Nordic Mining ASA (OAX:NOM) - Interim report per 30 September 2019
Enclosed please find Nordic Mining’s interim report and company presentation for the third quarter of 2019. The interim report and company updates will be presented today, Thursday 21 November 2019 at 10.00 (CET) in the company’s office (address details below). A presentation and Q&A session will be held in English and transferred via webcast (details for the webcast below).
Important events in the third quarter of 2019 and year-to-date:
ENGEBØ RUTILE AND GARNET PROJECT (100% ownership)
Definitive feasibility study close to finalization
All test-work, mine-planning and engineering has been completed for the definitive feasibility study (“DFS”). The documentation of the work in form of a report is near complete. Additional work relating to assessing and clarifying quotations received from the market has caused minor delays and Nordic Mining will present the main results of the study in January 2020. Based on current status, capex is expected to increase compared to the prefeasibility study (“PFS”), but positive changes in other project variables are expected to offset the impact on valuation.
Agreements on offtake and participation in construction financing
In January, Nordic Mining signed a Heads of Agreement with a Japanese trading house relating to long term offtake for rutile and participation with a substantial portion of the construction financing for the Engebø project. Offtake on rutile is complementary to the Heads of Agreement previously entered into with the Barton Group relating to offtake in North America and commercial cooperation in Europe for garnet from Engebø. In September, Nordic Mining announced an expansion of the exclusive offtake arrangement of garnet to Barton to additionally include the South-America and Central America regions. Dialogues with both parties are ongoing.
Preparations for construction financing ongoing
Nordic Mining has entered into an agreement with Northcott Capital Ltd for provision of financial advisory services for the debt financing of the Engebø project. Preparations for construction financing is ongoing and lenders’ due diligence process has commenced.
Detailed regulation plan approved
In August, Naustdal municipality approved the detailed regulation plan. The process for regulation of the water supply pipeline is ongoing, and a resolution from the municipalities is expected in the near future.
Local municipalities support for operating license
The public hearing process regarding Nordic Mining’s application for operating license for the Engebø project has ended and Askvoll and Naustdal municipalities, as well as the new Sunnfjord municipality, supported the application. The Directorate of Mining will consider the application together with the input from the hearing process, and a license approval is expected in the first quarter of 2020. The operating license will regulate operational scope, methodology and procedures to secure safe and efficient production of the mineral resources.
KELIBER LITHIUM PROJECT (18.5% ownership)
Project update
In November, Keliber presented a project update with a delay in start of construction. Keliber’s revised estimate is for construction to commence in 2021 for a duration of over two years. Due to the changes in end-product and production process to lithium hydroxide, additional technical and environmental planning are required. Updated market information for lithium indicates that further optimization of the time schedule is desired. Keliber will continue to advance the lithium project as planned in various fields including further technical planning, permitting, ore potential and financing.
Recoveries in minerals processing improved
In November, Keliber announced the results from a continuous pilot program on the Syväjärvi ore minerals processing which improved the recovery rate to exceed 88 percent compared to the 83.4% from the previous pilot-scale test program conducted in 2016. Keliber expects the whole test program, including the continuous pilot test programs for conversion and LiOH processes and related test run reports, to be completed in the first quarter of 2020.
Permitting process
In June, Keliber received a permit to initiate the preparatory work of the mining operations in Syväjärvi and secured the rights to use the land for the purpose assigned in the mining permit previously granted. Syväjärvi environmental permit was received in early 2019 but is not yet legally forceable due to appeals. Activities related to the permitting process for the concentrator plant and the chemical plant are ongoing.
Increase in resource base
Over the last years, Keliber has consistently increased the resource base for its project. The most recent resource updates were completed in June and September and increased the estimates for Rapasaari by about 40% and by about 10% for Syväjärvi. Currently, Keliber’s estimated resources in the measured and inferred categories total around 11.8 million tonnes at an average Li2O grade of 1.10%.
Optimizing the business case
Keliber’s DFS, which was published in June 2018, confirmed a profitable business case based on production of lithium carbonate. Following an increasing market demand for lithium hydroxide for use in cathodes for lithium-ion batteries in electric vehicles, Keliber completed a test program for production of lithium hydroxide which significantly improves project economics. Keliber published an updated DFS based on lithium hydroxide in February 2019, outlining an increase in post-tax NPV@8% by more than 70% to EUR 384 million and IRR of 24%.
Gain of NOK 98m reflecting increased values in Keliber
In February, Keliber raised EUR 10 million from existing shareholders to finance ongoing development work and other pre-construction activities. The implied value in the capital raise exceeded the book value recorded by Nordic Mining by NOK 98 million which was recognized as a gain in the consolidated financial statements for the first quarter of 2019. The gain is not subject to tax. Following the share issue in Keliber, Nordic Mining’s shareholding in Keliber is approximately 18.5% with a current book value of NOK 116 million.
CORPORATE
Equity issues completed
In May and October, Nordic Mining completed equity issues with combined gross proceeds of NOK 62.5 million. In total, approximately 38 million shares were issued. The proceeds will primarily be used to finance the continued development of the Engebø rutile and garnet project through the completion of the DFS and into the Front-End Engineering and Design (FEED) phase.
The third quarter presentation will be held today, Thursday 21 November 2019 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: https://webtv.hegnar.no/presentation.php?webcastId=98164526.
For further information, please contact CFO Birte Norheim, telephone +47-95293321.
Oslo, 21 November 2019
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 18.5% 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".