Jervois Quarterly Activities Report to 30 June 2022

2022-07-22 20:22:00 By : Ms. Aily wu

Q2 2022 revenue US$91.2 million (1H 2022: US$196.3 million)  

Q2 2022 EBITDA US$11.9 million (1H 2022: US$26.8 million)  

BFS commenced for expansion of Kokkola refinery  

On track for commissioning late Q3 2022; sustainable production at nameplate capacity expected in February 2023  

Additional US$3.6 million committed (total US$4.8 million in 2022) to infill and expansion drilling, with a total of 46,000 feet to be drilled in 2022  

São Miguel Paulista (“SMP”) Nickel and Cobalt Refinery, Brazil:

Acquisition of SMP closed on 15 July with a cash payment of R$47.5 million; remaining R$62.5 million cash payment of R$125.0 million total purchase price due June 2023  

Detailed execution planning for expected restart underway  

Jervois ended June 2022 quarter with US$57.6 million in unrestricted and unescrowed cash; US$114.9 million including the remaining ICO Senior Bond escrow and debt service accounts (remaining proceeds released from escrow on 20 July 2022)  

Mercuria standby working capital facility limit increased from US$75 million to US$150.0 million in June, providing additional financial flexibility  

At end June total drawn debt was US$150 million; as of this release date and full drawdown of ICO Senior Bond in July, current net debt of US$90 million 1  

Quarterly revenue:         US$91.2 million        (Q1 2022: US$105.1 million)  

Sales volume:                1,139 metric tonnes        (Q1 2022: 1,446 metric tonnes)  

Production volume:        1,145 metric tonnes        (Q1 2022: 1,275 metric tonnes)  

Jervois Finland achieved Q2 2022 revenue of US$91.2 million, generated via quarterly cobalt sales volumes of 1,139 metric tonnes, down on the previous quarter. Volatility in both end-user demand and cobalt feed supply impacted cobalt prices and revenue. Cobalt prices (Metal Bulletin (“ MB ”) Fastmarkets Standard Grade (“ SG ”) Low) trended down from nearly US$40.00/lb at the end of Q1 2022 to US$26.95/lb as at 20 July 2022. The MB Fastmarkets SG Low cobalt hydroxide payable indicator also trended downwards, sitting at 63.0% at the same date.

Quarterly production was 1,145 metric tonnes, a decrease of ~11% on the previous quarter. This reduction was in part due to the planned annual maintenance shutdown in June, with also reduced reliability experienced in global supply chains that impacted cobalt feed availability early in the quarter.

Due to a catch up of raw materials supply late in the quarter, along with weakened global market demand for cobalt largely associated with Covid-19 lockdowns in China, total inventory volumes increased across the quarter. Jervois expects cobalt inventory levels to remain temporarily above levels typically targeted, to ensure profitability is optimised and risk is managed relative to ongoing supply chain challenges. Working capital is expected to normalise during the second half of 2022, with management focussed on balancing supply chain risk, commercial objectives, and liquidity management.

Jervois’ outlook for key market segments is summarised below.

Short–term battery demand has softened, driven by Covid shutdowns in China.  

In the current falling price environment there is very little spot demand for battery chemicals as customers wait for prices to stabilise.  

Despite short term volatility and supply chain destocking initiated by China, the medium- and longer-term trend of significant demand growth remains intact, with significant OEM (automaker) interest in expanding delivery commitments over time.  

Catalysts: consumption at lower rates than previous, but stabilising. Jervois continues to see new opportunities, specifically in North America later this year.  

Chemicals: consumption in key applications such as copper electrowinning, rubber chemicals, animal feed, plating and specialty chemicals remains stable, although regional demand dynamics vary. Supply chain adjustments activity has resulted in delayed shipments. In Asian markets, specifically Japan and Korea, premiums are lower due to increased competition associated with the previously mentioned Covid lockdowns in China triggering mass destocking of Chinese industry and cobalt trade.  

Ceramics: demand for pigments production is slowing as producers mull the impact of significant energy cost increases and the falling cobalt price; pigment applications using cobalt are typically more elastic in nature, particularly relative to price inelasticity of other cobalt consuming industries. Cobalt usage in the smaller glass application segment remains stable.  

