Nordic Mining Asa · OSL:NOM
Nordic Mining Asa — Investor Presentation (February 2023)
63 slides from Nordic Mining Asa's investor presentation, Feb 2, 2023
Slide 1: Company update and contemplated equity financing
Minerals for a sustainable future Company update and contemplated equity financing 2 February 2023
Slide 2: Disclaimer
Disclaimer IMPORTANT NOTICE This extended company presentation (the "Presentation") has been prepared by Nordic Mining ASA ("Nordic Mining" or the "Company") with the assistance of Clarksons Securities AS and SpareBank 1 Markets AS (the "Financial Advisors"), solely for use at the presentation of No
Slide 3: Summary of risk factors
Summary of risk factors Risks related to the issuer's industry and operational risks Financial risks - The Project is a large scale complex industrial project and will be subject to all the risks inherent in a - Risks related to adverse conditions and changes in the global economic environment. new
Slide 4: 1. Equity financing
1. Equity financing 2. Company update - Engebø Project 3. Additional information 4
Slide 5: Towards production and cash flow
Equity financing Towards production and cash flow • Project construction commenced in April 2022, with around USD 33m spent towards pre-production capital Construction on track for expenditures as of year-end 2022 production in 2024 • Low-risk project with around 70% of capital expenditure committed
Slide 6: Contemplated equity financing and timeline
Equity financing Contemplated equity financing and timeline • Process for an equity private placement with total gross Indicative timeline proceeds of at least NOK 900m announced • ~NOK 241m in pre-commitments, with ~NOK 659m or Call for EGF and announcement of equity Contemplated USD 66m to be rais
Slide 7: Significant progress on financing in 2022 – less than 24% in equity remaining
Equity financing Significant progress on financing in 2022 – less than 24% in equity remaining The remaining equity raise is the last piece of the puzzle for Engebø to become fully financed 277 7 G&A and transaction costs 277 USD million 24 Bond interest 66 30 Fully committed capital12 Project reser
Slide 8: Project due diligence processes and verification work conducted
Equity financing Project due diligence processes and verification work conducted Updated Definitive Managers’ Independent Orion’s Independent Orions’s and Managers’ Legal Counsel to the Feasibility Study (UDFS) Technical Engineer Technical Engineer Market Due Diligence Company Defines realistic and
Slide 9: Low cost provides 1st quartile position in global market and high profitability
Equity financing Low cost provides 1st quartile position in global market and high profitability Comments TZMI’s projected industry curve in 2024 (2021 UDFS) • Industry curve indicates ratio of revenue to cash cost (R/C Ratio), e.g., ratio of 2 = 50% EBITDA margin • The Engebø Rutile and Garnet Proj
Slide 10: Long-term offtake agreements for full production of rutile and garnet secured
Equity financing Long-term offtake agreements for full production of rutile and garnet secured Rutile Garnet Global TiO2 Partner Global Partner on Garnet Binding offtake agreement signed in June 2022 Binding offtake signed October 2022 Binding offtake agreement signed January 2023 5-year agreement A
Slide 11: World's most climate friendly titanium feedstock
Equity financing World’s most climate friendly titanium feedstock Industry leader on GHG emissions1 Life Cycle Analysis proves superior rutile product2 Titanium producers analysis Global Warming Potential 3.3 Total Scope 1 and 2 Emissions vs Emission Intensity Emissions Intensity (tCO2e/t product) T
Slide 12: Outlook for material cash flow generation and shareholder distributions
Equity financing Outlook for material cash flow generation and shareholder distributions Potential for strong cash flow generation (cumulative unlevered)12 USDm Annual free cash flow Accumulated free cash flow 2003 1700 Nordic Mining intends to pay 1200 competitive dividend in line with key peers on
Slide 13: Project economics continues to improve as project progresses towards production
Equity financing Project economics continues to improve as project progresses towards production USD 491m 25.9% IRR USD 57m USD 47m Unlevered post Unlevered post Avg. annual Avg. annual free tax NPV82 tax2 EBITDA ’25-’303 cash flow ’25-’303 LOCATION RESOURCE1 INFRASTRUCTURE PROJECT READINESS Stable
