What we own

The Group has a royalty over the Piauí nickel project in Brazil owned by Brazilian Nickel PLC (‘BRN’), a privately held UK company. Anglo Pacific contributed an initial investment of US$2.0m for a 1.25% GRR on the project in 2017 and has, at its election, the right to increase this investment by a further US$70.0m for a total gross royalty of 4.25% upon the satisfaction of certain developmental milestones.

The transaction is very much in keeping with the Group’s strategy of investing in materials closely aligned to 21st century technological developments around electric vehicles and mass storage infrastructure.

Performance

The highlight of the year for BRN was the completion of an equity investment funding totalling US$27.5m in December 2020, including a US$25.0m investment from BRN’s funding partner TechMet Limited, which in turn was funded by the U.S. International Development Finance Corporation (‘DFC’), and a US$2.0m (£1.8m) share subscription into BRN from Anglo Pacific.

BRN has allocated the funds towards accelerating the project’s development through the completion of a definitive feasibility study (‘DFS’) for the full-scale project, as well as expanding its existing demonstration plant to provide early, small scale production from the PNP1000 project, which is BRN’s initial, small scale commercial production project.

The involvement of the DFC is a strong validation of the Piauí project and its technology, and a recognition of the robustness of Anglo Pacific’s original royalty investment thesis. Anglo Pacific’s further equity investment also underlines our confidence in the growth potential of the project.

Outlook

BRN expects the DFS engineering work to take approximately 12 months and is aiming to publish the final study in Q1 2022. In addition, BRN is targeting operational start-up of the PNP1000 in Q1 2022 with first nickel and cobalt hydroxide products produced in Q2 next year.

Under Anglo Pacific’s existing 1.25% GRR, the US$2m investment is expected to contribute US$4.3m per annum once fully ramped up, and US$67.2m over the life of mine assuming a long term nickel price of 17,848 per tonne.

If Anglo Pacific decides to exercise its upsize option by investing a further US$70.0m, the royalty on the project is expected to contribute US$14.5m per annum once fully ramped up, and US$228.0m over the life of mine assuming a long-term nickel price of 17,848 per tonne.