TIDMAPF
RNS Number : 7023Q
Anglo Pacific Group PLC
14 September 2017
News Release
14 September, 2017
Anglo Pacific Group PLC
Acquisition of a royalty on the Piauí Nickel - Cobalt
Project
Anglo Pacific Group PLC ("Anglo Pacific", the "Company") (LSE:
APF, TSX: APY) is pleased to announce that it has entered into an
agreement with Brazilian Nickel Limited, ("BRN") to acquire a Gross
Revenue Royalty ("GRR", the "Royalty") interest for the development
of its Piauí Nickel - Cobalt Project (the "Project"), located in
north eastern Brazil. This is in line with the Company's strategy
to invest in development opportunities with significant growth
potential to complement its existing portfolio of income producing
assets.
The Piauí Nickel - Cobalt Project has a JORC compliant Measured
Resource (1) of 52.9 Mt at 1.03% Nickel ("Ni") and 0.05% Cobalt
("Co"), plus Indicated Resources of 19.3 Mt at 0.92% Ni and 0.05%
Co at a 0.6% nickel cut-of-grade.
Anglo Pacific will provide BRN with an initial US$2 million
(GBP1.5 million) cash payment payable immediately, in exchange for
a 1% GRR over the Project. The Tranche 1 consideration and
associated expenses will be funded from internal sources.
This consideration will be used by BRN for further Project
assessment and/or the development of the "PNP1000", a Ni and Co
pilot plant with a nameplate production capacity of 1,000 tonnes
per annum ("tpa") of Ni contained in a saleable product.
Upon achievement of certain development milestones and Anglo
Pacific board approval for each specific tranche, the Company has
the right to acquire up to a total of US$70m (GBP53m) in additional
GRRs, namely:
-- Under a staged ramp-up development scenario: US$20m for an
incremental 2.0% GRR when plans for the construction of a
processing plant with a nameplate capacity of up to 10,000 tonnes
of Ni and 450 tonnes of Co per annum (the "PNP10k") are
implemented, and an additional US$50m for an incremental 2.5% GRR
when plans for the construction of a processing plant with a
nameplate capacity of 24,000 tonnes of Ni and 1,000 tonnes of Co
per annum (the "PNP24k") are implemented, OR:
-- US$70m for an incremental 3.0% GRR at the point when plans
for the construction of a processing plant with a nameplate
capacity of up to 24,000 tonnes of Ni and 1,000 tonnes of Co per
annum are implemented.
Highlights of the transaction:
-- Attractive end market fundamentals - high quality nickel and
cobalt products expected for use in technologies such as lithium
ion battery manufacturing, as well as for traditional markets;
-- Low cost operation - current BRN estimates indicate that the
Project will be a large, low cost nickel and cobalt operation with
operating costs after refining charges and cobalt credits of less
than US$3 per pound of Ni;
-- Established mining jurisdiction - the Project is located
close to water, power, and transport infrastructure;
-- Partnering with an experienced management team - the BRN
management team has an established track record in mining and
nickel heap leach operations;
-- Lower risk royalty acquisition structure - the innovative
staged structure of this transaction allows Anglo Pacific to
increase its exposure as the project is advanced; and,
-- Further diversifies the Anglo Pacific royalty portfolio - the
expected royalty income profile has the potential to significantly
increase the Company's revenue stream and exposure to base metals
if fully invested.
Commenting on the investment, Julian Treger, Chief Executive
Officer of Anglo Pacific, said:
"The Piauí royalty reflects the Company's strategy of investing
into earlier stage, high growth potential royalties. Combined with
our Maracás Menchen vanadium royalty, this investment also
represents a continuing strategic pivot into metals which are
exposed to the burgeoning electric vehicle story.
The royalty will deliver further diversification for the
Company's asset base and commodity exposure in a lower risk manner
through the incremental structure of the investment, and has the
potential to deliver very high returns once in production. This
investment also has the potential to contribute significantly to
our cash flows in the coming years as the Project ramps up through
the expanded production phases.
The Acquisition is consistent with Anglo Pacific's strategy to
acquire royalties on mining assets that are competitively
positioned on the cost curve and located in established mining
jurisdictions."
Overview of the Piauí Nickel Cobalt Project
Brazilian Nickel Ltd is a private UK company which was formed in
2013 to develop the 100% owned Piauí Nickel Cobalt Project in north
eastern Brazil. The Project was acquired from Vale S.A. ("Vale") in
January 2014, who extensively drilled the deposit. To date over
US$75 million has been spent on the Project.
The Project is being envisaged as a nickel laterite heap
leaching project. It boasts a JORC compliant (1) Measured Resources
of 52.9 Mt at 1.03% Ni and 0.05% Co, plus Indicated Resources of
19.3 Mt at 0.92% Ni and 0.05% Co at a 0.6% nickel cut-of-grade with
upside potential in adjacent exploration areas.