Outlook for 2022 remains stable, but more customers are expressing concern regarding the last four months of the year as inflation rates increase and the possibility of a recession grows  

All markets remain stable except automotive which is variable dependent upon customer and geography; the automotive sector is largely expected to remain this way until semiconductor and parts availability improves.  

Aerospace continues to incrementally improve, as outside of China the rest of the world and associated movement of persons and goods normalises post Covid.  

Jervois Finland achieved Q2 2022 revenue of US$91.2 million. The Q2 2022 adjusted EBITDA of US$11.9 million compared to US$14.9 million in the prior quarter.  

Figure 1: Jervois Finland Financial Metrics and Market Price Indicators

As a result of lower cobalt prices and sales volumes, Jervois has revised EBITDA full year 2022 guidance to US$35.0 million to US$40.0 million based on a US$27.50/lb forecast cobalt price assumption for the remainder of the year, from US$50 million to US$55 million which was based on a US$39.75/lb forecast cobalt price assumption at the end of Q1 2022.

Table 1: Updated 2022 EBITDA guidance for Jervois Finland.

2H 2022 Cobalt price (Metal Bulletin Fastmarkets Standard Grade) – US$/lb

CY2022 sales volumes guidance – tonnes

CY2022 EBITDA guidance – US$M

Key factors that underpin the guidance update are as follows:

Guidance is based on actual cobalt price (MB Fastmarkets SG Low) of US$36.70/lb for 1H 2022, and a forecast price of US$27.50/lb price the second half of the year.  The spot MB Fastmarkets SG Low price on 20 July 2022 was US$26.95/lb.  

Lower sales guidance (previously 5,750 to 6,000 tonnes) principally due to weaker end use demand in key end use segments due to the factors detailed previously within the Jervois Finland cobalt market update.  

Expected inventory profile for 2022 drives higher than average feed cost realisation in the profit and loss account in second half (lower than average in first half).  

Recent declines in market cobalt hydroxide expected to take time to translate into cost and EBITDA benefits (new purchases recorded in inventory).  

Guidance assumes constant prices for 2H 2022 – price volatility in the period will impact actual EBITDA outcome.  

In May, Jervois announced the commencement of a Bankable Feasibility Study (“ BFS ”) to assess the expansion of its production of refined cobalt to at least 6,000 metric tonnes of additional annual cobalt refining capacity at Kokkola Industrial Park, Finland. Current finished product capacity is 11,000 metric tonnes per annum of contained cobalt, significantly higher than the refining tolling capacity available to Jervois at Umicore’s refinery.

An expansion of refining capacity is expected to be available in conjunction with forecast increased cobalt demand in the second half of this decade, largely associated with rising electric vehicle penetration.

The expansion advances the Company’s strategy to become a globally significant supplier of speciality chemicals and advanced manufactured cobalt products into battery and other industries.

Initial commercial discussions with both final product customers and refinery feed suppliers (including recyclers) are underway.

Expansion timing will be determined in conjunction with key customers and will not require any near-term material financial investment for Jervois. Technical partner selection processes in Finland are underway, covering key workstreams such as flowsheet piloting, process engineering and environmental and other permitting.

Idaho Cobalt Operations (“ICO”), United States  

In June, Jervois announced it expected to commence commissioning the plant at ICO in September 2022 with first ore through the mill in October 2022 and sustainable, full rate ore processing forecast by February 2023.

With detailed engineering, procurement, and commitments all more than 90% complete, Jervois revised final forecast capital expenditure to bring ICO into production to US$107.5 million (from US$99.1 million), an increase of ~7.5%. Project construction experienced cost pressures due to the significant United States inflationary environment, compounded in recent months due to contractor shortages and poor weather conditions across May and June. Weather-related delays have affected site installation for the accommodation camp, which is now expected to be operable in August.

In July, ICO completed the second and final draw down of the US$100.0 million Senior Secured Bonds (“ Bonds ”). The second draw down, of US$51 million, follows the July 2022 visit to site by RPM Global, engaged in its capacity as Independent Engineer on behalf of the Bondholders. RPM Global submitted an affirmed Cost to Complete test to the Bonds trustee, confirming ICO is fully funded to completion.

ICO Construction and Mine Development Progress

As of June, mine development continued at ~27 feet per day. Planned increases to underground working faces, improved water management and road conditions, as well as additional personnel and greater utilisation of existing and future mining equipment on site are expected to continue to improve mine development productivity. Jervois and its mining contractor, Small Mine Development, remain confident in the revised mining production targets that underpin the capital cost update.

