Nordic Mining Asa · OSL:NOM
Nordic Mining Asa — Q3 2022 Earnings Presentation
62 slides from Nordic Mining Asa's earnings presentation, Nov 8, 2022
Slide 1: Minerals for a sustainable future
Minerals for a sustainable future Extended company presentation Q3 2022 08 November 2022
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: Today's presenters
Today’s presenters Ivar S. Fossum Christian Gjerde Mona Schanche Chief Executive Officer Chief Financial Officer VP Resource and Sustainability • 16 years’ with Nordic Mining (since • With the company since August 2020 • 14 years’ with Nordic Mining founding) • 14 years’ experience from management •
Slide 4: Q3 2022 Highlights – over 75% of project financing secured for Engebø
Q3 2022 Highlights – over 75% of project financing secured for Engebø • USD 55 million royalty agreement with Orion Resources1 Financing • USD 100 million senior secured bond • Project financials significantly improved from UDFS Commercial • Full rutile production sold: second rutile offtake agreeme
Slide 5: Agenda
1. Company update 2. Engebø Rutile and Garnet 3. Financial update Q3-2022 4. Additional information 5
Slide 6: Building a Norwegian sustainable industrial company to deliver critical minerals
Company update 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 Western world to increa
Slide 7: Engebø is a project with attractive characteristics in a favourable location
Company update 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 and garnet Headquar
Slide 8: Supplying critical industrial minerals - mitigating supply chain risk
Company update 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 elements with broad a
Slide 9: 15 years of progress at the Engebø project, positioned for the next ~40 years
Company update 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 completed 2022: Fi
Slide 10: Engebø Rutile and Garnet
1. Company update 2. Engebø Rutile and Garnet 3. Financial update Q3-2022 4. Additional information 10
Slide 11: Health & Safety
Engebø Rutile and Garnet Health & Safety HSE status Key Performance Year to Q3 Target indicator date ▪ No injuries in Q1-Q3 Lost time injuries (1/1 million working 0 0 <2,51 ▪ No incident when drilling into area with old explosives hours) ▪ The Norwegian Labor Inspection Authority (Nw. Total recorda
Slide 12: Preparatory groundworks progresses according to plan
Engebø Rutile and Garnet Preparatory groundworks progresses according to plan • 12
Slide 13: Site groundworks status
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 December 2022 • Access road 50% completed • Preparations for underground infrastructure work completed Process plant • Detail engineering ongoin
Slide 14: Material funding progress in 2022 from large financial and strategics partners
Engebø Rutile and Garnet Material funding progress in 2022 from large financial and strategics partners USD 50m royalty (non-dilutive) Binding 5 year off-take agreement UDS 5m equity commitment USD 19m equity commitment1 USD 190m from large financial Nordic Bond EPC partners and strategic partners d
Slide 15: Significant progress on financing in 2022 – less than 25% in equity remaining
Engebø Rutile and Garnet Significant progress on financing in 2022 – less than 25% in equity remaining The remaining equity raise is the last piece of the puzzle for Engebø to become fully financed 277 277 10 G&A and transaction costs USD million 28 Bond interest ~66 Fully committed capital12 19 30
Slide 16: Forecast for solid revenue and low cost, provides substantial EBITDA
Engebø Rutile and Garnet Forecast for solid revenue and low cost, provides substantial EBITDA1 USD million +39 years revenue and EBITDA generation Total revenue 104 of USD 624 99 Revenue Garnet revenue million from 94 89 2023-2030 Royalty prepayment 84 83 EBITDA 73 68 Avg. EBITDA 64 margin of 65% 59
Slide 17: Fully financed post equity raise and outlook for strong cash flow generation
Engebø Rutile and Garnet Fully financed post equity raise and outlook for strong cash flow generation Substantial upside potential to a de-risked project – illustrative metrics1 Potential for strong cash flow generation (USDm) USDm 2000 453 1500 1000 500 0 -500 46 Outlook for material cash flow gene
Slide 18: Significantly improved economics, NPV8 increased by > 70% since UDFS
Engebø Rutile and Garnet Significantly improved economics, NPV8 increased by > 70% since UDFS USD 453m 24.4% IRR USD 62m USD 50m Unlevered post Unlevered post Avg. annual Avg. annual free tax NPV8 tax EBITDA ’25-’303 cash flow ’25-’303 LOCATION RESOURCE INFRASTRUCTURE PROJECT READINESS Stable and su