Resources Category Tonnes ('000t) Ni (%) Co (%)
------------------------------- --------------- ------- -------
Measured 52,887 1.03 0.048
------------------------------- --------------- ------- -------
Indicated 19,324 0.92 0.048
------------------------------- --------------- ------- -------
Total Measured plus Indicated 72,211 1.00 0.048
------------------------------- --------------- ------- -------
Mining will be conventional open pit extraction.
Metallurgically, the ore is characterised by favourable geological
conditions in that it is rocky in texture to aid heap percolation,
and has fast leaching kinetics, high nickel extraction, and most
importantly, low acid consumption. The ore is amenable to sulphuric
acid heap leaching which produces a Pregnant Leach Solution ("PLS")
containing nickel and cobalt. The PLS is then treated in a simple
precipitation circuit where limestone is added to remove iron and
other impurities from the PLS. The remaining solution is then
passed through an ion exchange process which separates and
concentrates the nickel and cobalt solutions which are then
precipitated as high purity nickel and cobalt hydroxide for
packaging and sale.
The project is close to grid power and road infrastructure which
connects the project to a choice of ports. There is a large source
of water nearby, for which BRN already has an extraction permit.
Social and environmental work continues in order to obtain the main
environmental licence.
In 2015, BRN started the next phase of development with the
refurbishment of an on-site demonstration plant and camp facilities
originally built by Vale. The construction and operation of three
commercial height demonstration heaps commenced in May 2016 with
the leach solutions feeding the downstream plant by July, and first
nickel and cobalt hydroxide products produced in August of the same
year. Target extractions of 80% nickel have been achieved and data
have been collected from the demonstration plant showing low
consumption of acid. In December 2016, BRN successfully exported
and sold nickel and cobalt hydroxide trial products.
BRN has used the data from the demonstration plant to simulate
the two different production scenarios, a 24,000 tpa Ni and 1,000
tpa Co nameplate operation ("PNP24k") or a smaller capex
requirement 10,000 tpa Ni and 450 tpa Co nameplate operation
("PNP10k"). BRN will undertake a detailed study to further assess
the parameters of the two separate production scenarios.
BRN may also expand the existing demonstration plant to a
production capacity to 1,000t of Ni a year ("PNP1000") for an
estimated capital cost of US$15 million. This expansion would use
existing environmental permissions and could be implemented within
a year of full financing.
Nickel and cobalt production are targeted to be sold into new
growth markets, such as lithium ion battery cathodes for use in
electric vehicles, but can also serve conventional industrial needs
(nickel to stainless steel, cobalt for refining to metal).
For more information, please visit www.braziliannickel.com.
1) The Piauí Resources have been reported under the JORC Code
(2012). The Mineral Resource estimate was completed by Rory Devlin
under the direction of Mick Elias. Rory Devlin and Mick Elias are
employees of CSA Global. Mick Elias FAusIMM is a Competent Person
as defined by the Australasian Code for the Reporting of
Exploration Results, Mineral Resources or Ore Reserves (JORC Code
2012 Edition) and consents to the inclusion in the JORC report of
the matters based on the information in the form and context in
which it appears. All figures in the tables are rounded, and
therefore the total sums might not be the direct sum of the input
figures.
The defined terms used in the Canadian Institute of Mining,
Metallurgy and Petroleum (CIM) Definition Standards for Mineral
Resources and Mineral Reserves, 2014 are referenced in NI 43-101.
The definition of the terms Mineral Resource and the categories
(Measured, Indicated and Inferred) are identical to those defined
in the JORC Code (2012 Edition). CIM definitions of Mineral
Reserves, and the sub categories Proven and Probable Mineral
Reserves, align with the JORC Code definitions for Ore Reserves and
the subcategories Proven and Probable Ore Reserves. No material
differences exist between the two codes.
For further information:
Anglo Pacific Group PLC
Julian Treger - Chief Executive
Officer
Kevin Flynn - Chief Financial
Officer and Company Secretary +44 (0) 20 3435
Juan Alvarez - Head of Investments 7400
Website: www.anglopacificgroup.com
+44 (0) 20 7664
BMO Capital Markets Limited 8020
Jeffrey Couch/Neil Haycock/Tom
Rider
+44 (0) 20 3037
Macquarie Capital (Europe) Limited 2000
Raj Khatri/Nicholas Harland/Ariel
Tepperman
+44 (0) 20 7418
Peel Hunt LLP 8900
Matthew Armitt/Ross Allister/Chris
Burrows
+44 (0) 20 7382
Redleaf Communications 4769
Charlie Geller/Elisabeth Cowell/Fiona
Norman
About the Company
Anglo Pacific Group PLC is a global natural resources royalty
and streaming company. The Company's strategy is to develop a
leading international diversified royalty and streaming company
with a portfolio centred on base metals and bulk materials,
focusing on accelerating income growth through acquiring royalties
on projects that are in the main currently cash flow generating or
are expected to be within the next 24 months, as well as investment
in earlier stage royalties. It is a continuing policy of the
Company to pay a substantial portion of these royalties and streams
to shareholders as dividends.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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