Atlantic Nickel (“Atlantic Nickel” or the “Company”) and Appian Capital Advisory LLP (“Appian”) are pleased to announce the completion of a NI 43-101 technical report outlining a 34-year mine life for the Santa Rita nickel sulphide mine (“Santa Rita” or the “Mine”) located in Bahia, Brazil.

Highlights

  • PEA level brownfield expansion extends life of mine from 8 to 34 years
  • Incorporates for the first time over 106,000m of recently announced drilling results from 2018-2019 (link)

Open pit

  • 8 years of open pit mining underpinned by Proven and Probable Reserve of 50.6Mt @ 0.31%NiS
  • Open pit produces 20-25 ktpa of contained nickel equivalent at a C1 cost of US$2.97/lb Ni and an AISC of US$4.12/lb Ni
  • 48 kdmt of concentrate produced at a C1 cost of US$3.17/lb Ni since restarting operations in August 2019
  • Revenue from shipments to date show a split of 83% nickel, 10% copper, 2% cobalt, 4% gold and platinum group metals

Underground

  • Sublevel caving identified as the most appropriate mining method extracting an additional 134.1Mt @ 0.54%NiS of Indicated and Inferred Resource
  • Underground operation produces 40-45 ktpa of contained nickel equivalent over life of mine at a C1 cost of US$2.17/lb Ni and an AISC of US$3.92/lb Ni
  • US$355m of capital over the first 5 years partially funded by cash flows generated from open pit operations
  • Underground development planned to commence in 2026 with first production in 2028

Study secures Atlantic Nickel’s current and long-term standing as a low-cost, sustainable producer of nickel sulphide

  • Producing a nickel sulphide concentrate with superior product attributes
    • Readily smeltable into high quality nickel matte or LME Class I nickel
    • Easily upgraded into nickel sulphate, an essential raw material for battery cathode precursors
    • Valuable by-product basket of copper, cobalt, gold, palladium, and platinum
  • High quality commercial partnerships in place with tier 1 counterparties globally
    • Long-term partnership with a leading European smelter operating to the highest safety, environmental and social standards
    • Previously announced relationship with Trafigura, a supportive partner that provided financing in 2019
    • Established links with the nickel value chain in China through one of the world’s largest refined nickel, cobalt, and copper producers
  • Uniquely positioned to provide long term sustainable nickel production
    • Atlantic Nickel’s sulphide concentrate has a far lower carbon footprint from processing (as much as 10x) than products from laterites
    • Powered by renewable hydroelectric generation through the grid, sourced from nearby hydro station 20km from site
    • Located within 140km of, or a 2.5-hour haul to, Ilhéus Port, minimizing carbon footprint of inland logistics
    • Atlantic Forest revegetation project has recovered 30ha, with over 30,000 seedlings planted
    • Atlantic Nickel’s restart alone has improved region’s GDP by 23%
    • Well-established social programs covering education, arts, music and language for children and teenagers

Atlantic Nickel (“Atlantic Nickel” or the “Company”) and Appian Capital Advisory LLP (“Appian”) are pleased to announce the completion of a NI 43-101 technical report outlining a 34-year mine life for the Santa Rita nickel sulphide mine (“Santa Rita” or the “Mine”) located in Bahia, Brazil.

Open pit operation
Open pit mining and operational analysis based on Reserves has been prepared at a Pre-Feasibility Study level. The open pit mine is in operation today and has declared commercial production.

The open pit operation encompasses a large open pit and a nearby, much smaller satellite open pit along strike. Both pits will be mined with conventional mining equipment, and the plan will be executed in 10 phases.

The open pit is scheduled over a period of eight years, ending in 2028. Mining operations utilize standard open pit methods with drilling and blasting, loading, and hauling. A stockpiling strategy is used to optimize throughput rate and metal recovery. Ore classification is based on cut-off grade, lithology type (based on MgO grade) and NiS% head grade ranges.

