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Jervois Global Limited Quarterly Activities Report to 30 September 2023

26.10.2023  |  The Newswire

Australia - 26 October 2023 - Jervois Global Ltd. (ASX/TSX-V:JRV) (OTC:JRVMF)


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Delivering on business priorities

Following the US$25.0 million Unsecured Convertible Notes ("Notes") and accompanying US$25.0 million fully underwritten 1 for 3.34 accelerated non-renounceable entitlement offer (the "Entitlement Offer") in July 2023, Jervois continued to implement a refocused strategy to ensure the business can be financially sustainable and self-funding at historically low cobalt prices caused by People's Republic of China ("PRC") oversupply from the Democratic Republic of Congo and Indonesia.

Priorities and key milestones delivered in the quarter are as follows:

  • Maximise margin and cash flow at Jervois Finland, and deliver operational improvements:

    • ??US$8.2 million Q3 operating cash flow at Jervois Finland, building on US$33.2 million of operating cash flow delivered in the first half (positive US$41.4 million 2023 YTD).

  • Execute U.S. Government (DoD) US$15.0 million funded ICO drilling programme and U.S. cobalt refinery BFS:

    • ??Surface drilling commenced at the Sunshine deposit; a historic resource adjacent to Jervois' ICO processing infrastructure.

    • ??Finalised engagement terms and study management execution arrangements with AFRY USA LLC to undertake basic engineering and prepare an accompanying BFS for a greenfield U.S. cobalt refinery.

    • ??BFS is key to support Jervois' existing Department of Energy ("DOE") Advanced Technology Vehicle Manufacturing ("ATVM") loan application for a domestic American cobalt refinery (see ASX Announcement "Jervois submits an ATVM loan application to the U.S. DOE", 24 April 2023).

    • ??Refinery site selection is ongoing.

    • ??Initial funds received from DoD for work completed (programmes are 100% reimbursable).

  • Advance debt and partner financing process at SMP

    • ??Counterparty engagement and due diligence in Brazil advancing.

  • Review partnership opportunities across the portfolio to crystalise and demonstrate value:

    • ??Additional initiatives advancing across all other portfolio assets - significant third-party interest at each asset.

Jervois Finland

  • Quarterly revenue US$42.2 million (Q2 2023: US$56.6 million)

  • Cash flow from operations US$8.2 million (Q2 2023: US$31.9 million)

  • Adjusted EBITDA1 US$0.5 million (Q2 2023: US$2.6 million)

  • Sales volume 1,216 metric tonnes (Q2 2023: 1,602 metric tonnes)

  • Production volume: 1,285 metric tonnes (Q2 2023: 1,367metric tonnes)

Jervois Finland provided positive Adjusted EBITDA and unlocked further operating cash flow in the period, including through the continued release of working capital. Jervois Finland has now generated more than US$40 million in operating cash flow over the past six months.

Sales and marketing

Jervois Finland produced 1,285 metric tonnes and sold 1,216 metric tonnes of cobalt in the quarter.

Figure 1: Jervois Finland sales volume by quarter (mt)


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The decrease in sales volumes relative to the prior quarter reflected cyclical softness in demand in end-use segments, and intra-year variability in shipment and customer order timing. Sales volumes year-to-date to 30 September 2023 are 4,377 mt, 10% higher than the corresponding period in 2022. Sales volume guidance for the 2023 calendar year of 5,300 mt to 5,600 mt remains unchanged. Production volumes and product mix remains subject to continuous review and adjustment based on an assessment of end-use demand and taking into account target inventory levels.

The company's sales performance and outlook for key market segments under which Jervois Finland operates are summarised below.

Batteries:

  • Destocking continues in battery supply chains, and customer inventory levels today remain above normal levels. Recovery from Jervois' current customers is expected in 2024.

  • Interest continues from both European and U.S. based EV OEMs (automakers) for long-term cobalt supply but with volumes starting in 2025 and beyond.

  • U.S. Inflation Reduction Act (IRA") continues to drive interest in U.S. and other Western supply of battery raw materials.

Chemicals, Catalysts and Ceramics:

  • Catalysts: Oil and gas segment (processing/refining) continues to be solid, and outlook remains positive.