The SAG mill, ball mill and crusher are each in place, and work continues with facilities construction and equipment placement.

An official opening ceremony is scheduled at site for 7 October 2022 with expected participation of United States political leadership and Australian government delegates.

At end June, Jervois had spent US$66.9 million of the total capital expenditure budget. Capital expenditure in Q2 2022 was US$25.6 million.

The previously announced initial US$1.2 million infill programme, commenced in Q1 2022, is set to be complete in August this year. Infill drilling rates over 200 feet per day are being achieved as part of a 19,000 feet underground campaign to decrease hole space aiming to enhance ore body knowledge and de-risk early mining.

In June, Jervois approved an additional US$3.6 million for drilling to complete additional infill and first expansion drilling from both surface and underground platforms to further define and expand its RAM deposit within ICO. This will take total planned drilling footage in 2022 to 46,000 feet.

Both drilling campaigns will improve ICO’s resource model and will be used to develop a production block model for both short- and medium-term mining operations and will target expansion down dip of the currently defined and known deposit. The RAM deposit remains open at depth and along strike, and Jervois has confidence that there exists a strong potential of both resource and reserve expansion. Consistent with this expectation, planning is underway in relation to Jervois’ neighbouring Sunshine deposit and historical mineral resource, with preparations for a 2023 summer drill programme well underway. The historical Sunshine cobalt resource is located a short traverse to the ICO mill and concentrator currently under construction.

ICO is a key asset in delivering Jervois’ strategy to become a leading independent cobalt and nickel company providing metals and minerals for the world’s energy transition through a western supply chain. When commissioned in Q3 2022, ICO will be the United States’ only domestic mine supply of cobalt, a critical mineral used in applications across industry, defence, energy, and electric vehicles.

São Miguel Paulista (“SMP”) Nickel and Cobalt Refinery, Brazil

In July, Jervois completed the acquisition from Companhia Brasileira de Alumínio (“ CBA ”) of 100% of the São Miguel Paulista nickel cobalt refinery (“ SMP ”) in São Paulo, Brazil. SMP is Latin America’s only electrolytic class 1 nickel and cobalt refinery, and operated successfully for over 30 years prior to being placed on care and maintenance by CBA when its vertically integrated mine was also closed due to low metal prices.

Total consideration to be paid for the acquisition is R$125.0 million in cash. Jervois paid the initial R$15.0 million payment in late 2020 when the acquisition was publicly announced and a further R$47.5 million on closing in accordance with the previously announced terms of the purchase agreement. The remaining R$62.5 million is to be paid on the earlier to occur of commencement of commercial production at SMP and June 2023, per the purchase agreement (which Jervois expects to be June 2023 based on SMP’s current restart schedule).

A Jervois technical and commercial team is currently working onsite at SMP undertaking detailed planning for the expected restart.

In April, Jervois released a BFS for Stage 1 of the SMP restart to process mixed nickel hydroxide (“ MHP ”) and cobalt hydroxide through to metal.

Jervois forecasts to produce 10,000 metric tonnes per annum (“ mtpa ”) and 2,000 mtpa of refined nickel and cobalt metal cathode respectively in Stage 1, with Net Present Value (“ NPV ”) of US$228 million and US$141 million at an 8% (real) discount rate on a pre-tax and post-tax basis respectively; nominal Internal Rate of Return (“ IRR ”) of 47% (pre-tax) and 35% (post-tax). 3

The supplemental Stage 1 BFS, including POX for sulphide concentrates, is due at the end Q3 2022. Engineering is currently focused on debottlenecking, accelerating the restart and enhancing nickel through-put capacity associated with Stage 1. Jervois is targeting a return to the full 25,000mtpa refined nickel production, but not at the expense of accelerated restart timing, risk optimisation and a staged, capital efficient approach.

Nico Young Nickel-Cobalt Project, New South Wales, Australia

Jervois’s 100%-owned Nico Young nickel and cobalt project envisages heap leaching nickel and cobalt laterite ore to produce either an intermediate MHP or refining through to battery grade nickel sulphate and cobalt in refined sulphide.  

Planning for Jervois’s drilling campaign at Nico Young is well underway, with an initial focus on converting inferred resources into the indicated category.