The Santa Rita process plant, having started production in 2009, was completely refurbished and recommissioned in H2 2019. The plant consists of crushing, grinding, flotation, thickening and filtration unit operations to produce a saleable nickel concentrate. Flotation tailings are pumped to a tailings storage facility.

Grinding is performed by a SAG mill, two ball mills and two pebble crushers. This is followed by a conditioning circuit and a flotation circuit. The final concentrate is thickened and pumped to storage tanks ready for filtration. Concentrate is filtered in a Larox pressure filter. Following filtration, the final concentrate is trucked to the port of Ilhéus where it is loaded onto ships for transport to market.

All necessary infrastructure is in place to continue to support the open pit mining and mineral processing operation.

The Proven and Probable Reserve Estimate for the Santa Rita Mine totals 50.6Mt at average grades of 0.31% NiS, 0.11% Cu, 0.01% Co, 0.03 g/t Pd, 0.06 g/t Pt and 0.04 g/t Au. Approximately 25% of the Reserve is classified as Proven. The open pit Reserve Estimate and Mineral Resource Tabulation are shown in the tables below, and have an effective date of November 7, 2019:

Santa Rita Mineral Reserve Estimate
Classification Tonnage
(Kt)
NSR
(US$
/t)
NiS
(%)
Cu
(%)
Co
(%)
Pd
(g/t)
Pt
(g/t)
Au
(g/t)
Proven 12,674 30.61 0.36 0.12 0.01 0.03 0.06 0.04
Probable 37,960 25.18 0.29 0.11 0.01 0.03 0.06 0.04
Proven and Probable 50,634 26.54 0.31 0.11 0.01 0.03 0.06 0.04
  1. The Qualified Person for the Mineral Reserve Estimate is Ken Kuchling, P.Eng., of P&E Mining Consultants Inc.
  2. Mineral Reserves are defined within a mine plan and incorporate mining dilution and ore losses that result in a reduction of 1.4% of the tonnage and a 6% reduction in the NiS contained metal with no reduction in other contained metals.
  3. Mineral Reserves are based on Measured and Indicated Mineral Resource classifications only.
  4. Mineral Reserves are based on metal prices of US$6.50/lb nickel, US$3.00/lb copper, US$20.00/lb cobalt, US$1,000/oz palladium, US$800/oz platinum and US$1,250/oz gold.
  5. An NSR cut-off value of $8.91/t is estimated to differentiate ore from waste. The basis for the NSR formula is described in Section 14 of this Technical Report.
  6. The estimate of Mineral Reserves may be materially affected by metal prices, US$/BRL exchange rate, environmental, permitting, legal, title, taxation, socio-political, marketing, infrastructure development or other relevant issues.
  7. Totals may not sum due to rounding.
Santa Rita Open Pit Mineral Resource Tabulation
Classification Tonnes
(kt)
NSR
(US$/t)
NiS
(%)
Cu
(%)
Co
(%)
Pd
(g/t)
Pt
(g/t)
Au
(g/t)
Measured 13,165 32.82 0.38 0.13 0.01 0.03 0.07 0.04
Indicated 45,983 26.89 0.31 0.11 0.01 0.03 0.06 0.04
Meas + Ind 59,148 28.21 0.33 0.11 0.01 0.03 0.06 0.04
Inferred 45 21.82 0.25 0.10 0.01 0.02 0.05 0.03
  1. The Qualified Persons for the Mineral Resource Estimate are Timothy O. Kuhl, RM SME (MTS, formerly with Wood), Douglas Reid, P.Eng. (Wood) and Dr Ted Eggleston, RM SME (MTS).
  2. Mineral Resources are reported within a conceptual pit shell constructed using Whittle Pit Optimizer. The Whittle pit optimization includes an open pit mining cost of US$3.00/t; processing and G&A of US$8.50/t.
  3. An NSR cut-off of US$8.91/t includes processing costs of US$5.17/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. Mineral Resources are inclusive of Mineral Reserves.
  7. Open pit Mineral Resources are exclusive of underground Mineral Resources.
  8. Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability.
  9. Totals may not sum due to rounding.