  • Chemicals: Demand continues to be above last year in the main chemical applications (copper electrowinning, coatings, and rubber adhesion).

  • Ceramics: Short-term demand in pigments has increased on the back of recent cobalt price increases. Prices remain under pressure though as PRC competition into Europe continues to be robust.

Powder Metallurgy:

  • Automotive production rates remain variable with lagging issues around semi-conductor supply continuing to affect plant utilisation. Jervois customers have expectations of improvement in 2024.

  • General engineering, including construction, remains soft.

  • In contrast to demand from the petroleum sector as pertains to catalysts (specific to refining), in powder metallurgy, as U.S. oil and gas production (drilling) has fallen, and rig counts are expected to remain down for the balance of 2023, demand remains subdued.

  • Aerospace continues to be one of the bright spots, as order books remain full due to rising demand from both civilian and military purchasers.

Financial performance

Jervois Finland achieved revenue of US$42.2 million in the quarter, a decline of 25% relative to the second quarter. The decrease was principally due to lower sales volumes, and lower realised pricing. The cyclical weakness in cobalt prices that persisted in the quarter was in part due to market oversupply conditions instigated by the PRC as outlined earlier.

Adjusted EBITDA

Jervois Finland achieved Adjusted EBITDA in the third quarter of US$0.5 million, continuing a turnaround that commenced in the second quarter. The result is consistent with Jervois Finland's historical performance where the business model supports generation of a positive margin in an environment of cyclically weak but stable cobalt prices, albeit high input prices associated with energy and consumables in Europe, due to the Russian invasion of Ukraine, continue to linger. Moving forward, market pricing of key consumables and chemicals such as caustic soda, oxalic acid, and soda ash are continuing to steadily reduce in line with expectations.

The decrease in Adjusted EBITDA relative to the prior quarter was principally due to lower sales volumes and a modest increase in feed costs realised in the profit and loss account. These factors more than offset the benefits of a reduction in production costs in the quarter.

Figure 2: Jervois Finland Adjusted EBITDA by quarter (US$M, unaudited)

The plant continued to perform well in the quarter, with internal targets for safety, production efficiency and product quality all met in the quarter. Near-term focus for Jervois Finland remains on operational performance, cash generation and risk management.

A reconciliation between Adjusted EBITDA, EBITDA, and Net Profit after Tax ("NPAT") for Jervois and Jervois Finland is included on page 11. There were no material reconciliation differences between Adjusted EBITDA and EBITDA for Jervois Finland in the third quarter.

Cash flow performance

Cash flow from operations (before interest payments) was US$8.2 million in the quarter, bringing cumulative year to date cash flow from operations from Jervois Finland to US$41.1 million. Positive cash flow resulted from the continued stabilisation of the Jervois Finland business and working capital reductions. Physical cobalt inventories reduced by US$4.1 million from US$48.6 million at 30 June to US$44.5 million at 30 September 2023. This represented a reduction from ~100 days at 30 June 2023 to ~81 days at 30 September 2023. Jervois is continuing to execute an inventory management strategy aligned to a near-term target range of at or below 90 to 110 days, in a manner that balances liquidity and risk management objectives.

Jervois made partial repayment of the Mercuria working capital facility in the period in line with the reduction of the underlying collateral value, with US$8.6 million paid in July in accordance with the terms of the facility agreement. A further voluntary repayment of US$4.8 million was completed in early October, to meet deleveraging objectives and to reduce financing costs. The current loan balance at the date of this report is US$44.1 million.

Idaho Cobalt Operations ("ICO"), United States ("U.S.")

Cash flow for ICO in the third quarter included US$4.6 million associated with suspension costs.

A further US$8.6 million of cash was utilised for residual vendor payments and one-off items for works completed before the construction project was suspended on 29 March 2023 and, thereafter, transitioned to suspension mode in the second quarter. Residual vendor payments at ICO are substantially in line with prior guidance that was included in the "Capital Raising Presentation" dated 28 June 2023, with the final capital cost falling slightly below the US$155 million estimate.