Slide 14: Forecast for solid revenue and low cost, provides substantial EBITDA
Equity financing Forecast for solid revenue and low cost, provides substantial EBITDA12 USD million +39 years revenue and EBITDA generation Total revenue of USD 578 96 million from Royalty Prepayment 92 2023-2030 Revenue 87 85 84 EBITDA incl. Royalty 73 Avg. EBITDA 62 66 margin of 65% 55 58 from sta
Slide 15: 2. Company update – Engebø Project
1. Equity financing 2. Company update – Engebø Project 3. Additional information 15
Slide 16: Building a Norwegian sustainable industrial company to deliver critical minerals
Company update – Engebø Project Building a Norwegian sustainable industrial company to deliver critical minerals Broad push from Norwegian industry, Fully permitted high-quality asset Strong political drive in the EU and politicians and local communities for with low cost and industry-leading Wester
Slide 17: 15 years of progress at the Engebø project, positioned for the next ~40 years
Company update – Engebø Project 15 years of progress at the Engebø project, positioned for the next ~40 years 2006 2007 – 2021 2022 and onwards Project initiated Studies, regulatory, permits and stakeholders Construction and long-term value-creation 2006: Acquired rights to the 2009: Scoping Study c
Slide 18: Engebø is a project with attractive characteristics in a favourable location
Company update – Engebø Project Engebø is a project with attractive characteristics in a favourable location Project highlights Minerals for a sustainable future Engebø Rutile and Garnet Engebø Rutile (TiO2) and Garnet (100%) Titanium Garnet Oslo Large dual-mineral resource with high-grade rutile an
Slide 19: Supplying critical industrial minerals - mitigating supply chain risk
Company update – Engebø Project Supplying critical industrial minerals - mitigating supply chain risk Rutile Garnet Application areas Application areas Ti-metal Renewable energy Waterjet cutting Water cleaning Pigment Welding Sand blasting Abrasives/other • Titanium is one of the most versatile elem
Slide 20: Sustainability at the core of our business
Company update – Engebø Project Sustainability at the core of our business Environmental responsible Positive impact on communities Safe and healthy work environment ✓ Work towards zero-emission operations and ✓ Establish relations based on transparency, ✓ Build operations with safety embedded in co
Slide 21: World class high-grade rutile resources – secures 1st quartile cost position
Company update – Engebø Project World class high-grade rutile resources – secures 1st quartile cost position Compared with major operational and planned rutile resources (MI) Indicative rutile grades (TiO2) for current producers and planned projects (MI&I) Major Rutile Resources West Balranald, Aust
Slide 22: Location and topography offers efficient design and solutions
Company update – Engebø Project Location and topography offers efficient design and solutions Operations and plant layout Simplified infrastructure reduces risk and capex New pit design enables reduced fleet size and reduces bench height and width • Stick-build methodology enables compact plant layo
Slide 23: Fully permitted, well-proven tailings solutions
Company update – Engebø Project Fully permitted, well-proven tailings solutions Seabed Tailings Disposal “STD” Design measures to reduce risk • Seabed Tailing Disposal ‘STD’ is a well-proven solution with 5 operative • Tailings is conditioned by seawater to increase density of the discharge and seve
Slide 24: Taking action for biodiversity
Company update – Engebø Project Taking action for biodiversity Environmentally responsible • As a response to the United Nation’s goal to stop loss of biodiversity, Nordic Mining has adopted a goal of net biodiversity gain over the life of mine for the Engebø project • To achieve this, a Biodiversit
Slide 25: Construction site progress
Waste rock/ stockpile Access road Open pit Ore shaft • Total staff of ~55 persons at site • Groundworks on schedule, work on concrete foundations to start in Q1-2023 • Access road 70% completed • Conveyor tunnel and crushing chamber 55% complete • Detail Engineering ongoing with all EPCs Process pla