Jervois ended the June 2022 quarter with US$57.6 million in cash (excluding restricted cash associated with the US$100 million ICO Senior Secured Bond).  The US$51 million in the Escrow Account (restricted cash) was subsequently released on 20 July 2022 once requisite conditions were met.

In June, Jervois announced its subsidiaries, Jervois Suomi (Holding) Oy and Jervois Finland Oy, increased the secured loan facility (the “ Facility ”) with Mercuria Energy Trading SA, a wholly-owned subsidiary of Mercuria Energy Group Limited, by US$75 million to US$150 million.

Key terms of the Facility remain consistent with Jervois’ announcement to the market on 29

Jervois elected to draw US$25.0 million of this additional facility in June, taking the total balance out to US$100.0 million. Up to US$50.0 million is permitted to be transferred out of the Jervois Finland group of companies for other general purposes in the Jervois group including, for example, funding of the Group’s development activities in the United States and Brazil.

At June period end total debt was US$150 million; as of this release date, it has increased to US$200 million associated with full drawdown of the ICO Senior Secured Bond. Cash (all unrestricted) on hand had also increased to US$110 million associated with the final drawdown of the ICO Senior Secured Bond, leading to net debt of US$90 million.

At its Annual General Meeting held on 6 May 2022, all resolutions passed via poll.

Management hosted investor and equity analyst visits at its ICO and Jervois Finland sites during the quarter as well as participating in Canaccord Genuity’s virtual Cobalt Conference and Morgan Stanley Australia’s Battery Materials & Clean Tech Investor Day, both held in June.

In August, Jervois’ Chief Executive Officer, Mr. Bryce Crocker, will present at the Diggers & Dealers Mining Forum in Kalgoorlie, Australia.

Environmental, Social, Governance and Compliance

In May, Jervois announced it had awarded US$0.15 million to three restoration projects as part of the Upper Salmon Conservation Action Program (“ USCAP ”), created in partnership with the Idaho Conservation League (“ ICL ”). Recipients were:

The Idaho Department of Fish and Game in collaboration with Salmon-Challis National Forest, US$0.08 million, to remove two problematic culverts blocking fish access to an important tributary of the Salmon River, which will allow endangered fish species back into a 10-mile section of prime river habitat.  

White Clouds Preserve, US$0.06 million, to expand ongoing riparian restoration work along the East Fork of the Salmon River, an important habitat for ESA-listed Chinook salmon, steelhead and bull trout.  

Western Rivers Conservancy, US$0.02 million, to assist with the acquisition of a key parcel of land along Panther Creek, a major tributary of the Salmon River.  

The USCAP supports protection and restoration of fish and wildlife habitats, including water quality and biodiversity within the Upper Salmon River basin. Jervois will contribute US$0.15 million annually to USCAP throughout the operational life of ICO.

Following Russia’s invasion of Ukraine, Jervois commenced a dollar-for-dollar matching funds programme with its employees to support United Kingdom charity The HALO Trust (“ HALO ”; www.halotrust.org ). HALO is internationally respected and renowned as the oldest and largest humanitarian landmine clearance organisation in the world, and has been entrenched in Eastern Ukraine since 2016.  HALO’s 400+ personnel based in Ukraine are trained paramedics, many of whom have been providing medical treatment, supporting evacuations, and providing emergency assistance under dangerous conditions. HALO has a central role in in enabling safe delivery of humanitarian aid and passage of aid workers, evacuees and returnees by assessing explosives risks and clearing munitions along transport corridors and among affected communities.

Jervois and its matched employees’ donations are ringfenced to Ukraine, with US$0.1 million made during the quarter.

During the quarter, Jervois established a Diversity and Inclusion Working Group which will develop a roadmap of strategies and actions to support an inclusive culture and diverse workplace. This in line with Jervois’ core values and principles and aims to bring out the best within our workforce, create a pipeline for promotion from within and conditions to attract talent from outside while more broadly yielding enhanced productivity, innovation, decision-making and motivation.

During the quarter, Jervois participated in the Cobalt Institute Annual Cobalt Conference in Zurich, Switzerland. Key outcomes included training to enhance the company’s capacity to meet the requirements of EU legislation concerning human rights and environmental justice expectations of companies working within or with supply chain links to EU-based companies.

Also during the quarter, Jervois joined the United States’ Critical Materials Initiative and the National Mining Association.