Jervois commenced a surface drilling campaign at the Sunshine deposit adjacent to ICO in September 2023, following receipt of U.S. Forest Service approval. Sunshine is a historic deposit adjacent to Jervois' 100%-owned ICO, within a short trucking distance of the recently constructed processing facilities.

Drilling occurred under the U.S. DoD US$15.0 million funding agreement (the "Agreement Funding"). The Agreement Funding is under the Manufacturing Capability Expansion and Investment Prioritization office of Industrial Base Policy using the U.S. Defense Production Act Title III authorities and utilises funds from the Additional Ukraine Supplemental Appropriations Act. The drilling campaign direct expenditure and associated Jervois programme supervision and administration is fully refundable under this agreement.

Jervois expects to spend US$2.4 million to complete approximately 2,000 metres of drilling from surface, designed to intersect the Sunshine deposit with the results expected to enable the deposit to be upgraded to a modern mineral resource. Sunshine is a unique brownfield exploration opportunity, with a significant historical dataset which has underpinned design of this drilling programme.

Planning for an underground exploration programme at the RAM deposit within ICO progressed during the quarter.

Jervois' Board also approved the appointment of AFRY USA LLC., a U.S.-based engineering and consulting company, to lead basic engineering and the associated BFS for a new greenfield U.S. cobalt refinery. This facility is expected to be constructed under the framework of the IRA and associated U.S. legislative initiatives including Jervois' existing DOE ATVM loan application (see announcement dated 24 April 2023). Again, execution of basic engineering and the BFS is fully refundable under the Agreement Funding.

Jervois commenced site selection via its 100%-held subsidiary, Formation Holdings US, Inc., as the first stage of the U.S. refinery BFS (see announcement dated 2 August 2023). Jervois expects to spend US$0.3 million to complete site selection, which is being executed by AFRY USA LLC. The site selection is fully refundable under the Agreement Funding.

Site selection considers local, state, and federal incentives; permitting processes; security of supply chains; logistics; access to workforce capacity and capability; and other technical and operational requirements, all to underpin a globally competitive facility. The expected BFS completion schedule will be available upon a final location decision.

São Miguel Paulista ("SMP") nickel and cobalt refinery, Brazil

Counterparty engagement and due diligence continues to advance at SMP. Jervois' objective remains to conclude a partner financing solution before the end of 2023. SMP's economic potential is strong, based on prevailing market conditions, with market pricing for both nickel metal and mixed hydroxide precipitate intermediate feed trending favourably compared to the BFS assumptions.

The SMP restart project is expected to resume promptly once the partnering process is concluded. Current activities at site are focussed on supporting due diligence, and review of opportunities to optimise and de-risk the restart capital project.

Monthly costs are currently tracking favourably against the ~US$0.5 million expected run-rate previously communicated to the market.

Nico Young nickel-cobalt project, New South Wales, Australia

Jervois is undertaking a divestment process to sell all or part of its interest in the company's 100%-owned Nico Young nickel and cobalt project which continued to progress during the quarter. Jervois has invested >A$20 million in Nico Young. It is a strategic future source of Western nickel and cobalt.

Corporate activities

Liquidity

Jervois completed a fully underwritten US$50.0 million total capital raising in July 2023, comprising:

  • --US$25.0 million Notes maturing in July/August 2028 which are convertible into Jervois ordinary shares (Convertible Notes Offer"). The initial conversion price for the Notes is US$0.0605 which represented a 40% premium to the Entitlement Offer Theoretical Ex Rights Price ("TERP")2 and the Notes carry a 6.5% p.a. coupon; and

  • --US$25.0 million Entitlement Offer, undertaken in parallel with the Convertible Notes Offer.

On 31 August 2023, Jervois closed the second US$5.1 million tranche of the US$25.0 million Notes following approval of the Company's shareholders at a general meeting held in Melbourne, Australia on 28 August 2023.

Jervois ended the September 2023 quarter with US$54.9 million in cash, US$44.5 million physical cobalt inventories in Jervois Finland, and total drawn senior debt of US$148.9 million3. A key strategic objective for Jervois is to de-risk the path to establishing a multi-asset platform underpinned by a durable capital structure. Jervois intends to pursue initiatives across its asset portfolio to meet this objective.

