Nordic Mining ASA (OAX:NOM) - Interim report per 30 June 2020
Enclosed please find Nordic Mining’s interim report and company presentation for the second quarter of 2020. The interim report and company updates will be presented digitally today, Tuesday 18 August 2020 at 10.00 (CET). The presentation and Q&A session will be held in English and transferred via webcast at: https://channel.royalcast.com/webcast/hegnarmedia/20200818_7/
You will have the opportunity to post questions online throughout the webcast session.
Important events in the second quarter of 2020 and year to date:
CORPORATE
Adequately financed well into 2021
In January 2020, Nordic Mining completed an equity issue with gross proceeds of NOK 57.4 million. As a result of the substantial uncertainties in the global and national economies imposed by the Coronavirus pandemic, the Company is progressing development activities for the Engebø project cautiously and strategically, with a focus to improve project resilience, retain financial flexibility and reduce risk. Nordic Mining has no interest-bearing debt and is adequately financed well into 2021 based on current forecasts and work plans.
Strengthening of Management
The Group’s new CFO Christian Gjerde took up his position effective from 1 August 2020.
ENGEBØ RUTILE AND GARNET PROJECT (100% ownership)
Definitive Feasibility Study completed
In January 2020, the Company published the results of the Definitive Feasibility Study (DFS) for the Engebø project. The study reinforces Engebø as a world class rutile and garnet project and outlines the execution plan for the project.
Elevated global uncertainty necessitates project re-assessment
Due to substantial uncertainties in the global and national economies imposed by the unprecedented Coronavirus pandemic, the Company has adjusted progress plans and is undertaking a comprehensive project review with the purpose to increase the project’s robustness to future market conditions. Whilst forecasting is difficult in a time with possibly the biggest economic uncertainty in decades, the Company assumes that the economic recovery from the pandemic can be slow and that the economic fallout may be more substantial than previously experienced. The ongoing project review includes revisions of market scenarios and strategies, as well as updates of sales projections for rutile and garnet.
The global consulting and engineering company Ausenco has been engaged to do a value engineering assessment of the Engebø project based on a fit-for-purpose strategy. Preliminary indications have revealed attractive potential and opportunities for improvement of plant lay-out and configuration as well as mine methodology and scheduling. Nordic Mining will evaluate the opportunities from Ausenco and establish plans for further project progress. The DFS and the time schedule for the project going forward is under revision based on results from the ongoing review process.
Operating license granted
On 17 June, the Directorate of Mining granted the operating license for the Engebø project. The license is granted for the life of mine of the project which includes an open pit and underground phase. The license regulates operational scope, methodology and procedures to secure safe and efficient production of the mineral resources and follows the strict regulation practice for Norwegian mining operations which implies high standards for environment, health and safety. The operating license completes the main regulatory permits for the project.
Sustainability at the core of the strategy
Nordic Mining is continuously investigating measures to further improve the environmental aspects of the Engebø project. In June 2020, an application was submitted to the Environment Agency for substitution of chemicals that will be used in ore processing. The planned consumption is a 99% reduction compared with the granted chemicals in the environmental permit of 2015. Further, Nordic Mining will evaluate (renewable) electric drying instead of natural gas to reduce climate footprint from the mineral processing. Additionally, the ongoing assessments of plant lay-out and configuration may further reduce the physical footprint of the project.
Comprehensive planning is ongoing to develop an environmental and social management system to ensure environmental and social issues are managed in accordance with the Group’s standards, permits and Norwegian regulations. This includes i.e. advanced environmental monitoring programs to ensure adherence to permits and to mitigate environmental effects.
Market outlook and dialogues
Generally, the market outlook for rutile and garnet is uncertain due to the impact of the Coronavirus pandemic. For rutile, expected reduced supply and retained attractiveness in various industrial applications indicate a positive fundamental long-term outlook. The average rutile price in the first half of 2020 is reported around USD 1,240 per tonne (FOB Australia). This is around USD 100 per tonne higher than the price assumption used in the Engebø DFS. The dialogue with the Japanese trading house, with which a Heads of Agreement related to rutile offtake and participation in project financing was signed in 2019, is proceeding constructively, with target to finalize the terms and conditions for a long-term offtake agreement.
The demand for garnet is affected from reduced economic activity caused by the Coronavirus pandemic and the reduced oil price. The main production countries for garnet are Australia, China, India and South-Africa. Currently, there is no production of garnet in Europe and a long-term source of supply of high-quality garnet from Engebø is regarded to be attractive.
KELIBER LITHIUM PROJECT (16.3% ownership)
Significant market drivers
Keliber’s updated DFS for the lithium project was presented in February 2019 based on production of lithium hydroxide. Since then, the global lithium market has softened due to temporary lower demand and weak spot prices in Asia. The long-term outlook is positive related to accelerated electrification of transportation and transition of energy production towards renewable sources. A substantial recovery is expected in the lithium market in the coming years.
Comprehensive activities are ongoing related to increasing production capacities for lithium batteries in Europe. Also, in the Nordic countries significant battery initiatives are being developed. 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 European battery manufacturers.
Ongoing project update and reviewKeliber continues to advance the lithium project in various fields including technical planning, permitting, ore potential, market assessments and financing. This also includes activities to optimize the business case compared with the updated DFS published in February 2019. Decisions have been taken 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.
Oslo, 18 August 2020
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 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. Nordic Mining also holds 16.3% 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 Oslo Axess with ticker symbol "NOM".