In June, Jervois took part in a panel discussion at the prestigious SelectUSA Investment Summit in Washington, DC., with over 3,600 participants from more than 70 countries. Dr. Jennifer Hinton, Jervois’ Group Manager – ESG, shared insights into Jervois’ experience operating in Salmon, Idaho, in a panel moderated by Ms. Alejandra Castillo, Assistant Secretary of Commerce for Economic Development.  

In June, Ms. Alicia Brown joined as Jervois’ Group Manager – External Affairs at the Company’s corporate office in Melbourne, Australia.

Ms. Brown has more than 25 years of experience, including three years with the Australian Government Department of Defence in Canberra, and 12 years in leadership roles at global mining company MMG Ltd (“ MMG ”), where she was responsible for leading acquisition and divestment transactions, including management of all key stakeholder relationships and associated regulatory approvals. Prior to her role leading mergers and acquisitions projects, Ms. Brown spearheaded strategy and country and political analysis for MMG and its predecessor companies in Australia.

In her role as Group Manager – External Affairs, Ms. Brown will lead global co-ordination of government relations for Jervois, maximising effectiveness and alignment of activities to group strategy and management of key relationships. The role also provides Jervois with additional leadership support for the evaluation of future acquisition opportunities or other corporate transactions as circumstances require.

No material cash expenditure on exploration and development was incurred during the quarter. Activities at ICO are now classified as Assets Under Construction and incurred cash expenditure of US$25.6 million in the quarter.

During the quarter, US$nil was paid to Non-Executive Directors and US$0.1 million was paid to the CEO (Executive Director).

Jervois’ non-core assets are summarised on the Company’s website.

On 6 June 2019, the ASX granted a waiver to Jervois in respect of extending the period to 8 November 2023 in which it may issue new Jervois shares to the eCobalt option holders as part of the eCobalt transaction.  

As at 30 June 2022, the following Jervois shares were issued in the quarter on exercise of eCobalt options and the following eCobalt options remain outstanding:

Jervois shares issued in the quarter on exercise of eCobalt options:

eCobalt options expired in the quarter:

eCobalt options exercisable until 28 June 2023 at C$0.61 each

eCobalt options exercisable until 1 October 2023 at C$0.53 each

The number of options represent the number of Jervois shares that will be issued on exercise.  The exercise price represents the price to be paid for the Jervois shares when issued.  

By Order of the Board

For further information, please contact:

nathan.ryan@nwrcommunications.com.au

BASIS OF PREPARATION OF FINANCIAL INFORMATION

Historical financial information for Jervois Finland prior to acquisition by Jervois Global Limited on 1 September 2022 is based on unaudited financial statements that have been prepared in accordance with US GAAP and accounting principles applied under its ownership by Freeport McMoRan Inc. Financial information presented for the period prior to acquisition by Jervois Global on 1 September 2021 is presented on a proforma basis for illustrative purposes only.

Financial information presented for periods after acquisition on 1 September 2021 is prepared under Jervois group accounting policies, which conform with Australian Accounting Standards (“ AASBs ”) and International Financial Reporting Standards (“ IFRS ”). The Jervois Finland financial results for the period post-acquisition are consolidated into the Jervois Global consolidated financial statements.  Information presented is unaudited.

EBITDA for historical periods is presented as net income after adding back tax, interest, depreciation and extraordinary items and is a non-IFRS/non-GAAP measure.

The Jervois Finland 2022 guidance consists of actual results for January to June and forecast results for July to December. The forecast period includes an assumption of a forecast quoted cobalt price of US$27.50/lb. Other forecast assumptions, including production, sales plans, costs and exchange rates are based on Jervois’ internal estimates.

Adjusted EBITDA represents EBITDA attributable to Jervois, adjusted to exclude items which do not reflect the underlying performance of the company’s operations. Exclusions from adjusted EBITDA are items that require exclusion in order to maximise insight and consistency on the financial performance of the company’s operations.  Exclusions include gains/losses on disposals, impairment charges (or reversals), certain derivative items, and one-off costs related post-acquisition integration. A reconciliation of EBITDA to Adjusted EBITDA for Jervois Finland is included in the Investor Presentation dated 22 July 2022.