Slide 26: Pre-production capital expenditure supported by lump-sum EPC contracts
Company update – Engebø Project Pre-production capital expenditure supported by lump-sum EPC contracts Breakdown of total remaining capital cost through ‘24 (USDm) Comments Direct costs USDm • ~60% of remaining capital expenditure of USD 176.9m is covered under lump-sum EPC EPC1 (Sitewide Earthworks
Slide 27: ~35% of earthworks completed, on track to start production in 2024
Company update – Engebø Project ~35% of earthworks completed, on track to start production in 2024 Project Timeline 2022 2023 2024 FID Process Design Owners team – Follow-up EPC 1 - Earthworks EPC 2 – Civil & Buildings EPC 3 – Structural & Mechanical EPC 4 – Electro & Installation Mechanical complet
Slide 28: EPC work progresses according to plan
Company update – Engebø Project EPC work progresses according to plan • 28
Slide 29: Investment Highlights and Q&A
Investment Highlights and Q&A Construction on track for production in 2024 76% of funding secured – final equity to be raised 5-year offtake agreements for full production of rutile and garnet Industry-leading ESG profile, minerals producer for the next 40 years Attractive economics and significant
Slide 30: 3. Additional information
1. Equity financing 2. Company update – Engebø Project 3. Additional information a) Engebø Rutile and Garnet b) Market overview c) Project Financials d) Appendix 30
Slide 31: Large dual-mineral resource with high grade rutile and garnet
Engebø Rutile and Garnet Large dual-mineral resource with high grade rutile and garnet Fully-permitted project – early construction works ongoing Key project metrics Location • Attractively located in Western Norway – a country with stable and Key metrics Value supportive policies towards mining ope
Slide 32: Favorable location with available infrastructure
Engebø Rutile and Garnet Favorable location with available infrastructure Location highlights Area overview Norway, a politically stable jurisdiction Location by the North Sea provides advantageous logistics Road access and two local airports Deep-sea, ice-free quay on site Renewable hydro power Pow
Slide 33: Large deposit with unique characteristics
Engebø Rutile and Garnet Large deposit with unique characteristics Mineral resources (2% TiO2 cut-off) Deposit Location Tonnes (Mt) TiO2 grade (%) Garnet grade (%) Measured (M) 29.2 3.60 44.5 Indicated (I) 104.0 3.48 43.9 Total M&I 133.2 3.51 44.0 Inferred 254.1 3.15 41.3 Ore reserves Tonnes (Mt) Ti
Slide 34: 39 years mine-life with rapid ramp-up of production
Engebø Rutile and Garnet 39 years mine-life with rapid ramp-up of production Production profile Mtpa ore 3.0 Open pit ore to plant Underground ore to plant Stockpile to plant feed Ore to stockpile Feed to plant 2.5 2.0 1.5 1.0 0.5 0.0 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046
Slide 35: Integrated owners' team ensures control and reduces execution risk
Engebø Rutile and Garnet Integrated owners’ team ensures control and reduces execution risk • Carefully selected project organization Project Director1 Terje Gundersen • with significant experience within project execution and mining operations Environment & Process & Production Sustainability • Key
Slide 36: Lump-sum EPC agreements in place with experienced regional contractors
Engebø Rutile and Garnet Lump-sum EPC agreements in place with experienced regional contractors January 2022 Sunnfjord Industripartner AS Åsen & Øvrelid AS • Nordic Mining ASA secured first part of Engebø Project Financing through a NOK 132.5m Sitewide Earthworks and Underground Civil and Buildings
Slide 37: Engebø will report according to TSM from day one
Engebø Rutile and Garnet Engebø will report according to TSM from day one ENERGY COMMUNITIES AND PEOPLE ENVIRONMENTAL STEWARDSHIP EFFIENCY Crisis Indigenous and Biodiversity Energy Use and Management and Safety and Preventing Child Tailings Water Community Conservation GHG Emissions Communication He
Slide 38: 3. Additional information
1. Equity financing 2. Company update – Engebø Project 3. Additional information a) Engebø Rutile and Garnet b) Market overview c) Project Financials d) Appendix 38
Slide 39: Natural rutile – Superior titanium feedstock