Environmental, social, governance

Jervois continues to chair the Cobalt Institute's Responsible Sourcing and Sustainability Committee and actively engage in related working groups. In the quarter, this included participation of key Jervois personnel in environmental and human rights due diligence training and dialogue on industry ESG standards between members of the Cobalt Institute and OEMs (car makers), civil society organisations and standards setters.

Presentations and events

During the quarter, CEO Bryce Crocker presented at the Diggers and Dealers Mining Forum in Kalgoorlie, Western Australia and at the Canaccord LatAm Natural Resources Conference in São Paulo, Brazil.

Results of meeting

At a general meeting of Jervois shareholders on 28 August 2023, both resolutions put to shareholders passed via a poll, being:

Resolution 1: Approval to issue Convertible Notes

Resolution 2: Ratification of prior issue of Convertible Notes.

Exploration and development expenditure

In relation to the DoD funded surface drilling campaign at ICO, US$0.8 million was incurred during the quarter. No other material cash expenditure on exploration and development was incurred during the quarter.

Insider compensation reporting

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

Non-core assets

The non-core assets are summarised on the Company's website.

ASX waiver information

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 September 2023 no Jervois shares were issued in the quarter on exercise of eCobalt options and 1,980,000 eCobalt options remained. These 1,980,000 eCobalt options expired on 1 October 2023 and there are no longer any eCobalt options outstanding.

By Order of the Board

Bryce Crocker

Chief Executive Officer

For further information, please contact:

Investors and analysts:

Alicia Brown

Group Manager External Affairs

Jervois Global Ltd.

alicia.brown@jervoisglobal.com

Media:

Nathan Ryan

NWR Communications

nathan.ryan@nwrcommunications.com.au

Mob: +61 420 582 887

Forward-Looking Statements

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 partnership for group operations, operations at Jervois Finland, drilling to be undertaken at ICO, refinery studies to be undertaken in the US, timing of restart of SMP refinery, third party feed to SMP, sales from SMP 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.

Basis of preparation of financial information

Historical and forecast financial information

Financial information is prepared under Jervois Global 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 Group consolidated financial statements. All 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.

Reconciliation of NPAT to EBITDA and Adjusted EBITDA

EBITDA is a non-IFRS financial measure. EBITDA is presented as net income after adding back interest, tax, depreciation and amortisation, and extraordinary items. Adjusted EBITDA represents EBITDA 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, NRV adjustments to inventories, and one-off costs related to post-acquisition integration.

Refer to the table below for a reconciliation of NPAT to EBITDA and Adjusted EBITDA.


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Tenements

Australian Tenements

Description

Tenement number

Interest owned (%)

Ardnaree (NSW)

EL 5527

100.0

Thuddungra (NSW)

EL 5571

100.0

Nico Young (NSW)

EL 8698

100.0

West Arunta (WA)

E80 4820

17.9

West Arunta (WA)

E80 4986

17.9

West Arunta (WA)

E80 4987

17.9

Uganda Exploration Licences

Description

Exploration licence number

Interest owned (%)