This news release may contain certain “Forward-Looking Statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities laws. When used in this news release, the words “anticipate”, “believe”, “estimate”, “expect”, “target, “plan”, “forecast”, “may”, “schedule” and other similar words or expressions identify forward-looking statements or information. These forward-looking statements or information may relate to future EBITDA for the group, operations at Jervois Finland, construction work to be undertaken at ICO, timing of production at ICO, preparation of studies on the SMP refinery, timing of restart of SMP refinery, utilisation of the working capital facility and the reliability of third party information, and certain other factors or information. Such statements represent the Company’s current views with respect to future events and are necessarily based upon a number of assumptions and estimates that, while considered reasonable by the Company, are inherently subject to significant business, economic, competitive, political and social risks, contingencies and uncertainties. Many factors, both known and unknown, could cause results, performance or achievements to be materially different from the results, performance or achievements that are or may be expressed or implied by such forward-looking statements. The Company does not intend, and does not assume any obligation, to update these forward-looking statements or information to reflect changes in assumptions or changes in circumstances or any other events affections such statements and information other than as required by applicable laws, rules and regulations.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Idaho Cobalt Operations – 100% Interest owned

Mining exploration entity or oil and gas exploration entity quarterly cash flow report

Consolidated statement of cash flows

Cash flows from operating activities

(e) administration and corporate costs  

Interest and other costs of finance paid

Government grants and tax incentives

Other – incl. business development costs and SMP BFS costs

Net cash from / (used in) operating activities

Cash flows from investing activities

Payments to acquire or for:

(c) property, plant and equipment – incl. assets under construction  

(f) transfer tax on acquisition  

Proceeds from the disposal of:

(c) property, plant and equipment  

Cash flows from loans to other entities

Other – SMP Refinery Purchase: lease payment

Net cash from / (used in) investing activities

Cash flows from financing activities

Proceeds from issues of equity securities (excluding convertible debt securities)

Proceeds from issue of convertible debt securities

Proceeds from exercise of options

Transaction costs related to issues of equity securities or convertible debt securities

Transaction costs related to loans and borrowings

Net cash from / (used in) financing activities

Net increase / (decrease) in cash and cash equivalents for the period

Cash and cash equivalents at beginning of period

Net cash from / (used in) operating activities (item 1.9 above)

Net cash from / (used in) investing activities (item 2.6 above)

Net cash from / (used in) financing activities (item 3.10 above)

Effect of movement in exchange rates on cash held

Cash and cash equivalents at end of period

Reconciliation of cash and cash equivalents at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts

Cash and cash equivalents at end of quarter (should equal item 4.6 above)

Payments to related parties of the entity and their associates

Aggregate amount of payments to related parties and their associates included in item 1

Aggregate amount of payments to related parties and their associates included in item 2

Note: if any amounts are shown in items 6.1 or 6.2, your quarterly activity report must include a description of, and an explanation for, such payments.

Financing facilities Note: the term “facility’ includes all forms of financing arrangements available to the entity.

Add notes as necessary for an understanding of the sources of finance available to the entity.

Total facility amount at quarter end $US’000

Amount drawn at quarter end $US’000

Unused financing facilities available at quarter end ($US’000)

Include in the box below a description of each facility above, including the lender, interest rate, maturity date and whether it is secured or unsecured. If any additional financing facilities have been entered into or are proposed to be entered into after quarter end, include a note providing details of those facilities as well.

On 20 July 2021 the Company completed settlement of a US$100.0 million senior secured bond facility. The bonds were issued by the Company’s wholly owned subsidiary, Jervois Mining USA Limited, and are administered by the bond trustee, Nordic Trustee AS. During the previous quarter, Jervois Mining USA Limited completed the first US$50.0 million drawdown on the bonds.

Issuer: Jervois Mining USA Limited (wholly owned subsidiary of the Company).  

Maturity: 5-year tenor with a maturity date of 20 July 2026.  

Coupon rate: 12.5% per annum with interest payable bi-annually.  

No amortisation – bullet payment on maturity.  

Non-callable for 3 years, after which callable at par plus 62.5% of coupon, declining rateably to par in year 5.  

Transaction security: First priority security over all material assets of the Issuer, pledge of all the shares of the Issuer, intercompany loans.  

