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Energy, Mining & Resources

Atlantic Nickel delivers record operational and financial performance in 2021


Atlantic Nickel (“Atlantic Nickel” or the “Company”) and Appian Capital Advisory LLP (“Appian”) are pleased to announce record operating and financial performance in 2021 at the Company’s Santa Rita nickel sulphide mine (“Santa Rita” or the “Mine”) located in Bahia, Brazil.

Santa Rita is one of the very few long-life nickel sulphide mines in operation globally, boasting 34 years of mine life producing between 20-35 ktpa NiEq contained in concentrate. Based on an NI 43-101 technical report completed in 2021, the operation mines an 8-year open pit with an NPV8 of US$570m, then transitions to 27-years of underground sublevel caving operations with an NPV8 of US$812m. Capital expenditure over the first 5 years of the underground is US$332m and expected to be fully funded out of operating cash flow.

Appian also owns Mineracao Vale Verde (“MVV”) and its Serrote copper gold mine in Alagoas, Brazil (“Serrote”), which completed construction ahead of schedule and under budget and achieved first production in 2021. The MVV operational update will be covered in a separate release.

Atlantic Nickel 2021 performance highlights

– Best in class safety performance with an LTIFR of 0.20 over the last 12 months
– Atlantic Nickel posted US$127m of EBITDA on US$289m of revenue
– Santa Rita produced 107kdmt of nickel concentrate containing 14.5kt of nickel, 4.7kt of copper and 266t of cobalt and gold, platinum and palladium by-products
– First quartile C1 cost performance of US$3.45/lb Ni with an AISC of US$5.11/lb Ni
– All third-party debt has now been repaid in full, leaving the Company with a clean balance sheet and well positioned for growth

Safety and the environment

Santa Rita continues to operate as one of the safest operations globally with a Lost Time Injury Frequency Rate (“LTIFR”) of 0.20 achieved over the last 12 months [1]. The Company’s Visible Felt Leadership (“VFL”) program resulted in over ~2,900 incident prevention safety measures, helping to convey safety as a top priority of Atlantic Nickel’s management. Over 130,000 man-hours of safety, health and environmental training were conducted in 2021 which have contributed to the strong safety culture and awareness on site at Santa Rita.

To date, the operation has successfully managed the challenges caused by COVID-19. 100% of Atlantic Nickel site employees have received both first and second doses of COVID-19 vaccinations, and distribution of booster shots has begun. Preventative measures including workforce testing, training, tracing systems, continuous communication systems and contingency planning continue to be in effect as well. As a result, active cases at site are low and the resiliency of the business remains high.

From an environmental standpoint, Santa Rita maintains its position as a top decile nickel producer in terms of minimizing its carbon footprint. With 85% of Brazil’s power generation from renewable or carbon neutral sources, the operation is projected to produce just 32.5ktpa of Scope 1 carbon emissions and 5.4ktpa of Scope 2 carbon emissions over the open pit life of mine, resulting in a CO2 intensity of 1.77/t NiEq. Efforts to conserve the Atlantic Forest local biome have progressed over 2021 as the operation revegetated 66 hectares of land with 48,872 seedlings.

Operational update

Following the ramp-up of operations over 2020, Santa Rita achieved strong operational performance in 2021, its first full year of production:
– 6,307 kt of ore was mined from the open pit along with 17,150 kt of waste resulting in a strip ratio of 2.72x
– 6,133 kt of ore was fed to the mill at average feed grades of 0.31% NiS and 0.10% Cu
– 107 kdmt of concentrate was produced at average concentrate grades of 13.6% Ni and 4.4% Cu with cobalt, gold, palladium and platinum by-products

The first quartile C1 cost performance of US$3.45/lb Ni, net of by-product credits is driven by:
– Mining costs of US$2.57/t mined
– Processing costs of US$5.18/t processed
– Site general and administrative costs of US$1.57/t processed
– Downstream charges and transportation costs of US$1.71/lb payable Ni
– By-product credits of US$1.99/lb payable Ni