It is important to note that the current open pit Mineral Resource Estimate has been limited in size by Atlantic Nickel’s optimized strategy to transition to an underground sublevel caving operation. The current open pit Mineral Resource Estimate could be reviewed and potentially expanded if a decision were made to continue mining via open pit methods beyond the currently planned 8 years.

Underground expansion
The expansion development plan includes an underground project at a PEA level of study that includes Inferred Resources.

This PEA is preliminary in nature, includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as reserves, and there is no certainty that the PEA will be realized. Mineral resources that are not reserves do not have demonstrated economic viability.

The combined open pit and underground operation is scheduled over a period of 34 years of mining plus one year of closure activity. The Mineral Resource Estimate for the expansion case consists of 94.2Mt of Measured and Indicated Resources across open pit and underground mining at average grades of 0.41% NiS, 0.14% Cu, 0.01% Co, 0.03 g/t Pd, 0.07 g/t Pt and 0.05 g/t Au, with 90.6Mt of Inferred Resource at average grades of 0.54% NiS, 0.17% Cu, 0.02% Co, 0.04 g/t Pd, 0.09 g/t Pt and 0.06 g/t Au.

The Sublevel Caving (“SLC”) mining method was selected for the underground portion of the deposit based on the amenable geometry of the deposit, and because productivity and cost advantages of SLC enable greater exploitation of the underground Resource at greater margin than more selective mining methods. The geometry of the deposit and the location below a mined open pit are similar to the Ernest Henry SLC which is successfully operated by Ernest Henry Mining (a subsidiary of Glencore) in Queensland, Australia.

The SLC mining method employs long-hole drilling and blasting techniques to extract mineralization sequentially from the surface to the bottom of the deposit. The method does not require backfill and therefore relies on the overlying waste rock to cave and fill the mined void. Caving of the overlying waste rock results in surface subsidence above and in the immediate vicinity of the underground deposit. The subsidence will not interfere with open pit mining since initial production from the underground is planned to commence in 2028 when open pit mining is completed. Infrastructure capital and development of the underground project is planned to start at the beginning of 2026. Production from the underground will ramp-up over a seven-year period until full production of 6.2 Mtpa is achieved. The underground portion of the Resource considered in the PEA plan consists of 43.5Mt of Indicated Resources and 90.6Mt of Inferred Resources, which reflects a portion of the full Underground Mineral Resource Tabulation presented below, and have an effective date of February 20, 2020:

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 54,590 51.70 0.61 0.20 0.01 0.04 0.11 0.07
Inferred 113,193 49.09 0.58 0.18 0.01 0.05 0.10 0.07
  1. The Qualified Persons for the Mineral Resource Estimate are Timothy O. Kuhl, RM SME (MTS, formerly with Wood), Douglas Reid, P.Eng. (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 45 x 45 x 24 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.

The SLC mining layout comprises 37 mining levels spaced at vertical intervals of 25 m. Each level is made up of parallel and evenly spaced drill drives from which production drilling and blasting occur. Once blasted, the mineralization is loaded from the drill drives using load-haul-dump machines (“LHDs”) and loaded into trucks for haulage to the surface during the initial ramp-up phase, and later to ore passes feeding an underground crushing station and conveying to surface via an inclined tunnel.

The SLC method employs a top-down mining sequence that enables production to ramp-up quickly once the top of the underground deposit has been accessed. The method also enables high production rates as the mining cycle is simplified by the standardization of development and production and with no backfilling required. The figure below presents a 3-D schematic drawing of the proposed underground mine design.

The flotation testwork gave similar results to those obtained with open pit material; hence, plant performance is not expected to be significantly different for underground material. Underground feed will be treated in Atlantic Nickel’s existing process plant with only minor modifications required, likely to the grinding circuit.

