Centaurus Metals has entered into a transaction agreement with Vale Base Metals, through Salobo Metais S.A., to extinguish Vale’s nickel Offtake Rights from the Jaguar Nickel Sulphide Project in northern Brazil to raise Vale’s current royalties from the Project.
The Offtake Rights are derived from the original Jaguar Sale & Purchase Agreement (SPA) signed on 30 August 2019, when Centaurus acquired the Jaguar Project from Vale.
According to Centaurus, Vale’s total Net Operating Revenue royalty over Jaguar now stands at 1.75% for nickel sulphate and 2.00% for nickel concentrate and other products derived from the Jaguar Project as a result of Vale’s recent agreement to extinguish the Offtake Rights in exchange for an additional royalty over Jaguar on the same terms as the royalty agreements included in the original Jaguar SPA.
The increase in the Net Operating Revenue royalty of 1.20% for nickel sulphate and 1.25% for nickel concentrate and other products produced at the Jaguar Nickel Sulphide Project is intended to make up for Vale’s prior contractual rights under the SPA while also enabling Centaurus to explore funding and offtake options with a broad range of potential partners for Jaguar’s nickel sulphate product.
Battery manufacturers, OEMs, and other organisations, including traders, are showing a growing interest in offtakes for battery raw materials, and it is this interest that is predicted to open up a wide range of new finance alternatives for the Jaguar Project. Centaurus said these organisations had shown a noticeable interest in ensuring the physical offtake of nickel products with a small carbon footprint and solid ESG credentials, like Jaguar.
Following the deal, Centaurus will have complete control and discretion over the sale and marketing of Jaguar’s strategic, long-life nickel sulphate product, which is anticipated to be closely matched with the Western battery market’s rapid expansion.
According to Centaurus’ Managing Director Darren Gordon, the Transaction marked a turning point in the development of the Jaguar Nickel Sulphide Project, one of the world’s largest undeveloped and highest-grade open pittable nickel sulphide prospects.
“We anticipate that our low-greenhouse gas emission nickel sulphate product will be highly sought after in the global market, particularly amongst end-users, with Centaurus now able to freely explore a range of strategic funding and offtake options to support the Project’s development. The battery materials market is expanding exponentially, and we are increasingly seeing OEMs and other EV battery players moving further upstream as they seek to secure long-term supplies of key raw materials,” Gordon said.
He noted that the clean transaction structure provides more finance and partnership options while allowing the Company to keep its funds for ongoing DFS and project development operations at Jaguar. It also prevents any equity dilution of current Centaurus shareholders.
“The doubling in Jaguar’s Measured and Indicated Mineral Resource Estimate (MRE) late in 2022 and the recent production of a high-quality battery grade nickel sulphate product from the Company’s refinery pilot plant test work program has cemented its position as a Tier-1 global nickel sulphide development Project with class-leading GHG emission credentials. With the unencumbering of the nickel units held within the Jaguar Project, the Company can now actively explore a much wider variety of funding options at both a corporate and project level,” Gordon added.