All-in sustaining cost performance of US$5.11/lb Ni, net of by-product credits is also driven by:
– Corporate general and administrative costs of US$1.12/t processed
– Royalties of US$0.52/lb payable Ni
– Sustaining capital expenditure of US$0.88/lb payable Ni

Geotechnical update

On November 9, a crack propagated across a portion of the pit wall in the vicinity of phase 5. The resulting geotechnical instability was localized in scope and directly affected <1% of the pit's total surface area. These types of events occur in the normal course of mining operations and can be adequately managed. As a precaution, mining was suspended in the affected area and constant 24/7 radar monitoring established. No safety related incidents occurred related to the event or otherwise. Overall impact to mining activity was limited. By November 13th, daily material mined exceeded pre-event levels. For further context, an average of 1,946 kt of material was mined per month from January to October of 2021. In comparison, 1,985 kt and 2,003 kt of material was mined in November and December, respectively. The stability of both the affected area as well as the design of a pushback to remediate it has since been evaluated by third-party geotechnical experts. The pushback mines 4.7 Mt of waste material, 2.6 Mt of which falls outside of the final design pit limit. Aside from impacts to the mine schedule, which is normally reviewed on an annual basis, the 2.6 Mt of waste will add to the total material to be mined during the remaining open pit mine life. Prior to the event, over 140 Mt of open pit material remained to be mined, and so the additional material equates to a less than 2% increase. With the underground extension, the increase is less than 1% of total material mined. There is no expected impact from the event on the life of mine open pit Reserve. Mining of the pushback commenced in December and is expected to complete in early H2 2022. Financial update Over 2021, 11 shipments of concentrate were made to the Company’s offtake partners resulting in revenue of US$289m with average realized commodity prices of US$8.75/lb Ni and US$4.31/lb Cu. EBITDA and capital expenditure for the period was US$127m and US$27m, respectively. As a result of its operational and financial performance, the Company's financial position is now the strongest it's ever been. The Company ended the year with cash on balance sheet of US$50m and has since fully repaid the loan from Bradesco, becoming debt free. Plans for 2022 In 2022, the operation is expected to maintain its current production levels, processing 6.4 Mtpa of ore and producing c.19 kt NiEq contained in concentrate. Atlantic Nickel will continue the development of the underground expansion at Santa Rita, with activities that include: - Step out and infill drilling of the underground Resource - Additional geotechnical drilling and studies for sublevel caving - Additional metallurgical drilling and testwork - Completion of various trade-off studies - Delivery of a Prefeasibility Study in H1 2023 Additionally, the Company aims to advance its regional exploration with its primary focus being the drill out and declaration of a resource at Palestina, the most advanced open pit exploration target. Palestina sits approximately 25 km from Santa Rita with easy access to Santa Rita's existing processing infrastructure. Paulo Castellari, CEO of Appian Capital Brazil commented: "2021 was an outstanding year for our operations at Santa Rita. I am truly impressed with the efforts of our employees and local communities and their ability to navigate another difficult year fraught with COVID-related challenges. "Atlantic Nickel has achieved record revenue and EBITDA, first quartile C1 cost performance and now boasts its most resilient balance sheet ever, all while maintaining a best-in-class safety track record with an LTIFR of 0.20. These strong foundations position us to take advantage of the high growth potential at Santa Rita and in the region, expanding upon what is already one of the largest nickel sulphide operations in the world. "We have more to improve upon and accomplish in 2022, and I have every confidence in our team's ability to deliver another record year." 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 to achieve their development targets, with a global operating portfolio overseeing nearly 5,000 employees. Appian has a global team of 54 experienced professionals with offices in London, Toronto, Lima, Belo Horizonte, Montreal and Sydney. For more information, please visit, or find us on LinkedIn or Instagram 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 an operating open pit mine that is planning to transition to underground mining to extend its mine life to 34 years. The mine benefits from US$1bn of prior investment and has a plant 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 at 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 so has exposure to the high-growth potential of the electric vehicle industry. [1] The industry average LTIFR was 1.53 in 2020, as reported by Global Data Dual Source: Atlantic Nickel and Appian Capital Advisory LLP

Source: Atlantic Nickel and Appian Capital Advisory LLP