Anglo Pacific Group PLC (the “Company” or “Anglo Pacific”) (LSE: APF, TSX: APY) is pleased to note the additional capital raise by Brazilian Nickel PLC (“BRN”) today to fund the continued development of the Piauí Nickel project in Brazil.
BRN has announced the completion of a tranched equity financing for gross proceeds of US$24.8m of which US$17.5m will be contributed by Resource Capital Fund VII L.P. (RCF) which sees them join TechMet Limited as a cornerstone BRN shareholder. RCF are a leading natural resource investor and their addition to the shareholder register is, in our opinion, a further validation of the quality of the project.
The combined equity investments from December 2020, in which Anglo Pacific subscribed US$2m, amount to US$52.37 million which will allow BRN to continue to accelerate the development of the Piauí Nickel Project. The latest investment completes both the funding for BRN’s bankable feasibility study (“BFS”) for the Project, and the necessary funding to construct and operate a small-scale production plant with nickel production capacity of up to 1,400 tonnes per annum, thereby creating employment in one of Brazil’s most economically deprived and underdeveloped regions, and delivering high environmental performance and social governance standards.
Anglo Pacific was an early-stage sponsor of this Project, investing US$2m in return for a 1.25% royalty on the Project. Along with this investment the Group obtained the right, but not obligation, to acquire additional royalty rights for a maximum consideration of US$70m which would see the Company’s total royalty entitlement increase to between 4.25% and 5.25%. The Project has the potential to become a significant asset in the Group’s portfolio, with a full-scale operation contributing annual royalty income ranging US$10-15m depending on the nickel price.
Julian Treger, Chief Executive Officer, commented:
“We are incredibly pleased with the progress that BRN has made over the past year in securing financing to complete its BFS and the small scale production plant. This will be a very significant new nickel and cobalt operation supplying the battery space. We believe that this now puts them on a firm trajectory towards initial production.
Although our primary focus has been to acquire income producing assets, we have deployed modest amounts of capital into development opportunities to secure royalties over projects with the potential to become sizable contributors to Anglo Pacific’s portfolio. We are very pleased that our belief in the positive fundamental outlook for nickel market is turning out to have been well founded. Furthermore, the right to acquire up to US$70m in additional royalty interests at a future time when the construction of a full-scale operation is fully funded provides an opportunity to further increase our exposure to this project and the strong outlook for both nickel and cobalt prices. We look forward to following the progress of the project in the coming months.”
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