Kilembe Area

EL0292

100.0

Kilembe Area

EL0012

100.0

Idaho Cobalt Operations - 100% Interest owned

Claim Name

County #

IMC #

SUN 1

222991

174156

SUN 2

222992

174157

SUN 3 Amended

245690

174158

SUN 4

222994

174159

SUN 5

222995

174160

SUN 6

222996

174161

SUN 7

224162

174628

SUN 8

224163

174629

SUN 9

224164

174630

SUN 16 Amended

245691

177247

SUN 18 Amended

245692

177249

Sun 19

277457

196394

SUN FRAC 1

228059

176755

SUN FRAC 2

228060

176756

TOGO 1

228049

176769

TOGO 2

228050

176770

TOGO 3

228051

176771

DEWEY FRAC Amended

248739

177253

Powder 1

269506

190491

Powder 2

269505

190492

LDC-1

224140

174579

LDC-2

224141

174580

LDC-3

224142

174581

LDC-5

224144

174583

LDC-6

224145

174584

LDC-7

224146

174585

LDC-8

224147

174586

LDC-9

224148

174587

LDC-10

224149

174588

LDC-11

224150

174589

LDC-12

224151

174590

LDC-13 Amended

248718

174591

LDC-14 Amended

248719

174592

LDC-16

224155

174594

LDC-18

224157

174596

LDC-20

224159

174598

LDC-22

224161

174600

LDC FRAC 1 Amended

248720

175880

LDC FRAC 2 Amended

248721

175881

LDC FRAC 3 Amended

248722

175882

LDC FRAC 4 Amended

248723

175883

LDC FRAC 5 Amended

248724

175884

RAM 1

228501

176757

RAM 2

228502

176758

RAM 3

228503

176759

RAM 4

228504

176760

RAM 5

228505

176761

RAM 6

228506

176762

RAM 7

228507

176763

RAM 8

228508

176764

RAM 9

228509

176765

RAM 10

228510

176766

RAM 11

228511

176767

RAM 12

228512

176768

RAM 13 Amended

245700

181276

RAM 14 Amended

245699

181277

RAM 15 Amended

245698

181278

RAM 16 Amended

245697

181279

Ram Frac 1 Amended

245696

178081

Ram Frac 2 Amended

245695

178082

Ram Frac 3 Amended

245694

178083

Ram Frac 4 Amended

245693

178084

HZ 1

224173

174639

HZ 2

224174

174640

HZ 3

224175

174641

HZ 4

224176

174642

HZ 5

224413

174643

HZ 6

224414

174644

HZ 7

224415

174645

HZ 8

224416

174646

HZ 9

224417

174647

HZ 10

224418

174648

HZ 11

224419

174649

HZ 12

224420

174650

HZ 13

224421

174651

HZ 14

224422

174652

HZ 15

231338

178085

HZ 16

231339

178086

HZ 18

231340

178087

HZ 19

224427

174657

Z 20

224428

174658

HZ 21

224193

174659

HZ 22

224194

174660

HZ 23

224195

174661

HZ 24

224196

174662

HZ 25

224197

174663

HZ 26

224198

174664

HZ 27

224199

174665

HZ 28

224200

174666

HZ 29

224201

174667

HZ 30

224202

174668

HZ 31

224203

174669

HZ 32

224204

174670

HZ FRAC

228967

177254

JC 1

224165

174631

JC 2

224166

174632

JC 3

224167

174633

JC 4

224168

174634

JC 5 Amended

245689

174635

JC 6

224170

174636

JC FR 7

224171

174637

JC FR 8

224172

174638

JC 9

228054

176750

JC 10

228055

176751

JC 11

228056

176752

JC-12

228057

176753

JC-13

228058

176754

JC 14

228971

177250

JC 15

228970

177251

JC 16

228969

177252

JC 17

259006

187091

JC 18

259007

187092

JC 19

259008

187093

JC 20

259009

187094

JC 21

259010

187095

JC 22

259011

187096

CHELAN NO. 1 Amended

248345

175861

GOOSE 2 Amended

259554

175863

GOOSE 3

227285

175864

GOOSE 4 Amended

259553

175865

GOOSE 6

227282

175867

GOOSE 7 Amended

259552

175868

GOOSE 8 Amended

259551

175869

GOOSE 10 Amended

259550

175871

GOOSE 11 Amended

259549

175872

GOOSE 12 Amended

259548

175873

GOOSE 13

228028

176729

GOOSE 14 Amended

259547

176730

GOOSE 15

228030

176731

GOOSE 16

228031

176732

GOOSE 17

228032

176733

GOOSE 18 Amended

259546

176734

GOOSE 19 Amended

259545

176735

GOOSE 20

228035

176736

GOOSE 21

228036

176737

GOOSE 22

228037

176738

