Engebø Rutile and Garnet

Webcast of the presentation of the UDFS – May 2021

Nordic Mining acquired the rights to the Engebø deposit in 2006. The zoning plan and environmental permits were granted in April 2015 and the Updated Definitive Feasibility Study (UDFS)  of the Engebø Project (the “Project”) was published in May 2021.

Nordic Mining ASA (“Nordic Mining”) has completed the Updated Definitive Feasibility study (“UDFS”) for the Engebø Rutile and Garnet project (“the Project”). The UDFS is an update of the DFS which was completed in January 2020. As a consequence of the COVID-19 pandemic and uncertainties related to the markets for rutile and garnet, and the opportunities for securing project financing, Nordic Mining decided in spring 2020 to undertake a Value Engineering review to make the Project more resilient.

The updated study documents Engebø as a sustainable and economically robust mineral project with reduced financing risk, improved financial resilience, and attractive financials returns.

The main improvements and risk-reducing measures in the UDFS are:

• Reduced environmental footprint; 99% reduction in consumption of approved chemicals in the production process (compared with the 2016 environmental permit), around 80% reduction of CO2 emissions and approximately 40% reduction of the process plant facilities footprint compared with the DFS

• Contract and execution strategy based on EPC partnerships and early vendor engagement

• Stick-build construction methodology and improved ore flow logistics

• Reduced initial investment needed to realize the project from USD 311 million to USD 218 million, maintaining a Run-of-Mine (ROM) of 1.5 Mtpa

• Reduced process operating cost by more than 25% following from flowsheet optimizations, including reduction in energy costs from use of electrical dryers for drying of minerals

• Improved mining design for open pit and underground focusing on practical and cost-effective operations. Mining schedule in open pit has been optimized for the initial years and the underground mining schedule targets higher grades and a simplified infrastructure

• Reduced market risk based on post-pandemic market forecasts for rutile and garnet, retaining flexibility to increase garnet production in line with increasing demand

• Attractive project economics with considerable reductions in market, financing, and execution risks

 

Key economic figures:

• Pre-tax NPV@8% of USD 355 million
• Pre-tax IRR 22.5%
• Post-tax NPV@8% of USD 260 million
• Post-tax IRR 19.8%
   
• High-margin cash flow and short pay-back support bankability:
  • Initial capital investment of USD 218 million  
  • Life of Mine EBITDA of USD 2.1 billion, corresponding to an EBITDA-margin of 68%
  • Life of Mine Operating Cash Flow of USD 1.7 billion
  • Free Cash Flow the first 10 years of full operations of USD 51 million per annum
  • Pay-back period of 4.4 years from start of production

• Optimized schedule and dual mineral production provide competitive strength:
  • Outcropping and geotechnically stable orebody
  • Low stripping ratio (waste to ore ratio) of 0.6 in open pit
  • High-grade rutile and garnet
  • Short distance and gravity supported ore transportation minimize transportation
  • 1st quartile revenue-to-cash cost position for rutile  

• Optimized mining plan and scheduling support an initial 39 years Life of Mine:
  • 15 years of open pit mining and high-grade processing, and stockpiling of medium/low-grade ore
  • 19 years underground production
  • 6 years production based on stockpiled ore
  • Extension of Life of Mine expected based on substantial inferred resources
     
• All permits granted:
  • Extraction permits for the whole deposit
  • Operational license for open pit and underground mining
  • Landowner agreements for open pit, infrastructure, and process plant areas
  • Detailed zoning plan
  • Environmental permit
     
• High environmental and social standards in accordance with IFC Performance Standards and relevant Equator Principles