H1 2022 performance highlights
- Safety performance among the best in the industry with LTIFR of 0.37 over the past 12 months
- Great Place to Work certification obtained in early 2022
- EBITDA for first half of 2022 at US$105m on US$213m of revenue
- Santa Rita produced 57.6kdmt of nickel concentrate containing 8.0kt of nickel, and 2.4kt of copper with cobalt, gold, palladium and platinum by-products
- C1 cost performance of US$4.95/lb payable Ni net of by-products for the period
- The Company remains debt free and well positioned for further growth
Atlantic Nickel (“Atlantic Nickel” or the “Company”) and Appian Capital Advisory LLP (“Appian”) are pleased to announce record operating and financial performance in 1H22 at the Company’s Santa Rita nickel sulphide mine (“Santa Rita” or the “Mine”) located in Bahia, Brazil.
Santa Rita is one of the very few long-life nickel sulphide mines in operation globally, boasting 35 years of mine life producing between 20-35 ktpa NiEq contained in concentrate. Based on an NI 43-101 technical report completed in 2021, the operation mines an 8-year open pit with an NPV8 of US$570m, then transitions to 27-years of underground sublevel caving operations with an NPV8 of US$812m. Capital expenditure over the first 5 years of the underground is US$332m and expected to be fully funded out of operating cash flow.
Appian also owns Mineração Vale Verde (“MVV”) and its Serrote copper gold mine in Alagoas, Brazil (“Serrote”), which completed construction ahead of schedule and under budget and achieved first production in 2021.
Paulo Castellari, CEO Atlantic Nickel & Appian Capital Brazil commented:
“I am delighted to report another record half for Atlantic Nickel, building on our strong performance in 2021. Most importantly, we have achieved this while maintaining our industry leading safety and environmental record, with a strong focus on employee welfare and one of the lowest carbon footprints in the sector.
The operational and financial results not only reflect the quality of the asset, but also the hard work of the Atlantic Nickel team, maintaining our robust C1 cost position against a backdrop of global inflationary pressures and the ongoing impact of the pandemic. Santa Rita is one of the leading nickel sulphide mines globally and I am incredibly excited about its further potential through the underground expansion.”
Safety and the environment
During the first half of 2022, Santa Rita continued to operate as one of the safest operations globally with a Lost Time Injury Frequency Rate (“LTIFR”) of 0.37 and a Total Recordable Injury Frequency Rate (“TRIFR”) of 1.67. More than 75,000 man-hours of safety, health and environmental training were conducted in the first half of 2022, contributing to the strong safety culture and awareness on site at Santa Rita.
Safety and worker well-being continue to be a top priority for Atlantic Nickel’s management. At the end of June 2022, 100% of the workforce had received COVID-19 booster vaccinations.
A survey conducted by Great Place to Work (GPTW) in early 2022 identified that 85% of the company’s employees find Atlantic Nickel an excellent place to work. This is the second time the company is awarded with this certification.
Santa Rita maintained its leading environmental performance, with its position among the lowest 10% carbon footprints in the industry, with 85% of Brazil’s power generation from renewable or carbon neutral sources. The company has invested over US$550k in the construction of a new Center for Waste Treatment that will provide a safe and environmentally responsible solution for 100% of non-mineral residue produced by the mine.
Operational update
A record performance was achieved in the first six months of 2022 in several operating areas driven by continuous business improvements and mining performance:
- 3.2Mt of ore was mined from the open pit in addition to 12.7Mt of waste. Total mine movement increased 48% from same period in 2021
- 3.2Mt of ore fed to the mill in the period – a 6% increase compared to the same period in 2021. Average feed grades of 0.32% NiS and 0.10% Cu
- 57.6kt of concentrate was produced at average concentrate grades of 13.9% Ni and 4.2% Cu with cobalt, gold, palladium and platinum by-products
Santa Rita’s C1 operating costs amounted to US$4.95/lb payable Ni net of by-products. Atlantic Nickel has been able to control costs in a global inflationary environment through the deployment of a number of Business Improvement initiatives during the first six months of 2022.
Through the first half of 2022, approximately US$15m in value was captured through Business Improvement initiatives. Most notably mining contract negotiations have reduced the unit cost (US$/t mined) by 15% in an inflationary environment.
Geotechnical update
Atlantic Nickel’s 2021 performance update press release provided an update on a geotechnical event comprising a small crack affecting less than 1% of the total surface area of the open pit. As of June 2022, the pushback designed to remediate the area of the geotechnical event had been mostly completed (85%) in line with the plan established by Atlantic Nickel and evaluated by external consultants. The remediation has been conducted safely, with dedicated daily radar inspections and prism monitoring. Since the quarter ending June 30 2022, the remediation work has been 100% completed in line with the timeline originally projected. There is no impact on open pit mine life and no expected loss of ore within the open pit reserve.
Financial update
Five shipments were completed in the first half of 2022 containing 50kt of concentrate and 7.0kt of Nickel content. Total revenues of US$213m were realized in the period with EBITDA of US$105m. Strong financial performance was driven by a combination of strong operating results and commodity price performance. Moreover, Atlantic Nickel has locked in commodity price hedges for nickel and copper at attractive levels to further capitalize on strong commodity markets.
Drilling / Growth update
Atlantic Nickel continues the development of strategic studies for the underground expansion at Santa Rita, with activities that include:
- An extensive drilling campaign (step out and infill), with 7 operating rigs and another 4 planned by Q3 2022
- Execution of outstanding technical studies required for completion of the Pre-Feasibility Study (“PFS”)
- Mobilization of a top-tier international engineering firm to develop the mine design for sublevel caving mine
- Definition of a robust permitting strategy underway with the support of renowned consultants
- Delivery of PFS on the underground extension in 1H23
Additionally, the company has advanced with an additional drilling campaign and technical studies on its satellite exploration asset Palestina. At Palestina, Atlantic Nickel has been primarily focused on resources declaration. The project is located 25km from Santa Rita and will benefit from the existing Santa Rita process plant. A pre-feasibility study for Palestina is planned for the first half of 2023.
For further information:
FGS Global +44 (0)20 7251 3801
Charles O’Brien, 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 to achieve their development targets, with a global operating portfolio overseeing nearly 5,000 employees.
Appian has a global team of 54 experienced professionals with offices in London, Toronto, Lima, Belo Horizonte, Vancouver, Montreal and Perth.
For more information, please visit www.appiancapitaladvisory.com, or find us on LinkedIn, Instagram or Twitter.
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 an operating open pit mine that is planning to transition to underground mining to extend its mine life to 34 years. The mine benefits from US$1 billion of prior investment and has a plant capacity of 6.5 Mtpa. One of the largest open pit nickel sulphide mines in the world, Santa Rita is a high-quality asset. It is one of a few 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.
