COMPANY EXPOSURE

Nickel Producer

COMPANY LISTING

Consolidated Nickel Mines

STOCK CODE

Private

COMPANY OVERVIEW

Consolidated Nickel Mines (CNM) is a private nickel developer focused on the Munali Nickel Project 70km South West of Lusaka, Zambia.

Operations at Munali ceased in November 2011 due to low nickel prices and poor operational performance by previous owners, Jinchuan. CNM acquired the rights to use all of Munali’s mine resources and infrastructure through a leasing arrangement from the previous owners.

CNM believe the company is well positioned to develop the mine at a lower cost level than the previous owners and is well positioned to produce a Nickel Sulphate NiSO4 product that will supply the developing battery market.

COMPANY STRATEGY

CNM’s strategy is to acquire underperforming base metal assets & apply modern mining methods & novel applications of metallurgy to improve the economic performance of mines that have had significant capital invested.

CNM have recently raised US$20m and is seeking a further US$20m through equity and debt instruments to commence mining at Munali.

MINING IN ZAMBIA

Country Background

  • Zambia has a proven, democratic tradition of transfer of power
  • Mining has been economic and social backbone of Zambia
  • More than 80 years of established mining operations
  • Mining is a significant contributor to employment (Direct and Indirect)
  • Highly trained and well educated mining workforce

Infrastructure

  • Well-established transport and communications network
  • Further capital development under way (railway, power stations)

Taxes

  • 5% Mineral Royalty Tax for nickel operations
  • Sliding scale for copper 4-6% depending on copper price
  • 30% Corporation Tax
  • Ministry (Mines and Finance)
MUNALI MINE

ROBUST PROJECT RETURNS

Short-run to cash-flow positive driven by competitive operating costs and low start-up capex requirement

  • Targeting low cost 30-40kt/pa Ni concentrate over >7yr LoM
  • Saleable products: 12% Ni Conc: 4,500tpa Ni, 200tpa Cu, 200tpa Co, 6,400oz PGM 25% Cu Conc : 500tpa Cu, 6,300oz PGM
  • Forecast Opex costs of US$ 7,000/t nickel produced
  • Estimated US$40m to commence start-up targeting Q2 2017
  • Targeted annual revenue of US$65.6m (Ni price US$18,000/t)
  • NPV8% – US$62.2m and IRR – 62.7% (7 yr LoM)
  • NPV8% – US$143.8m and IRR – 90.3% (10 yr LoM)
  • Potential to rapidly double production to 8ktpa
  • Free to sell nickel concentrate off-take contract
RE-START STRATEGY AND STRATEGIC RELATIONSHIPS

Current Position

  • Ongoing care and maintenance costs at current staffing level $5m per annum
  • Project cash positive at current nickel prices
  • Decision made to finance re-start at $40m capital

Financing options

  • Mining fleet financing in advanced discussion
  • Light vehicle financing in advanced discussion
  • Offtake finance $20m under discussion with traders
  • Offtake finance and nickel sulphate project finance under discussion
  • Equity finance – private
Consolidated Nickel Mines Ltd

CONTACT DETAILS

WEBSITE: www.cnmplc.co.uk

EMAIL: info@cnmplc.co.uk

PHONE: +44 20 3326 1601