REG - Metals One PLC - Results of PEA for Finland - Black Schist Project

Metals OneAnnouncement

31/01/2025 07:00

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RNS Number : 3684V  Metals One PLC  31 January 2025

31 January 2025

 

Metals One Plc

("Metals One" or the "Company")

 

Results of PEA for Finland - Black Schist Ni-Cu-Co-Zn Project

 

Application for Strategic Project Status under European Critical Raw Materials
Act in Q1 2025

 

Metals One (AIM: MET1), which is advancing strategic minerals projects in
Finland and Norway, announces the outcome of a Preliminary Economic Assessment
("PEA") for the Finland - Black Schist Ni-Cu-Co-Zn Project (the "Project").
The PEA was undertaken by Wardell Armstrong International ("WAI"), part of
Wardell Armstrong LLP, a long-established, independent British engineering and
environmental consultancy, and provides the Company with an initial assessment
of which deposits may warrant focus as it looks to develop its various Black
Schist projects. The material findings of the PEA are summarised in this
announcement.

 

Summary

 

·    Rautavaara (R1) deposit is considered the key economic driver for now

·   While the PEA applies NPV(8) and NPV(10) calculations, due to the
favourable jurisdiction, WAI deems it appropriate to also consider the
financials at NPV(5)

·   As illustrated by the Upside Case below, Project returns are leveraged
to rising long-term nickel price assumptions

·    Further upside may exist as the Company adds resources to the
modelled 57.1Mt in the PEA

·    Company intends to apply for Strategic Project Status under the
European Critical Raw Materials Act within Q1 2025

 

                  NPV(5)     NPV(5)                                                  NPV(8)      NPV(10)     IRR

                             (Applying 20% commodity price increase - Upside Case)

 Rautavaara (R1)  US$41.04M  US$188.09M                                              US$9.29M    -US$7.92M   9.0%
 Paltamo (P5)     -US$3.86M  US$144.94M                                              -US$32.78M  -US$47.99M  4.7%

 

See Metal Price Inputs below for price assumptions used in the PEA.

 

Jonathan Owen, CEO of Metals One, commented:

 

"The PEA demonstrates that although it was undertaken at a time of weak nickel
prices and inflated input costs, the Project is highly leveraged to rising
commodity prices. Considering demand for battery-grade nickel is forecast to
triple by 2030 and that producing the metal domestically within the EU becomes
an ever more critical goal, we are evidently sitting on valuable assets with
compelling leverage to a rising nickel price. For now, however, capital
availability for nickel projects remains tough.

 

Our next move is to apply to the European Commission for designation of the
Project as "Strategic", as defined by the European Critical Raw Materials Act,
within the first quarter of 2025, before assessing the future work programme."

 

Alastair Clayton, Chairman of Metals One, commented:

 

"The PEA delivers excellent optionality against a realistic background of
depressed nickel pricing and global cost inflation. China-financed Indonesian
nickel over-production has led to a global glut, forcing the shuttering of
many high-cost historical producers in Australia and Canada. We believe our
Finnish projects have the potential to replace this shuttered western
production as the global nickel supply chain rebalances over time, driven by
the growing criticality of locally sourced, ethically mined nickel to support
the energy transition. We continue to assess projects where we can provide
returns for shareholders based on targeted exploration and investment rigour."

 

Introduction

 

The Project includes the Rautavaara ("R1") and Paltamo ("P5") deposits which
are located in the Northern Savonia (Rautavaara) and Kainuu (Paltamo) regions
of eastern Finland. The regional mining and processing centre at Sotkamo lies
between the two project areas approximately 90km north of Rautavaara and 50km
south of Paltamo.

 

The Project lies within the Paleoproterozoic Kainuu Schist Belt, a 200km long
geological formation of economic importance. The Project is believed to belong
to the Talvivaara-style shale-hosted nickel-zinc-copper-cobalt type of
deposits. It is characterised by sulphidic Ni-Zn-Cu-Co deposits hosted by
highly sulphidic-graphitic muds and turbiditic wackes, which have undergone
high-grade metamorphism.

 

Two main targets exist within the Project, R1 at Rautavaara and P5 at Paltamo,
both of which have been drill tested to reveal significant Talvivaara-style
mineralisation. Minimal exploration has been completed outside of these two
prospects, with little work completed across the Project in over a decade
meaning much of the licence can be considered unexplored.

 

The Project is situated adjacent to Europe's largest operating nickel mine,
operated by Terrafame, and has an Inferred Mineral Resource of 57.1 Mt of
Terrafame's type of mineralised material at a grade of 0.18% Ni (105.8kt),
0.09% Cu (51.9kt), 0.01% Co (6.9kt) and 0.35% Zn (276.0kt).

 

Further upside may exist as the Company adds resources to the modelled 57.1Mt
in the PEA.

 

The PEA has been prepared in accordance with Canadian National Instrument
43-101.