Slide 19: Among the largest high-grade rutile resources globally
Engebø Rutile and Garnet Among the largest high-grade rutile resources globally 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, Australia 3.68% 8 Engebø, Norway
Slide 20: Long-term offtake agreements secure future revenue visibility
Engebø Rutile and Garnet Long-term offtake agreements secure future revenue visibility Rutile – sales secured for full annual rutile production Garnet Global TiO2 Partner EU Partner Binding offtake agreement signed in June 2022 Binding offtake signed October 2022 Negotiations ongoing 5-year agreemen
Slide 21: Early construction started H1'22 and on track to produce in 2024
Engebø Rutile and Garnet Early construction started H1’22 and on track to produce 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 completion Commi
Slide 22: Sustainability at the core of our business
Engebø Rutile and Garnet 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 contribut
Slide 23: World's most climate friendly titanium feedstock
Engebø Rutile and Garnet 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 pr
Slide 24: Taking action for biodiversity
Engebø Rutile and Garnet 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 Biodiversity Actio
Slide 25: Financial update Q3-2022
1. Company update 2. Engebø Rutile and Garnet 3. Financial update Q3-2022 4. Additional information 25
Slide 26: Keliber sale ensures funding to continue Engebø early construction
Financial update Q3-2022 Keliber sale ensures funding to continue Engebø early construction ▪ The Group’s balance sheet remains solid: o NOK 525 million in cash after sale of Keliber; will be used towards Engebø construction o Engebø development costs of NOK 51 million capitalized under «Mine under
Slide 27: Investment Highlights and Q&A
Investment Highlights and Q&A Sustainable Norwegian industrial minerals producer for the next 40 years Significant revenue and EBITDA (65%) generation Substantial part of funding secured Construction on track for production in 2024 Industry leading ESG profile 27
Slide 28: Additional information
1. Company update 2. Engebø Rutile and Garnet 3. Financial update Q3-2022 4. Additional information a) Market overview b) Project Financials c) Appendix 28
Slide 29: 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 30: Resource depletion drives long-term supply deficit
Market overview Resource depletion drives long-term supply deficit Global supply (projected volumes as planned) Comments 1800 • Supply has been decreasing steadily over the last few years with an 1600 absence of a response on the supply side 1400 1200 Natural rutile existing • The decline in supply
Slide 31: Rutile price forecast reflects supply deficit
Market overview Rutile price forecast reflects supply deficit Natural rutile (TiO2) price forecast on FOB basis Comments 1600 • Declining natural rutile production has put an upward pressure on prices from 2017 and onwards 1500 • Natural rutile is expected to continue to benefit from positive pricin
Slide 32: 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)2 Garnet supply (2021)2 • The waterjet technology has revolutionized the production Other, USA, 6% 8% process
Slide 33: Garnet – Strong demand recovery after Covid
Market overview Garnet – Strong demand recovery after Covid Global demand and indicative outlook to 2030 2500 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 2
Slide 34: Garnet – Freight and global economic recovery to drive garnet price
Market overview Garnet – Freight and global economic recovery to drive garnet price Price expectations for processed and bagged garnet Comments 700 • There is no terminal market to quote garnet prices • Garnet prices vary according to the source location, 600 hard-rock versus alluvial, coarseness, b
Slide 35: 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 36: Project Financials
1. Company update 2. Engebø Rutile and Garnet 3. Financial update Q3-2022 4. Additional information a) Market overview b) Project Financials c) Appendix 36
Slide 37: Overview and assumptions
Project Financials Overview and assumptions Financial overview1,2 Assumptions USDm H2-2022 2023 2024 2025 2026 2027 2028 2029 2030 USD/t Realized rutile FOB Engebø 1 500 Revenue from rutile - - 12 45 47 47 47 47 49 1 400 Revenue from garnet - - 9 39 36 42 47 51 55 Revenue from royalty - 50 - - - - -
Slide 38: Solid revenue supported by two commodities