New surface infrastructure associated with the underground mine would include the following:

  • A box cut and portal located to the west of the north end of the open pit.
  • A conveyor portal connecting to the bottom of the existing crusher installation.
  • A temporary construction portal in the west wall at the north end of the open pit on the 82 m RL bench.
  • Multiple ventilation raise surface collars on the western side of the open pit.
  • Ventilation adits on the west wall at the south end of the open pit on the 10 m RL bench.
  • Dewatering pond for storing, settling and recycling water from underground.
  • Electrical reticulation to the portals, adits and services.
  • Shotcrete batch plant

After completion of open pit mining, a new tailings storage facility would be required to store the additional 134 Mt of tailings to be produced from the underground mine over a period of 28 years. Like the existing tailings storage facility, raises will be constructed using a downstream method.

Total capital associated with the underground expansion amounts to US$1.3bn over the 34-year combined operation, with only US$355m of that being spent during the first 5 years of underground development commencing in 2026. The expansion is partially self-funding with cash flows generated from the open pit mining operation.

Expansion Case LOM Financial Valuation and Parameters
Item Unit Value
Commodity Prices and FX1
2020-2025 Nickel Price US$/lb 5.56-7.31
2020-2025 Copper Price US$/lb 2.40-3.00
2020-2025 Cobalt Price US$/lb 14.46-20.00
2020-2025 Palladium Price US$/oz 2,080-1,248
2020-2025 Platinum Price US$/oz 828-1,100
2020-2025 Gold Price US$/oz 1,674-1,400
2020-2025 BRL:USD BRL:US$ 5.0-4.5
LOM Mine Plan Summary
Mine Life Years 34
Measured and Indicated Mineral Resource Mined kt 94,200
Inferred Mineral Resource Mined kt 90,600
Grade NiS: MI, I % 0.41, 0.54
Grade Cu: MI, I % 0.14, 0.17
Grade Co: MI, I % 0.01, 0.02
Grade Pd: MI, I g/t 0.03. 0.04
Grade Pt: MI, I g/t 0.07, 0.09
Grade Au: MI, I g/t 0.05, 0.06
Processing Rate tpd 17,800
LOM Concentrate Production
Concentrate (dry) kt 5,289
Ni % 13.85
Cu % 3.60
Co % 0.25
Pd g/t 1.30
Pt g/t 2.17
Au g/t 1.17
LOM Revenue
Net Smelter Return Revenue US$M 9,717
LOM Operating Cost
Mining $/t processed 11.75
Processing $/t processed 5.17
Site G&A $/t processed 1.59
Treatment, Refining, Penalties $/t processed 5.38
Freight $/t processed 2.92
C1 Cash Operating Cost2 US$/lb NiEq 2.32
AISC Cost3 US$/lb NiEq 3.97
Operating Costs Net of Adjustments US$M -3,674
Royalties US$M -816
LOM Cash Flow
EBITDA Cash US$M 5,227
Net Cash Flow
Taxes US$M -795
Sustaining Capex US$M -1,334
Net Cash Flow US$M 3,100
Post-Tax NPV8% US$M 795

Paulo Castellari, CEO Atlantic Nickel & Appian Brazil commented:
“We are pleased to announce the completion of a technical study which enhances Atlantic Nickel’s status as a producing nickel sulphide mine with a low-cost profile. The team here has always believed in the asset’s potential and today we get to demonstrate and communicate that through robust technical studies.

We are here for the long run, with a high quality and sustainable product that will be an important source of supply for relevant markets, both today and in the future.

The Atlantic Nickel team has been making significant positive contributions to the region and its communities, and we are excited for the opportunity to continue to do so for the next 34 years, potentially longer.”

Adapting to the challenges caused by COVID-19, Atlantic Nickel has been conducting virtual site visits to foster continued interaction and collaboration with external partners and counterparties. Parties interested in learning more can reach out to either Atlantic Nickel at comunicacao@atlanticnickel.com or Appian at info@appiancapitaladvisory.com.

For further information:
Finsbury +44 (0)20 7251 3801
Charles O’Brien, Ruban Yogarajah, Richard Crowley
Appian Capital Advisory +44 (0)20 7004 0951
info@appiancapitaladvisory.com
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$1bn 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 exposure to the high-growth potential of the electric vehicle industry.

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