The mining royalties investment firm said it has paid US$2mln, or roughly £1.5mln, for the stake at an assumed value of 45p a share.
The investment is part of a wider US$27.5mln funding led by private investment firm TechMet with funds TechMet has received as part of a significant equity investment from the US International Development Finance Corporation (DFC), as part of the anticipated acceleration of the development of Brazilian Nickel’s Piauí Project.
The investment underlines Anglo Pacific’s confidence in the growth potential of the Piaui Project, over which Anglo has a 1.25% gross revenue royalty (GRR) with the option to acquire an incremental 3.0% GRR for US$70mln.
Brazilian Nickel will channel most of the proceeds from the share sale into completing a definitive feasibility study for the full-scale Piauí Project as well as expanding its demonstration plant to provide early small scale production from the PNP1000 project.
Anglo Pacific said its existing 1.25% GRR, which cost it US$2mln in 2017, is expected to contribute US$4.3mln a year to Anglo’s coffers once the project hits full-tilt, and US$67.2mln over the life of the mine assuming a long-term nickel price of US$17,848 per tonne.
If Anglo decides to exercise its option to increase its GRR, the royalty on the project is expected to initially contribute US$14.5mln a year once fully ramped up, and US$228.0mln over the life of the mine.
“The involvement of TechMet, in whom the US Government recently became a significant shareholder, is a very positive signal of the technical viability of the Project and a recognition of the robustness of Anglo Pacific’s original royalty investment thesis,” declared Julian Treger, the chief executive officer of Anglo Pacific.
“This share subscription is part of our continuing strategy of investing in commodities that support a more sustainable world and which form part of new technologies which contribute to reducing the world’s carbon footprint including vehicle electrification. BRN’s anticipated nickel and cobalt products are aligned with this strategy as the project is expected to produce high purity nickel and cobalt hydroxide intermediates which can be used in lithium-ion batteries as well as traditional nickel end-user markets,” he added.
Shares in Anglo Pacific were up 2.2% at 123p in early deals.