Project Financials Solid revenue supported by two commodities Production profile Comments kt 250 • Production split from ’24 through ’30 Rutile tonnage with 17% rutile and 83% garnet from a 200 Garnet tonnage tonnage perspective 150 185 195 200 • Attractive orebody allows for very 162 165 175 100 co
Slide 39: Low operational cash cost provides solid margins for Engebø
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 227 Average estimated realized sales price through 2030 425 USD/t inc offtakes Garnet 1,125 400 Total 1,352 Revenue1 USDm Rutile
Slide 40: 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 Comments USDm 80 73 • Average annual EBITDA initial 5 years 68 post ramp-up is USD 70m 64 59 60 53 53 • Pre-production operating costs are 50 capitalized and accounted in CAPEX plan 40 • EBITDA
Slide 41: Attractive economics in wide range of scenarios
Project Financials Attractive economics in wide range of scenarios NPV sensitivity Comments • Projected USD 453m Net Present Value -20 % -10 % +10 % +20 % of the project after tax and on an USD/NOK 429 469 unlevered basis (also excluding royalty) with 8% discount rate 442 462 • Realized sales price
Slide 42: Pre-production capital expenditure supported by lump-sum EPC contracts
Project Financials Pre-production capital expenditure supported by lump-sum EPC contracts Breakdown of total remaining capital cost through ‘24 (USDm) Comments Direct costs USDm • Development CAPEX plan is based on updated DFS from May EPC1 (Sitewide Earthworks and Underground Infrastructure) 29.3 2
Slide 43: Non-dilutive royalty of USD 55m from leading resource investment firm
Project Financials Non-dilutive royalty of USD 55m 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 44: Appendix
1. Company update 2. Engebø Rutile and Garnet 3. Financial update Q3-2022 4. Additional information a) Market overview b) Project Financials c) Appendix 44
Slide 45: 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 46: 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
Slide 47: Favorable location with available infrastructure
Appendix - 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 hydr
Slide 48: Large deposit with unique characteristics
Appendix - 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 Ton
Slide 49: Location and topography offers efficient design and solutions
Appendix - Engebø Rutile and Garnet 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
Slide 50: 39 years mine-life with rapid ramp-up of production
Appendix - 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
Slide 51: Integrated owners' team ensures control and reduces execution risk
Appendix - Engebø Rutile and Garnet Integrated owners’ team ensures control and reduces execution risk • Carefully selected project organization Project Director1 Hiring process Terje Gundersen • with significant experience within project execution and mining operations Environment Process & Product
Slide 52: Lump-sum EPC agreements in place with experienced regional contractors
Appendix - 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
Slide 53: Fully permitted, well-proven tailings solutions
Appendix - ESG 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 several historical ST
Slide 54: Engebø will report according to TSM from day one
Appendix – ESG 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 Health and F
Slide 55: Project due diligence processes and verification work conducted
Appendix - Due diligence and parties involved Project due diligence processes and verification work conducted Role Appointed Comment • Defines realistic and conservative way to production Updated Definitive Feasibility Study (UDFS) • Initial DFS announced in 2020 and updated in 2021 • Provided a tec
Slide 56: Independent Technical Engineer – Environmental and Regulatory risks
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 57: Independent Technical Engineer – Environmental and Regulatory risks (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 58: Independent Technical Engineer – Geotechnical risks
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 59: Independent Technical Engineer – Mining risks
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 60: Independent Technical Engineer – Processing risks
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 61: Independent Technical Engineer – Management and contracts risks
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 62: Independent Technical Engineer – Management and contracts risks (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