 

The figurers quoted as extracted from the PEA are preliminary in nature and
should not be considered a guide to the future value of the Project.

 

Market Studies

 

The product from the Project will be a bulk sulphide concentrate, within which
nickel is the key economic driver. Nickel sulphides, by contrast to nickel
laterites, are generally both easier and cheaper to extract, and are amenable
to bio heap leaching.

 

In 2023, global nickel production was reported to be over 3.3 Mt, an increase
of over 10% from 2022, of which Indonesia and the Philippines account for over
60%. By contrast, negligible amounts of nickel are currently produced in
Europe. Although nickel does not currently qualify as a critical raw material
in the EU, the US Geological Survey added nickel (and zinc) to the critical
minerals list in 2022, meaning that the metal is now considered to be
essential to the economic security of the US. Despite not qualifying for the
EU list, analysis still identified nickel to be of material economic
importance to the EU and, since the start of Q2 2022, Indonesia (the largest
global producer) has banned the export of unprocessed nickel ores to ensure
that ores are processed domestically as opposed to being exported and
processed offshore. Given these relatively recent developments in the nickel
market, producing the metal domestically within the EU becomes an ever more
critical goal.

 

In terms of applications, nickel has a significant amount of end-user sectors,
and it is estimated that there are over 300,000 products and processes that
utilise the metal.

 

Application for Strategic Project Status Under European Critical Raw Materials
Act

 

Demand for battery-grade nickel is forecast to triple by 2030(**). The PEA
highlights the opportunity for the Company's Black Schist Project to make a
meaningful contribution to the security of the EU's supply of this strategic
material. The Company intends to apply to the European Commission for
designation of the Project as "Strategic", as defined by the European Critical
Raw Materials Act, within the first quarter of 2025. Strategic Project Status
provides several key advantages that can significantly aid in the Project's
development and long-term success, including but not limited to: enhanced
access to project financing, including eligibility for funding from EU
programmes; streamlined permitting processes; reducing bureaucratic obstacles;
and priority consideration in national and EU-level planning and support
policies.

 

Economic Analysis

 

The economic analysis uses a Discounted Cash Flow approach on a post-tax,
unleveraged, real-terms basis, to determine the NPV, Internal Rate of Return
("IRR") and payback period, amongst other key financial performance
indicators.

 

The financial analysis has been prepared on the basis of the project with no
consideration of financing scenarios. The cost estimates have been made with
reference to general benchmarks within the industry and using Cost Mine, as
opposed to individual project specific costings.

 

Given its stable economy and other factors pertinent to the mining industry,
Finland is considered an investable country and WAI considers it appropriate
to include in the PEA a discount rate of 5% alongside calculations for 8% and
10% discount rates, as summarised in Table 1.

 

                  NPV(5)     NPV(5)                                                  NPV(8)      NPV(10)     IRR

                             (Applying 20% commodity price increase - Upside Case)

 Rautavaara (R1)  US$41.04M  US$188.09M                                              US$9.29M    -US$7.92M   9.0%
 Paltamo (P5)     -US$3.86M  US$144.94M                                              -US$32.78M  -US$47.99M  4.7%

Table 1: Economic Analysis

 

Metal Price Inputs

 

WAI has used flat (real) pricing in the financial analysis as shown in Table
2. The Ni price has been derived from a three-year trailing average, as
required by NI 43-101 for the primary commodity, which the Company notes is
considerably above the prevailing Ni spot price of approximately US$15,500/t,
whilst Zn, Cu and Co have been based on the London Metal Exchange spot price
at the time of the model's construction.

 

 Nickel  US$/t  21,822
 Zinc    US$/t  3,260
 Copper  US$/t  9,850
 Cobalt  US$/t  24,300

Table 2: Metal Price Inputs

 

The Upside Case assumes a 20% commodity price increase on WAI's price inputs.

 

Sensitivity Analysis - Upside

 

Rautavaara (R1)

 

When a discount rate of 5% is applied to post-tax cash flows, on average, each
10% change in metal prices (and therefore grade and recovery) results in a
US$76.89M change in NPV(5), while each 10% variation in operating costs
results in a US$47.56M change and each 10% variation in capital costs results
in a US$23.64M change.

 

 

Figure 1: Sensitivity Analysis - Rautavaara R1 (NPV(5))

 

Paltamo (P5)

 

On average, when a discount rate of 5% is applied to post-tax cash flows, each
10% change in metal prices (and therefore grade and recovery) results in a
US$79.94M change in NPV(5), while each 10% variation in operating costs
results in a US$53.92M change and each 10% variation in capital costs results
in a US$24.56M change.

