Atlantic Nickel reports continued first quartile cost performance in Q1 2021; upgrades and adds another 20% to the declared Underground Mineral Resource

Q1 2021 operational highlights

• In the 6^th consecutive quarter of operation since restarting in Q4 2019, Atlantic Nickel produced 26kdmt of concentrate with 3.6kt of contained nickel and 1.1kt of contained copper, among other by-products
• Net revenues of US$63m achieved over the first 3 shipments of the year at an average realized nickel price of US$7.85/lb
• First quartile C1 and AISC cost performance of US$3.05/lb Ni and US$4.78/lb Ni, respectively, net of by-product credits
• Active COVID cases at site remain low and well-managed, supporting continuity of operations throughout the quarter

Resource highlights

• Completion of an additional 20,600m of infill and step-out drilling targeting the underground
• Updated underground resource estimate grows Indicated Resources to 88Mt @ 0.61% NiS while also slightly growing Inferred Resources to 115Mt @ 0.59% NiS
• Update provides further validation of increasing grade profile with depth
• High potential that updated underground mine plan will extend mine life beyond the 34 years defined in NI 43-101 completed in 2020
• Additional resource potential remains high and will be targeted in future drilling

Atlantic Nickel (“Atlantic Nickel” or the “Company”) and Appian Capital Advisory LLP (“Appian”) are pleased to announce an update to both the operations and underground resource of the Santa Rita nickel sulphide mine (“Santa Rita” or the “Mine”) located in Bahia, Brazil.

Protecting our people and the community
Despite the challenges posed by COVID-19 nationwide, the number of new daily cases has plateaued, with some states, including Bahia, seeing lower infection and hospitalization rates than the national average. Following initiation of the federal government’s vaccination program in January, 30% of the adult population has now received their first dose. Sanitary protocols implemented at Santa Rita remain in place and are under continuous review by a dedicated team. At the end of March, the number of active cases at Atlantic Nickel was below 0.5% of the total complement.

Atlantic Nickel, through its affiliation with Appian Capital Brazil, has been working with internationally recognized human resources consultancy firm Great Place to Work, to roll-out an organizational climate, or satisfaction, survey. Over 60% of Appian Capital Brazil employees who were able to participate took part, the result of which was a score of 87 out of 100 and certification as a “Great Place to Work”. Atlantic Nickel is committed to maintaining and improving upon this certification through a robust action plan to ensure that we attract, develop, engage and retain this critical group of stakeholders, our employees.

Operational update
Atlantic Nickel’s safety track record and focus over the ramp-up has now been demonstrated over ~7 million-man hours through the achievement of a Lost Time Injury Frequency Rate (“LTIFR”) of 0.53 and 234 days since the last LTI.

Building upon ramp-up progress achieved in 2020, Atlantic Nickel continued to demonstrate robust performance through 1Q21:

• Atlantic Nickel mined 5.4Mt of material, of which 1.4Mt of ore and processed 1.5Mt @ 0.30% NiS
• Nickel and copper recoveries of 79.3% and 73.5%, respectively have exceeded budgeted ramp-up performance
• Production of 3.6kt of contained nickel and 1.1kt of contained copper in 26.3 dmt of concentrate, among other by-products; total production of 13.9kt of nickel since the restart of Santa Rita
• First three concentrate shipments of the year, which includes a cargo that embarked from the Port of Ilheus on April 1, 2021, generated revenue of US$62.7m at an average realized nickel price of US$7.85/lb
• Santa Rita maintained a C1 and AISC cost performance of US$3.05/lb Ni and US$4.78/lb Ni, respectively, net of by-products

Resource update
Building on an already significant drillhole database, Atlantic Nickel commenced an additional drilling campaign in 2020 of 20,600m across 22 holes. Completion of 19 holes for a total of 17,055m this campaign brings Santa Rita’s drillhole database to over 320,000m across both the open pit and underground resource. The holes completed in this campaign to date were primarily focused on upgrading inferred resources to indicated and stepping out to define additional inferred resource and resource potential. The additional three holes to be completed will provide additional geotechnical data and include one step out hole to further extend the ore zone at depth. Selected intercepts from the campaign include the following and contribute to the estimation of increasing sulphide nickel grades at depth:

• MBS-1090: 150m @ 0.70% NiS & 0.24% Cu from 500m
• MBS-1091: 100m @ 0.57% NiS & 0.19% Cu from 630m
• MBS-1092: 100m @ 0.78% NiS & 0.22% Cu from 636m
• MBS-1099: 99m @ 0.38% NiS & 0.14% Cu from 659m
• MBS-1102: 86m @ 0.6% NiS & 0.21% Cu from 650m
• MBS-1103: 150m @ 0.71% NiS & 0.21% Cu from 500m
• MBS-1104: 98m @ 0.64% NiS & 0.21% Cu from 655m
• MBS-1105: 138m @ 0.62% NiS & 0.21% Cu from 469m
• MBS-1107: 127m @ 0.76% NiS & 0.23% Cu from 638m
• MBS-1108: 155m @ 0.78% NiS & 0.22% Cu from 630m
• MBS-1109: 108m @ 0.64% NiS & 0.2% Cu from 702m
• MBS-1110: 105m @ 0.88% NiS, 0.30% Cu from 632m incl. 55m @ 0.99% NiS, 0.33% Cu
• MBS-1111: 130m @ 0.64% NiS & 0.2% Cu from 862m
• MBS-1115: 55m @ 0.77% NiS & 0.19% Cu from 630m

This drilling forms the basis for an updated block model and resource for the underground, shown below.