GOOSE 23

228038

176739

GOOSE 24

228039

176740

GOOSE 25

228040

176741

SOUTH ID 1 Amended

248725

175874

SOUTH ID 2 Amended

248726

175875

SOUTH ID 3 Amended

248727

175876

SOUTH ID 4 Amended

248717

175877

SOUTH ID 5 Amended

248715

176743

SOUTH ID 6 Amended

248716

176744

South ID 7

306433

218216

South ID 8

306434

218217

South ID 9

306435

218218

South ID 10

306436

218219

South ID 11

306437

218220

South ID 12

306438

218221

South ID 13

306439

218222

South ID 14

306440

218223

OMS-1

307477

218904

Chip 1

248956

184883

Chip 2

248957

184884

Chip 3 Amended

277465

196402

Chip 4 Amended

277466

196403

Chip 5 Amended

277467

196404

Chip 6 Amended

277468

196405

Chip 7 Amended

277469

196406

Chip 8 Amended

277470

196407

Chip 9 Amended

277471

196408

Chip 10 Amended

277472

196409

Chip 11 Amended

277473

196410

Chip 12 Amended

277474

196411

Chip 13 Amended

277475

196412

Chip 14 Amended

277476

196413

Chip 15 Amended

277477

196414

Chip 16 Amended

277478

196415

Chip 17 Amended

277479

196416

Chip 18 Amended

277480

196417

Sun 20

306042

218133

Sun 21

306043

218134

Sun 22

306044

218135

Sun 23

306045

218136

Sun 24

306046

218137

Sun 25

306047

218138

Sun 26

306048

218139

Sun 27

306049

218140

Sun 28

306050

218141

Sun 29

306051

218142

Sun 30

306052

218143

Sun 31

306053

218144

Sun 32

306054

218145

Sun 33

306055

218146

Sun 34

306056

218147

Sun 35

306057

218148

Sun 36

306058

218149

Chip 21 Fraction

306059

218113

Chip 22 Fraction

306060

218114

Chip 23

306025

218115

Chip 24

306026

218116

Chip 25

306027

218117

Chip 26

306028

218118

Chip 27

306029

218119

Chip 28

306030

218120

Chip 29

306031

218121

Chip 30

306032

218122

Chip 31

306033

218123

Chip 32

306034

218124

Chip 33

306035

218125

Chip 34

306036

218126

Chip 35

306037

218127

Chip 36

306038

218128

Chip 37

306039

218129

Chip 38

306040

218130

Chip 39

306041

218131

Chip 40

307491

218895

DRC NW 1

307492

218847

DRC NW 2

307493

218848

DRC NW 3

307494

218849

DRC NW 4

307495

218850

DRC NW 5

307496

218851

DRC NW 6

307497

218852

DRC NW 7

307498

218853

DRC NW 8

307499

218854

DRC NW 9

307500

218855

DRC NW 10

307501

218856

DRC NW 11

307502

218857

DRC NW 12

307503

218858

DRC NW 13

307504

218859

DRC NW 14

307505

218860

DRC NW 15

307506

218861

DRC NW 16

307507

218862

DRC NW 17

307508

218863

DRC NW 18

307509

218864

DRC NW 19

307510

218865

DRC NW 20

307511

218866

DRC NW 21

307512

218867

DRC NW 22

307513

218868

DRC NW 23

307514

218869

DRC NW 24

307515

218870

DRC NW 25

307516

218871

DRC NW 26

307517

218872

DRC NW 27

307518

218873

DRC NW 28

307519

218874

DRC NW 29

307520

218875

DRC NW 30

307521

218876

DRC NW 31

307522

218877

DRC NW 32

307523

218878

DRC NW 33

307524

218879

DRC NW 34

307525

218880

DRC NW 35

307526

218881

DRC NW 36

307527

218882

DRC NW 37

307528

218883

DRC NW 38

307529

218884

DRC NW 39

307530

218885

DRC NW 40

307531

218886

DRC NW 41

307532

218887

DRC NW 42

307533

218888

DRC NW 43

307534

218889

DRC NW 44

307535

218890

DRC NW 45

307536

218891

DRC NW 46

307537

218892

DRC NW 47

307538

218893

DRC NW 48

307539

218894

EBatt 1

307483

218896

EBatt 2

307484

218897

EBatt 3

307485

218898

EBatt 4

307486

218899

EBatt 5

307487

218900

EBatt 6

307488

218901

EBatt 7

307489

218902

EBatt 8

307490

218903

OMM-1

307478

218905

OMM-2

307479

218906

OMN-2

307481

218908

OMN-3

307482

218909

BTG-1

307471

218910