Figure 2: Sensitivity Analysis - Paltamo P5 (NPV(5))

 

(**)https://source.benchmarkminerals.com/article/battery-nickel-demand-set-to-triple-by-2030
(https://source.benchmarkminerals.com/article/battery-nickel-demand-set-to-triple-by-2030)

 

 

Enquiries:

 

 Metals One Plc                                                       via Vigo Consulting

 Jonathan Owen, Chief Executive Officer                               +44 (0)20 7390 0234

 Beaumont Cornish Limited (Nominated Adviser)                         +44 (0)20 7628 3396

 James Biddle / Roland Cornish

 www.beaumontcornish.com (http://www.beaumontcornish.com)

 SI Capital Limited (Joint Broker)                                    +44 (0)14 8341 3500

 Nick Emerson

 Capital Plus Partners Limited (Joint Broker)                         +44 (0)20 3821 6169

 Keith Swann

 https://www.capplus.co.uk/ (https://www.capplus.co.uk/)

 Vigo Consulting (Investor Relations)                                 +44 (0)20 7390 0234

 Ben Simons / Kendall Hill / Anna Stacey

 metalsone@vigoconsulting.com (mailto:metalsone@vigoconsulting.com)

 

About Metals One

 

Metals One is developing strategic metals projects in Finland (Black Schist
Project) and Norway (Råna Project). Metals One is aiming to help meet the
significant demand for strategic minerals by defining resources on the
doorstep of Europe's major electric vehicle OEMs and battery manufacturers.
Metals One's Black Schist Project in Finland, totalling 706 km(2) across three
licence areas, has a total Inferred Resource of 57.1 Mt
nickel-copper-cobalt-zinc and is located adjacent to one of Europe's largest
strategic minerals producers, Terrafame. Metals One's fully carried Råna
Project in Norway covers 18.14 km² across three contiguous exploration
licences, with significant opportunity for exploration of the Råna intrusion,
and proven potential for massive sulphide nickel-cobalt-copper mineralisation.

 

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Qualified Person Statement

 

Craig Moulton is an Independent Non-Executive Director of the Company and the
Qualified Person who reviewed and approved the technical disclosures in this
news release. Mr Moulton has over 30 years' experience in the mining industry,
having worked for Rio Tinto, Cliffs and Wood Mackenzie, and is a trained
Geologist and Mineral Economist. Mr Moulton holds a BSc (Hons) in Geology and
a MSc in Mineral Economics and is a qualified person under the AIM Rules. Mr
Moulton consents to the inclusion of the technical information in this release
and context in which it appears.

 

Market Abuse Regulation (MAR) Disclosure

 

The information set out below is provided in accordance with the requirements
of Article 19(3) of the Market Abuse Regulations (EU) No. 596/2014 which forms
part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018
('MAR').

 

Nominated Adviser

 

Beaumont Cornish Limited ("Beaumont Cornish") is the Company's Nominated
Adviser and is authorised and regulated by the FCA. Beaumont Cornish's
responsibilities as the Company's Nominated Adviser, including a
responsibility to advise and guide the Company on its responsibilities under
the AIM Rules for Companies and AIM Rules for Nominated Advisers, are owed
solely to the London Stock Exchange. Beaumont Cornish is not acting for and
will not be responsible to any other persons for providing protections
afforded to customers of Beaumont Cornish nor for advising them in relation to
the proposed arrangements described in this announcement or any matter
referred to in it.

 

Glossary

 

 Co                 Cobalt

 Cu                 Copper

 Graphite           A crystalline form of the element carbon with its atoms arranged in a
                    hexagonal structure

 Inferred Resource  That part of a Mineral Resource for which quantity and grade (or

                    quality) are estimated on the basis of limited geological evidence and
                    sampling. Geological evidence is sufficient to imply but not verify geological
                    grade (or quality) continuity. It is based on exploration, sampling and
                    testing information gathered through appropriate techniques from locations
                    such as outcrops, trenches, pits, workings and drill holes. An inferred
                    Mineral Resource has a lower level of confidence than that applying to an
                    Indicated Mineral Resources and must not be converted to an Ore Reserve. It is
                    reasonably expected that the majority of Inferred Mineral Resources could be
                    upgraded to Indicated Mineral Resources with continued exploration

 km                 Kilometres

 kt                 Thousand tonnes

 Massive sulphide   Metal sulphide ore deposit which consists almost entirely of sulphides

 Mt                 Million tonnes

 m                  Metres

 NPV                Net Present Value

 Ni                 Nickel

 Paleoproterozoic   Spans the time period from 2,500 to 1,600 million years ago (2.5-1.6 Ga), is
                    the first of the three subdivisions (eras) of the Proterozoic Eon

 Schist             A medium-grade metamorphic rock formed from mudstone or shale

 Shale              A fine-grained, clastic sedimentary rock formed from mud

 Sulphidic          Relating to or containing sulphide

 t                  Tonnes

 Turbidite          The geologic deposit of a turbidity current, which is a type of amalgamation
                    of fluidal and sediment gravity flow responsible for distributing vast amounts
                    of clastic sediment into the deep ocean

 Wacke              A sandstone of which the mud matrix in which the grains are embedded amounts
                    to between 15% and 75% of the mass

 Zn                 Zinc

 

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