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Nordic Mining ASA (OAX:NOM) - Interim report per 31 December 2019

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Enclosed please find Nordic Mining’s interim report and company presentation for the fourth quarter of 2019. The interim report and company updates will be presented today, Tuesday 11 February 2020 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 fourth quarter of 2019, in 2019 and year-to-date 2020:

ENGEBØ RUTILE AND GARNET PROJECT (100% ownership)

 

  • Results of the definitive feasibility study published in January 2020

In January 2020, the Company published the results of the definitive feasibility study (“DFS”) for the Engebø project. The updated study reinforces Engebø as a world class rutile and garnet project and outlines the execution plan for the project. The main results presented in the updated DFS were:

  • Pre-tax NPV@8%          USD 450 million
  • Pre-tax IRR                  21.9%
  • Post-tax NPV@8%        USD 344 million
  • Post-tax IRR                19.8%
  • Average annual free cashflow first 15 years of USD 70 million
  • Net operating cashflow (undiscounted) of USD 2,160 million
  • Initial capex of USD 311 million and deferred capex of USD 25 million (underground)  
  • Pay-back period < 5 years
     
  • Agreements on offtake and participation in construction financing
    In January 2019, 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 for garnet in North America and commercial cooperation in Europe. In September 2019, 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 progressing
    In January 2019, Nordic Mining entered into an agreement with Northcott Capital Ltd for provision of financial advisorsy services for the debt financing of the Engebø project. Lenders' due diligence process has commenced and the activity level relating to construciton financing will increase over the next months. The Company has also appointed Clarksons Platou Securities and Sparebank 1 Markets as joint lead managers for construction financing. 
     
  • Detailed regulation plan approved
    In August 2019, Naustdal municipality approved the detailed regulation plan. The process for regulation of the water supply pipeline is ongoing, and a resolution from the local municipalities is expected in the first part of 2020.  
     
  • 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 2019, 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. In addition, 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. This also includes activities to improve and optimize the business case which was outlined in the updated DFS published in February 2019.

 

  • Recoveries in minerals processing improved
    In November 2019, Keliber announced the results from a continuous pilot program on the Syväjärvi ore minerals processing which improved the recovery rate to exceed 88% compared to the 83.4% from the previous pilot-scale test program conducted in 2016. In December 2019, Keliber announced that it had reached 96.9% conversion degree in a continuous conversion pilot run using spodumene concentrate produced from Syväjärvi lithium ore. The results exceed the 95% degree applied in the Definite Feasibility Study published by Keliber in February 2019.

 

  • Ore reserve estimate for Keliber’s Rapasaari lithium deposit increased by 50%
    In December 2019, Keliber announced that the ore reserve estimate for the Rapasaari lithium deposit had been updated. Following the update, estimated proven and probable ore reserves total 5.280 million tonnes with a grade of 1.07% Li₂O. This represents an increase of 50% compared to the previous estimate for Rapasaari. The total JORC 2012 compliant proven and probable lithium ore reserves for Keliber is currently 9.372 million tonnes with a grade of 0.98% Li₂O.

 

  • Underlying values substantiated
    In February 2019, 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. During the fourth quarter, Keliber made several positive announcements including increased mineral resources, improved recoveries and increase in reserve estimates. However, it also announced that its lithium project will be delayed by at least one year compared to previous estimates. In addition, and despite a positive long-term outlook, conditions for the global lithium market has softened due to weak spot prices. This has adversely impacted Keliber’s progress on securing offtake directly as well as driven down the general market sentiment/valuation. An updated assessment as per 31 December 2019 (ref. note 3) valued Nordic Mining’s holding of 18.5% of the outstanding shares in Keliber to NOK 91 million, resulting in an impairment of NOK 25 million in the fourth quarter and a reduction of the gain for the year to NOK 76 million including foreign exchange effects. The gain is not subject to tax.
     
     

CORPORATE

  • Equity issues completed

In January 2020, Nordic Mining completed an equity issue with gross proceeds of NOK 57.4 million (ref. note 6). The Company also called for an extraordinary general meeting to resolve on a subsequent share issue of up to 10 million new shares directed towards existing shareholders. The proceeds will primarily be used to finance the Engebø project until the construction financing has been secured. This includes all activities relating to front-end engineering and design (FEED) and to secure a financing package.

 

In May and October 2019, Nordic Mining completed equity issues with combined gross proceeds of NOK 62.5 million (ref. note 5). In total, approximately 38 million shares were issued. The use of proceeds was primarily for 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 fourth quarter presentation will be held today, Tuesday 11 February 2020 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://channel.royalcast.com/webcast/hegnarmedia/20200211_5/

For further information, please contact CFO Birte Norheim, telephone +47-95293321.


Oslo, 11 February 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 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".

 

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