Secured Revolving Credit Facility – US$150.0 million:  

On 28 October 2021 the Company’s wholly owned subsidiaries, Jervois Suomi Holding Oy and Jervois Finland Oy (together, “the Borrowers”), entered into a secured loan facility with Mercuria Energy Trading SA, a wholly owned subsidiary of Mercuria Energy Group Limited, to borrow up to US$75 million. The facility was fully drawn as of 31 March 2022. On 3 June 2022, the Borrowers increased the facility to US$150 million through the execution of the Accordion Increase (as contemplated in the facility agreement entered into on 28 October 2021).

Borrowers: Jervois Suomi Holding Oy and Jervois Finland Oy (wholly owned subsidiaries of the Company).  

Maturity: rolling facility to 31 December 2024.  

Interest rate: LIBOR + 5.0% per annum.  

Transaction security: First priority security over all material assets of Jervois Finland, including inventory, receivables, collection account, and shares in Jervois Finland.  

Estimated cash available for future operating activities

Net cash from / (used in) operating activities (item 1.9)

(Payments for exploration & evaluation classified as investing activities) (item 2.1(d))

Total relevant outgoings (item 8.1 + item 8.2)

Cash and cash equivalents at quarter end (item 4.6)

Unused finance facilities available at quarter end (item 7.5)

Total available funding (item 8.4 + item 8.5)

Estimated quarters of funding available (item 8.6 divided by item 8.3)

Note: if the entity has reported positive relevant outgoings (i.e., a net cash inflow) in item 8.3, answer item 8.7 as “N/A”. Otherwise, a figure for the estimated quarters of funding available must be included in item 8.7.

If item 8.7 is less than 2 quarters, please provide answers to the following questions:

8.8.1        Does the entity expect that it will continue to have the current level of net operating cash flows for the time being and, if not, why not?

8.8.2        Has the entity taken any steps, or does it propose to take any steps, to raise further cash to fund its operations and, if so, what are those steps and how likely does it believe that they will be successful?

8.8.3        Does the entity expect to be able to continue its operations and to meet its business objectives and, if so, on what basis?

Note: where item 8.7 is less than 2 quarters, all of questions 8.8.1, 8.8.2 and 8.8.3 above must be answered.

1        This statement has been prepared in accordance with accounting standards and policies which comply with Listing Rule 19.11A.

2        This statement gives a true and fair view of the matters disclosed.

(Name of body or officer authorising release – see note 4)

1.        This quarterly cash flow report and the accompanying activity report provide a basis for informing the market about the entity’s activities for the past quarter, how they have been financed and the effect this has had on its cash position. An entity that wishes to disclose additional information over and above the minimum required under the Listing Rules is encouraged to do so.

2.        If this quarterly cash flow report has been prepared in accordance with Australian Accounting Standards, the definitions in, and provisions of, AASB 6: Exploration for and Evaluation of Mineral Resources and AASB 107: Statement of Cash Flows apply to this report. If this quarterly cash flow report has been prepared in accordance with other accounting standards agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent standards apply to this report.

3.        Dividends received may be classified either as cash flows from operating activities or cash flows from investing activities, depending on the accounting policy of the entity.

4.        If this report has been authorised for release to the market by your board of directors, you can insert here: “By the board”. If it has been authorised for release to the market by a committee of your board of directors, you can insert here: “By the [ name of board committee – e.g., Audit and Risk Committee ]”. If it has been authorised for release to the market by a disclosure committee, you can insert here: “By the Disclosure Committee”.

5.        If this report has been authorised for release to the market by your board of directors and you wish to hold yourself out as complying with recommendation 4.2 of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations , the board should have received a declaration from its CEO and CFO that, in their opinion, the financial records of the entity have been properly maintained, that this report complies with the appropriate accounting standards and gives a true and fair view of the cash flows of the entity, and that their opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively.

1  Debt drawn down represents aggregate of amounts drawn under US$150M working capital facility and amounts drawn down from Escrow Account under terms of US$100M Senior Secured Bonds. Net debt is debt drawn down less unrestricted cash. For current net debt cash balance is based on the Company’s most recent internal cash report prior to the date of release.  Amounts represent the nominal loan amounts; balances recorded in the Company’s financial statements under International Financial Reporting Standards will differ.

2  Information on the basis of preparation for the financial information included in this Quarterly Activities report is set out on page 13 below.

3  See ASX Announcement “BFS for Sao Miguel Paulista refinery restart” dated 29 April 2022

Cochrane, AB T4C1B7

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