BTG-2

307472

218911

BTG-3

307473

218912

BTG-4

307474

218913

BTG-5

307475

218914

BTG-6

307476

218915

NFX 17

307230

218685

NFX 18

307231

218686

NFX 19

307232

218687

NFX 20

307233

218688

NFX 21

307234

218689

NFX 22

307235

218690

NFX 23

307236

218691

NFX 24

307237

218692

NFX 25

307238

218693

NFX 30

307243

218698

NFX 31

307244

218699

NFX 32

307245

218700

NFX 33

307246

218701

NFX 34

307247

218702

NFX 35

307248

218703

NFX 36

307249

218704

NFX 37

307250

218705

NFX 38

307251

218706

NFX 42

307255

218710

NFX 43

307256

218711

NFX 44

307257

218712

NFX 45

307258

218713

NFX 46

307259

218714

NFX 47

307260

218715

NFX 48

307261

218716

NFX 49

307262

218717

NFX 50

307263

218718

NFX 56

307269

218724

NFX 57

307270

218725

NFX 58

307271

218726

NFX 59

307272

218727

NFX 60 Amended

307558

218728

NFX 61

307274

218729

NFX 62

307275

218730

NFX 63

307276

218731

NFX 64

307277

218732

OMN-1 revised

315879

228322

Appendix 5B

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

Name of entity

Jervois Global Ltd.

ABN

Quarter ended ("current quarter")

52 007 626 575

30 September 2023

Consolidated statement of cash flows

Current quarter
$US'000

Year to date

(9 months)

$US'000

1.

Cash flows from operating activities

51,607

192,129

1.1

Receipts from customers

1.2

Payments for

-

-

  1. (a)exploration evaluation

  1. (b)site costs

(4,588)

(8,583)

  1. (c)production

(42,892)

(149,623)

  1. (d)staff costs

(2,777)

(11,554)

  1. (e)administration and corporate costs

826

(2,832)

1.3

Dividends received (see note 3)

-

-

1.4

Interest received

263

1,074

1.5

Interest and other costs of finance paid

(7,593)

(18,776)

1.6

Income taxes refunded / (paid)

(454)

(1,082)

1.7

Other1

(3,995)

-

1.9

Net cash (used in) from operating activities

(9,603)

753

1. During the quarter ended 30 September 2023, a total amount of US$4.0 million was reclassified to "site costs" (section 1.2 (b)). This included US$2.7 million from property, plant, and equipment (section 2.5) and US$1.3 million from administration and corporate costs (section 1.2 (e)).

2.

Cash flows from investing activities

-

-

2.1

Payments to acquire or for:

  1. (a)entities

  1. (b)tenements

-

-

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

(8,746)

(78,375)

  1. (d)exploration evaluation

(260)

(625)

  1. (e)acquisition of subsidiaries

-

-

  1. (f)transfer tax on acquisition

-

-

  1. (g)other non-current assets

-

-

2.2

Proceeds from the disposal of:

-

-

  1. (a)entities

  1. (b)tenements

-

-

  1. (c)property, plant, and equipment

675

1,069

  1. (d)investments

-

-

  1. (e)other non-current assets

-

-

2.3

Cash flows from loans to other entities

-

-

2.4

Dividends received (see note 3)

-

-

2.5

Other1

2,693

-

2.6

Net cash used in investing activities

(5,638)

(77,931)

3.

Cash flows from financing activities

24,985

24,985

3.1

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

3.2

Proceeds from issue of convertible debt securities

25,000

25,000

3.3

Proceeds from exercise of options

-

-

3.4

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

(3,209)

(3,264)

3.5

Proceeds from borrowings

-

-

3.6

Repayment of borrowings

(8,638)

(66,138)

3.7

Transaction costs related to loans and borrowings

-

-

3.8

Dividends paid

-

-

3.9

Other - incl. lease liabilities

(525)

(1,405)

Other - Government grants and tax incentives

8

175

Other

-

-

3.10

Net cash from (used in) financing activities

37,621

(20,647)

4.