Market overview Natural rutile – Superior titanium feedstock Properties • Titanium is one of the most versatile elements with broad Rutile supply by country (2021)1 Rutile supply (2021)2 applications in multiple value chains India, Others, China, 2% 3% • Rutile is the cleanest and purest form of tit
Slide 40: Resource depletion drives long-term supply deficit
Market overview Resource depletion drives long-term supply deficit Global supply 2015-2030 Comments 800 • Supply has been decreasing steadily over the last few years with an absence of a response on the supply side ‘000 TiO2 units 600 • The decline in supply is a result of resource depletion 400 • N
Slide 41: Rutile price forecast reflects supply deficit
Market overview Rutile price forecast reflects supply deficit Nominal bulk rutile price forecast on FOB basis Comments 2500 • Declining natural rutile production has put an upward pressure on prices from 2017 and onwards • Natural rutile is expected to continue to benefit from 2000 positive pricing
Slide 42: Garnet – major producer's market position challenged by high freight costs
Market overview Garnet – major producer’s market position challenged by high freight costs Properties • The only viable mineral for industrial waterjet cutting Garnet supply by country (2021)1 Garnet supply (2021)1 • The waterjet technology has revolutionized the production Other, USA, 6% 8% process
Slide 43: Garnet – Strong demand recovery after Covid
Market overview Garnet – Strong demand recovery after Covid Global demand and indicative outlook to 20301 Limited additional Garnet to benefit from projected US and Europe largest markets garnet supply over the boost in infrastructure spending (reliant on significant imports next years – solid and i
Slide 44: Garnet – Freight and global economic recovery to drive garnet price
Market overview Garnet – Freight and global economic recovery to drive garnet price Nominal global FOB pricing garnet: global average Comments 350 • There is no terminal market to quote garnet prices • Garnet prices vary according to the source location, hard-rock versus alluvial, coarseness, bulk o
Slide 45: Direct use in pigment or metal production give substantially lower GHG footprint
Market overview Direct use in pigment or metal production give substantially lower GHG footprint Natural rutile is the purest of all titanium feedstocks Comments Feedstock Product TiO2 content Typical applications • Titanium feedstocks are raw minerals that contain TiO2 (titanium dioxide) Chloride p
Slide 46: 3. Additional information
1. Equity financing 2. Company update – Engebø Project 3. Additional information a) Engebø Rutile and Garnet b) Market overview c) Project Financials d) Appendix 46
Slide 47: Low operational cash cost provides solid margins for Engebø
Project Financials Low operational cash cost provides solid margins for Engebø Cash cost build-up for combined sales through 20302 Margins through 2030 USD/t Production kt Rutile 220 Average estimated realized sales price through 2030: 408 USD/t, incl. rutile and garnet offtakes 400 Garnet 1,075 Tot
Slide 48: Revenue supported take-or-pay offtake agreements for all production first 5 years
Project Financials Revenue supported take-or-pay offtake agreements for all production first 5 years Production profile (kt) Comments 250 Rutile tonnage Garnet tonnage • Production split from ’24 through ’30 with 17% rutile and 83% garnet from a 200 tonnage perspective 150 200 • Attractive orebody a
Slide 49: Strong EBITDA numbers and low sustaining CAPEX for attractive cash flow to firm
Project Financials Strong EBITDA numbers and low sustaining CAPEX for attractive cash flow to firm EBITDA incl. Royalty Comments 70 • Average annual EBITDA initial 5 years 60 post ramp-up is USD 57m 50 • Pre-production operating costs are 40 capitalized and accounted in CAPEX plan 62 66 30 55 58 • E
Slide 50: Attractive economics in wide range of scenarios
Project Financials Attractive economics in wide range of scenarios NPV sensitivity Comments -20 % -10 % +10 % +20 % • Post-tax NPV8 based on the same production and cost profile as UDFS 480 500 from 2021 taking account into investments made in 2022 and updated USD/NOK 467 507 forecasted sales prices
Slide 51: Non-dilutive royalty of USD 50m from leading resource investment firm
Project Financials Non-dilutive royalty of USD 50m from leading resource investment firm Key terms Comments • Orion Resource Partners is a global natural resource investment firm with Royalty provider Orion Resource Partners LLP approx. USD 8bn under management1. The fund specializes in mining inves
