production, marketability and sale of pyrite can potentially
create value from residual mineral waste streams and reduce the need to deposit
pyrite as part of the tailings. Further, it has the potential for a significant
reduction of chemical additives in the tailings. Even though the project is
fully permitted and considered environmentally safe by the Norwegian
authorities, any reduction in additives in the tailings is regarded positive and
further reduces the risk of environmental impacts. The process plant design
already allows for finalization of the pyrite as a separate mineral concentrate
stream, with minimum additional infrastructure requirements.
Rutile demand weakened in Q1 due to subdued pigment demand
Titanium metal demand, being an important driver for rutile, remained robust in
the first quarter of 2023, due to the ongoing revival of air traffic, as well as
demand for non-Russian products. The outlook remains strong throughout 2023.
The first quarter 2023 showed a slower start for titanium feedstock producers.
Rutile sales volumes were below or at production levels and reported average
prices for rutile showed a diverse picture. The first quarter of 2023 has been
mixed for the TiO2 industry; however, in Asia, led by China, signs of recovery
of pigment demand are reported. Pigment demand in North America remained steady
whereas in Europe, reported demand was still weak. Rebound of pigment demand is
projected as European pigment plants have re-started last quarter combined with
the northern hemisphere spring paint season ramp up. Current inventories are low
due to the actions taken in H2 2022
Reported bulk natural rutile prices in Q1 2023 have been from around USD
1,450/mt FOB and above, with the main producers expecting pricing to be steady
onwards.
Supreme Court to hear appeal by Artic Mineral Resources
In April 2023 the Supreme Court’s appeals committee informed that the appeal in
the case between Artic Mineral Resources (“AMR”) and Nordic Rutile AS (“NRU”)
will be heard before the Supreme Court. The Oslo District Court and the
Borgarting Court of Appeal both ruled in favour of NRU and concluded that AMR
shall pay NRU’s legal expenses. The court rulings were in line with the
operating license granted by the Ministry of Trade, Industry and Fisheries in
May 2022. NRU maintain that AMR’s claims have no merit and will continue to
defend the case rigorously and is confident that the ruling from the Supreme
Court will be in NRU’s favour, i.e. in line with the previous rulings.
Furthermore, two NGO’s have summoned the Norwegian Government claiming that
Nordic Rutile’s disposal permit granted by the Norwegian Government in 2015 is
null and void.
Oslo, 10 May 2023
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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