In general terms, the mineralization style remains similar across the open pit and underground and in some areas continuity of ore grade material is improved in the underground. Estimated grade for all payable metals increases with depth. The deposit remains open at depth and on flanks along strike with some of the best intercepts to date seen near the periphery of the resource.

Table 1: Santa Rita Underground Mineral Resource Tabulation

Classification	Tonnes (kt)	NSR (US$/t)	NiS (%)	Cu (%)	Co (%)	Pd (g/t)	Pt (g/t)	Au (g/t)
Indicated	87,717	51.52	0.61	0.20	0.01	0.04	0.11	0.07
Inferred	114,518	49.54	0.59	0.18	0.01	0.05	0.11	0.07

1. The Qualified Persons for the Mineral Resource Estimate are Timothy O. Kuhl, RM SME (MTS, formerly with Wood) and Dr Ted Eggleston, RM SME (MTS).
2. Mineral Resources are reported within conceptual stope outlines constructed using Datamine MRO (Mineable Reserves Optimizer, minimum mineable unit 30 x 45 x 25 m).
3. An NSR cut-off of US$30.00/t includes a mining cost of US$20.26/t, processing costs of US$6.00/t, G&A of US$2.03/t and US$1.71/t royalty.
4. Reasonable prospects for eventual economic extraction were determined using the following assumptions. Assumed commodity prices are US$6.50/lb nickel, US$3.00/lb copper, US$20.00/lb cobalt. The assumed recoveries are 83% for NiS, 70% for copper and 29% for cobalt. The assumed payable metals from the smelter/refinery are 91% for NiS, 80% for copper and 35% for cobalt.
5. Platinum, palladium, and gold were not included in the NSR calculation. Assumed prices for these commodities are US$1,250/oz gold, US$800/oz platinum, and US$1,000/oz palladium. By-product recoveries are estimated to be 50%.
6. Underground Mineral Resources are exclusive of open pit Mineral Resources.
7. Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability.
8. Totals may not sum due to rounding.

No changes in commodity price assumptions or selected NSR cut-off were applied to the update of conceptual SLC stopes outlining the resource. Relative to the underground resource presented as part of Atlantic Nickel’s September 2020 NI 43-101, the updated resource increases combined tonnage from 168Mt to 202Mt and is accompanied by a slight improvement in nickel sulphide grades. Resources in the indicated category now make up a larger proportion of the resource, increasing from 55 Mt to 88 Mt, or 43% of the combined tonnage.

Indicated Resources are now approaching the critical mass Atlantic Nickel requires to advance the upper block of the underground to a Prefeasibility level of study. In addition to further infill and step-out drilling, other workstreams that are being progressed in support of advancing the underground to Prefeasibility include:

• Geometallurgical testwork with SGS on a campaign of variability sampling from the underground
• Refreshed geotechnical studies with Stantec with the benefit of an additional dedicated geotechnical drilling completed as part of the most recent campaign
• A number of trade-off studies and additional engineering relating to mine design, infrastructure and scheduling

Paulo Castellari, CEO Atlantic Nickel & Appian Brazil commented:
“We’re delighted to announce our strong operational performance in Q1 with continued first quartile cost performance and robust safety standards. The team has a constant drive to improve and performance to date reflects our hard work and desire to be the best at what we do, safely, responsibly.

The upgraded and upsized underground resource underpins the longevity of our business, positioning us to be a positive presence in both the state of Bahia and our local communities for decades to come. We are proactively preparing for the transition in mining method and with a significant portion of the resource now defined as indicated, we are in a great position to continue advancing the project’s development.”

 

For further information:

Finsbury +44 (0)20 7251 3801
Charles O’Brien, Ruban Yogarajah, Richard Crowley, Theo Davies-Lewis

Appian Capital Advisory +44 (0)20 7004 0951
[email protected]
Michael Scherb, Adam Fisher

 

About Appian
Appian Capital Advisory LLP is the investment advisor to long-term value focused private equity funds that invest solely in mining and mining related companies.

Appian is a leading investment advisor in the metals and mining industry, with global experience across South America, North America, Australia and Africa and a successful track record of supporting companies and the advancement of their projects into production. Appian acquired Atlantic Nickel, the 100% owner of Santa Rita, in 2018.

About Atlantic Nickel
Atlantic Nickel is the owner and operator of Santa Rita, an open-pit nickel-copper-cobalt sulphide operation located in Bahia, Brazil. Santa Rita is a fully permitted, past-producing nickel mine currently undergoing an operational restart. The Mine benefits from US$1 billion of prior investment and has an estimated production capacity of 6.5 Mtpa. One of the largest open pit nickel sulphide mines in the world, Santa Rita is a high-quality asset operating with a first quartile cost position. It is one of a few remaining nickel sulphide mines globally that can offer additional supply towards the production of Class I nickel products and so has exposure to the high-growth potential of the electric vehicle industry.