Slide 52: 3. Additional information
1. Equity financing 2. Company update – Engebø Project 3. Additional information a) Engebø Rutile and Garnet b) Market overview c) Project Financials d) Appendix 52
Slide 53: Overview
Appendix Overview Financial overview1,2,3 USDm 2023 2024 2025 2026 2027 2028 2029 2030 Revenue - 11 73 84 85 87 92 96 Revenue from royalty 50 - - - - - - - Operating Costs and Expenses - (6) (29) (30) (30) (29) (30) (30) EBITDA 50 5 44 54 55 58 62 66 WC and Other adjustments - 2 (4) (4) (3) (2) (3)
Slide 54: Independent Technical Engineer – Environmental and Regulatory
Appendix - Summary of risk analysis by Golder Independent Technical Engineer Environmental and Regulatory Residual Risk Rating Risk Rating Comment Mitigation (Post-Mitigation) While STD (seabed tailings deposition) has permits, it will cause some Careful planning and implementation of the deposition
Slide 55: Independent Technical Engineer – Environmental and Regulatory (cont'd)
Appendix - Summary of risk analysis by Golder (cont’d) Independent Technical Engineer Environmental and Regulatory Residual Risk Rating Risk Rating Comment Mitigation (Post-Mitigation) Plan and implement all operations with minimum harmful environmental The Project currently has required permits in
Slide 56: Independent Technical Engineer – Geotechnical
Appendix - Summary of risk analysis by Golder (cont’d) Independent Technical Engineer Geotechnical Residual Risk Rating Risk Rating Comment Mitigation (Post-Mitigation) Too optimistic pit design parameters Special attention to blasting in order to minimize crest loss and Stability formation of hard
Slide 57: Independent Technical Engineer – Mining
Appendix - Summary of risk analysis by Golder (cont’d) Independent Technical Engineer Mining Residual Risk Rating Risk Rating Comment Mitigation (Post-Mitigation) Careful consideration must be taken to avoid the ore pass from Ore pass The grizzly set-up will have to be uninstall, drill and blast sho
Slide 58: Independent Technical Engineer – Processing
Appendix - Summary of risk analysis by Golder (cont’d) Independent Technical Engineer Processing Residual Risk Rating Risk Rating Comment Mitigation (Post-Mitigation) Flowsheet does not take advantage of gravity and most transfers are done via pumps. No stand-by Dedicated Stand-by pumps are not incl
Slide 59: Independent Technical Engineer – Management Structure and Contracts
Appendix - Summary of risk analysis by Golder (cont’d) Independent Technical Engineer Management Structure, Management Team, Material Contracts, Human Resources, Health and Safety Residual Risk Rating Risk Rating Comment Mitigation (Post-Mitigation) Lack of control and follow-up on Since engineering
Slide 60: Independent Technical Engineer – Management Structure and Contracts (cont'd)
Appendix - Summary of risk analysis by Golder (cont’d) Independent Technical Engineer Management Structure, Management Team, Material Contracts, Human Resources, Health and Safety Residual Risk Rating Risk Rating Comment Mitigation (Post-Mitigation) Time risk Allowances for debugging bottlenecks mus
Slide 61: Management with complementary skillset and extensive mining experience
Appendix - Company overview Management with complementary skillset and extensive mining experience Ivar S. Fossum | Chief Executive Officer Terje Gundersen | Project Director, Engebø • 16 years’ with Nordic Mining (since founding) • With the company since February 2022 • 20 years experience from man
Slide 62: Engebø Operations Team
Appendix - Company overview Engebø Operations Team Kenneth Nakken Angedal | Operations Director, Engebø Odd Gunnar Røyseth | Technical & Maintenance Manager • With the company since August 2018 • Starts 1st March 2023 • Broad management and project coordination experience from various management • S
Slide 63: Board of Directors
Appendix - Company overview Board of Directors Kjell Roland | Chair of the Board Benedicte Nordang | Board member • Previously CEO at Norfund and co-founder/CEO of ECON • Extensive experience from the offshore industry, including top management • Extensive experience in the intersect between macroec
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