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

4.1

Cash and cash equivalents at beginning of period

32,181

152,647

4.2

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

(9,603)

753

4.3

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

(5,638)

(77,931)

4.4

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

37,621

(20,647)

4.5

Effect of movement in exchange rates on cash held

290

29

4.6

Cash and cash equivalents at end of period

54,851

54,851

5.

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

Current quarter
$US'000

Previous quarter
$US'000

5.1

Bank balances

54,851

32,181

5.2

Call deposits

-

-

5.3

Bank overdrafts

-

-

5.4

Other (provide details)

-

-

5.5

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

54,851

32,181

6.

Payments to related parties of the entity and their associates

Current quarter
$US'000

6.1

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

202

6.2

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.

7.

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

7.1

Bond Facility1

100,000

100,000

7.2

Secured Revolving Credit Facility2

150,000

48,862

7.3

Unsecured Convertible Notes3

25,000

25,000

7.4

Total financing facilities

275,000

173,862

7.5

Unused financing facilities available at quarter end ($US'000)4

-

7.6

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.

  1. Bond Facility - US$100.0 million:

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. In February 2022, Jervois Mining USA Limited completed the first US$50.0 million drawdown on the bonds, and in July 2022 the second, and final, US$50.0 million drawdown was completed.

Key terms:

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

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

  • Original issue discount of 2%.

  • 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.

  1. 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 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 and as amended and restated on 4 August 2022).

Key terms:

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

  • Maturity: rolling facility to 31 December 2024.

  • Interest rate: SOFR + 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.

  1. Unsecured Convertible Notes

On 28 June 2023, the Company entered into a Subscription Agreement for the issuance of US$25.0 million of Unsecured Convertible Notes (the "Notes") maturing in July 2028 (Tranche 1) and August 2028 (Tranche 2), respectively, and which are convertible into Jervois ordinary shares. The initial conversion price for the Notes is US$0.0605 and the Notes carry a 6.5% per annum coupon, payable in arrears through either settlement in cash or payment in kind. The gross proceeds were received under two tranches of US$19.9 million and US$5.1 million on 20 July 2023 and 31 August 2023, respectively.

  1. Unused limit of Secured Revolving Credit Facility:

The Borrowers may draw to the lower of the maximum amount or 80% of the collateral value (referred to as the "Maximum Available Amount"), where collateral is defined as the value of the Borrower's inventory and receivables, calculated monthly (reduced to 70% for eligible inventory in Finland exceeding US$75.0 million) and subject to eligibility requirements and associated terms of the agreement. Where the amounts drawn exceed 110% of the Maximum Available Amount (the "Shortfall"), the Borrowers are required to prepay or repay any amount of the facility to ensure that, following such payment, the Shortfall no longer exists.

Subject to the Maximum Available Amount, the total unused financing facility may increase in the future to the maximum facility amount of US$150.0 million.

8.

Estimated cash available for future operating activities

$US'000

8.1

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

(9,603)

8.2

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

(260)

8.3

Total relevant outgoings (item 8.1 + item 8.2)

(9,863)

8.4

Cash and cash equivalents at quarter end (item 4.6)

54,851

8.5

Unused finance facilities available at quarter end (item 7.5 and see item 7.6 - footnote 3)

-

8.6

Total available funding (item 8.4 + item 8.5)

54,851

8.7

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

5.6

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.

8.8

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?

Answer: N/A

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?

Answer: N/A

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?

Answer: N/A

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.

Compliance statement

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.

Date: 26 October 2023

Authorised by: Disclosure Committee

(Name of body or officer authorising release)

1 Information on the basis of preparation for the financial information included in this Quarterly Activities Report is set out on page 11.

2 TERP is the theoretical price at which Jervois' ordinary shares should trade at immediately after the ex-date for the Entitlement Offer based only on the last traded price and issuance of Jervois' ordinary shares at the offer price under the Entitlement Offer.

3 Drawn senior debt represents the aggregate of amounts drawn under the company's senior debt facilities (excludes Unsecured Convertible Notes that mature in Jul/Aug 2028). Amounts represent the nominal loan amounts; balances recorded in Jervois' financial statements under International Financial Reporting Standards will differ.

Copyright (c) 2023 TheNewswire - All rights reserved.


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Jervois Global Ltd.
Bergbau
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