The transaction will provide Centaurus with full control and optionality over the sale and marketing of Jaguar’s long-life, low-greenhouse gas emission nickel sulphate product
The Jaguar Nickel Sulphide Project located in the northern region of Brazil. Image Representative. (Credit: Barsamuphe/ Wikipedia)
Centaurus Metals has engaged in a transaction agreement with Vale Base Metals, operating through its subsidiary Salobo Metais. Under this agreement, Vale has willingly relinquished its exclusive right to 100% of the nickel offtake (Offtake Rights) from the Jaguar Nickel Sulphide Project located in the northern region of Brazil. In return for this concession, Vale’s existing royalty from the project will be increased.
The Offtake Rights originated from the initial Jaguar Sale & Purchase Agreement (SPA) signed on 30 August 2019, when Centaurus acquired complete ownership of the Jaguar Project from Vale.
Vale now has agreed to waive the Offtake Rights and, instead, receive an augmented royalty over the Jaguar Project. The terms of this new royalty arrangement mirror those outlined in the original Jaguar SPA. As a result, Vale’s overall Net Operating Revenue royalty for nickel sulphate from the Jaguar Project will be increased to 1.75%, while the royalty for nickel concentrate and other products generated from the project will rise to 2%.
The purpose of the 1.20% increase in the Net Operating Revenue royalty for nickel sulphate and the 1.25% increase for nickel concentrate and other products derived from the Jaguar Project is twofold. Firstly, it serves as compensation to Vale for relinquishing its previous contractual rights as outlined in the SPA. Secondly, this adjustment enables Centaurus to explore various funding and offtake possibilities with a broader range of potential end-users for the nickel sulphate product sourced from the Jaguar Project.
The rising demand for battery raw materials, especially from OEMs, battery manufacturers, traders, and other entities, has created a favorable environment for the Jaguar Project. This heightened interest is expected to facilitate the availability of diverse funding options for the project.
As a result of the transaction, Centaurus will assume complete control and flexibility in the sale and marketing of Jaguar’s nickel sulphate product, which holds strategic importance and boasts a long operational lifespan while maintaining low greenhouse gas emissions. This nickel sulphate product is anticipated to be well-aligned with the rapidly expanding Western battery market, which further strengthens its market potential.
Centaurus managing director Darren Gordon said: “Securing 100% control over the sale of our nickel sulphate product will significantly increase the suite of strategic pathways available to us to fund and de-risk the Jaguar development.
“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.
“The clean transaction structure allows the Company to retain its cash for ongoing DFS and project development activities at Jaguar and avoids any equity dilution of existing Centaurus shareholders while delivering enhanced funding and partnering flexibility.
“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 programme 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.”