In September, 2017 Anglo Pacific Group (Anglo Pacific or the Company) entered into a royalty agreement with Brazilian Nickel Ltd (Brazilian Nickel) to acquire an initial 1.25% gross revenue royalty (GRR) over the Piauí nickel-cobalt project (Piauí or the Project) for a US$2m (~£1.5m) cash payment.
Anglo Pacific has the right to acquire up to US$70m in additional royalties to fund in part the construction of a processing plant.
» The initial US$2m consideration will fund in-part further project assessment and/or the expansion of the existingnickel-cobalt demonstration
plant to a nameplate production capacity of 1,000 tonnes of nickel per annum
» Brazilian Nickel intends to ramp-up production to 24,000 tonnes of nickel per annum after a potential expansion of the existing demonstration plant to 1,000 tonnes of nickel per annum, or alternatively Brazilian Nickel may pursue a lower-capex staged development first ramping-up to 10,000 tonnes and then to 24,000 tonnes of nickel per annum
» Upon the achievement of certain Piauí development milestones and Anglo Pacific board approval for eachtranche, the Company has the right to invest up to a total of US$70m (~£52.9m) in additional GRRs withproceeds restricted to funding in-part the construction or expansion of a processing facility:
Under the staged ramp-up development scenario: US$20m for an incremental 2.0% GRR when plans forthe construction of a processing plant with a nameplate capacity of 10,000 tonnes of nickel per annum areimplemented and US$50m for an incremental 2.5% GRR when plans to ramp-up to 24,000 tonnes ofnickel per annum 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
24,000 tonnes of nickel per annum are implemented
» The staged consideration approach allows for flexibility with regards to potential Piauí development scenarios aswell as for the Project to be de- risked prior to Anglo Pacific proceeding with additional tranches
During 2019, the project received its Preliminary Environmental Licence (Licença Prévia) from the Brazilian Piauí State Environmental Agency which confirms government and
community support for the project. The company is focused on securing the remaining finance it needs in order to continue its path towards construction. Should the project come online in accordance with our expectations, and once fully invested, this could become the Group’s second largest source of income.