Nordic Mining ASA (OAX:NOM) - Interim report per 31 December 2017
Enclosed please find Nordic Mining’s interim report for the fourth quarter 2017 and a separate presentation. The interim report and company updates will be presented today, Friday 16 February 2018 at 10.00 (CET) in the company’s office (address details below). The presentation and Q&A session will be held in English and transferred via webcast (details for the webcast below).
Important events in the fourth quarter 2017 and year-to-date 2018:
- In the period December 2017 to January 2018, Nordic Mining has executed a private placement and a subsequent offering with gross proceeds of NOK 59.6 million. The net proceeds have been received in January/February 2018. The Group’s cash balance at 31 December 2017 amounted to NOK 21.5 million.
- On a general note, the Group evaluates financing strategies to ensure adequate liquidity for its projects and to provide for future financial strength and flexibility. The good progress for ongoing projects, mainly the Engebø rutile and garnet project and the Keliber lithium project, is expected to be positive for the Group’s financial flexibility going forward. There is no assurance that the Group will be successful in obtaining the required financing for its prioritised projects. Consequently, the Group might have to adjust project progress in accordance with the prevailing funding.
Engebø rutile and garnet project
- Prefeasibility study completed; significant upside potential and moderate upfront investments
The prefeasibility study (PFS) was completed in line with estimated costs and published in October 2017. The PFS substantiates attractive project financials and perspectives:
o Pre-tax NPV@8% of USD 332 million
o Pre-tax IRR 23.8%
o Pay-back period: < 5 years
o Life of mine: 29 years
The PFS indicates an upside potential up to USD 465 million (pre-tax NPV@8%) for a scalable concept with increased capacity, higher sales volumes and utilisation of inferred mineral resources which will substantially increase the life of mine. The estimated initial investment of USD 207 million for a 1.5 mtpa operation is around 30% lower than previously anticipated.
The PFS outlines a robust dual-mineral operation with production of high-quality rutile and garnet, and low operating costs due to outcropping orebody, high mineral grades, low stripping ratio, geotechnical stability, limited transportation costs, and good product recoveries. In total, the estimated revenue-to-cash cost for rutile indicates a first quartile position in the global titanium feedstock industry.
- Strategic partnership with The Barton Group
In November 2017, Nordic Mining signed a Heads of Agreement with The Barton Group (Barton) related to offtake and commercial cooperation for garnet from Engebø. Barton is a leading US garnet producer and distributor with a strong foothold, particularly in the North American markets.
Barton participated in the private placement in Nordic Mining in December 2017 and has currently a shareholding of 2.3%. Barton intends to be an industrial anchor investor in the construction financing to establish the Engebø operation.
- Definitive feasibility study is progressing
The positive PFS results support further project progress towards production, and the definitive feasibility study (DFS) is currently progressing. The main purpose of the DFS is to qualify the project for adequate construction financing with a combination of debt and equity. In the DFS program, process optimisation work is carried out including variability testing for variations in ore feed, to provide input to the process design criteria and process flowsheets. A limited drilling program will be finalised in February 2018. This will provide additional data for updating of the resource model and estimates, and the geotechnical parameters for mine planning. The open pit mine plan and schedules will be optimised and defined. The DFS is scheduled for completion late in 2018.
- Project organisation and execution planning
Nordic Mining intends to attract additional competent personnel to strengthen the Engebø project team for the planning and execution phases. Various trade-off studies and market research will be carried out to ensure an effective execution strategy for the project. Extensive cooperation has been initiated with the local municipalities and other authorities to coordinate site infrastructure preparations.
- Positive market development and outlook for rutile and garnet
The average rutile price (95% TiO2) in the second half of 2017 has been reported in the range USD 825 – 875 per tonne. Recent information indicates a tightening market balance. Price increases have been implemented in the first part of 2018 following from higher demand and reduced stockpiles. In the coming years, the production from current producers is expected to decrease due to depletion of operating deposits. The Australian consultancy company TZMI estimates a long-term price for rutile around USD 1,070 per tonne.
Currently, there is no production of garnet in Europe and a new source of supply at Engebø will be beneficiary in a market perspective.
The Engebø deposit is situated next to a deep-water port and close to substantial markets for rutile and garnet. The location provides logistical advantages.
- Permits granted
The zoning plan for the mining and processing areas and the environmental permit for the project are fully granted. The Engebø project will be developed in accordance with high international standards for environment, health and safety.
Keliber lithium project
- Definitive feasibility study scheduled in H1 2018
The definitive feasibility study (DFS) is aiming to provide a solid foundation for project financing to implement the lithium project. Additional drilling will continue till end of February with the purpose to further increase the resource base for the DFS. The trade-off study of the location of the lithium carbonate plant has been concluded in favour of Kokkola Industrial Park. The DFS is scheduled for completion in the first half of 2018.
- Construction start targeted in 2018
Keliber targets completion of the permitting process and start of construction in the second half of 2018.
- Strong lithium market and outlook
The lithium market is developing on a positive note and product prices have increased, indicatively with 10-20%, into the first part of 2018. Contract prices for lithium carbonate doubled in 2017 compared to 2016. Going forward, a continued tight market balance is expected. The fastest demand growth for lithium is related to batteries for electric/hybrid vehicles and energy storage.
Keliber has dialogues with potential customers for lithium carbonate with the purpose to secure offtake agreements. In addition to the DFS, bankable offtake arrangements are required for the establishment of the construction financing package to implement the project.
- Successful financing in 2017
Keliber executed a private placement and a repair issue with total gross proceeds of EUR 10.0 million in the first half of 2017. In addition, incentive share issues for board members and management were completed in 2017 with total proceeds of EUR 0.3 million. Nordic Mining participated pro-rata to its shareholding in the April 2017 repair issue. Following from the equity issues in 2017, Nordic Mining’s shareholding in Keliber is approximately 22.0%.
The fourth quarter presentation will be held today, Friday 16 February 2016 at 10:00 (CET) in Nordic Mining’s office at Vika Atrium, Munkedamsveien 45 (Entrance A, 5th floor), N-0250 Oslo.
The 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 http://webtv.hegnar.no/presentation.php?webcastId=77874886
For further information, please contact CFO Lars K. Grøndahl, telephone +47-90160941.
Oslo, 16 February 2018
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 in Norway and internationally. 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. Permits for the project have been granted by the Norwegian government, and a prefeasibility study was completed in October 2017. Nordic Mining's associated company Keliber in Finland is in the process of completing its definitive feasibility study and preparing for production of lithium carbonate. Nordic Mining has rights for exploration and production of high-purity quartz in Kvinnherad in Norway. Further, the Company holds exploration rights at Reinfjord in northern Norway where a prospective area of sulphide mineralisation has been discovered. Nordic Mining is also exploring opportunities related to seabed mineral resources.
Nordic Mining is listed on Oslo Axess with ticker symbol "NOM".