Atlantic Nickel reports continued strong operational and financial performance in Q1 2023

LONDON, May 23, 2023 /PRNewswire/ -- Atlantic Nickel ("Atlantic Nickel" or the "Company") and Appian Capital Advisory LLP ("Appian") are pleased to announce continued strong operational and financial performance in the first quarter of 2023 at the Company's Santa Rita nickel sulphide mine ("Santa Rita" or the "Mine") located in Bahia, Brazil. This follows a record year for Santa Rita in 2022 and contributes to its growing track record of mature, consistent and improving performance.

Santa Rita is one of the very few long-life nickel sulphide mines in operation globally, boasting 34 years of mine life producing between 20-35 ktpa NiEq contained in concentrate. Based on an NI 43-101 technical report completed in 2021, the operation mines an open-pit with a minimum 8-year life and an NPV8 of US$570m, and transitions to an underground sublevel caving operation for another 27 years with an NPV8 of US$812m. Capital expenditure for the underground is expected to be fully funded out of operating cash flow.

Atlantic Nickel Q1 2023 performance highlights

• ESG and safety performance continue to be industry leading with a Lost Time Injury Frequency Rate over the last 12 months of 0.18
• Adjusted EBITDA of US$51.2m (Q1 2022 US$60.7m) on revenue of US$76.3m (Q1 2022 US$79.8m)
• Production of 28.7kdmt of nickel concentrate (Q1 2022 28.0kdmt) containing 4.0kt of nickel (Q1 2022 3.9kt) in addition to copper, cobalt, gold and platinum and palladium by-products
• C1 cost of US$3.37/lb Ni reflects a continuation of Santa Rita's highly competitive cost position
• Expanded hedging program secures forward pricing of >US$13.00/lb on c.60% of payable nickel produced through the end of 2023

Paulo Castellari, CEO of Appian Capital Brazil, commented:

"I am delighted to report Atlantic Nickel's continued strong performance, building on the record results in 2022. Its industry-leading cost position and best-in-class safety record remains a major differentiator, reflecting the asset's quality and our team's operational expertise. As one of the world's preeminent nickel sulphide mines, Santa Rita is well positioned to drive the energy transition, producing key critical minerals and robust investor returns."

Safety and ESG performance

Santa Rita continues to operate as one of the safest operations globally with a 12 month rolling average Lost Time Injury Frequency Rate ("LTIFR") of 0.18, in line with the Company's performance in 2022. As of the end of Q1 2023, the team has now worked 5.0m consecutive man hours without a lost time injury. Atlantic Nickel's Visible Felt Leadership program resulted in over 1,034 Visible Felt Leadership instances in Q1 2023, with safety KPIs included in 100% of Performance Contracts. Over 38,332 man-hours dedicated to safety, health and environmental training were completed in Q1 2023, which continues to play a critical role in the Mine's safety performance.

Atlantic Nickel continues to improve the biodiversity of Santa Rita and the surrounding Area, revegetating ~12.3ha of land in the quarter through the planting of over 11,000 seedlings.

Operational update

The team continued to deliver consistent operational performance in Q1 2023, including:

• 4.0kt of nickel in concentrate produced with copper, cobalt, gold and PGM by-products, supported by improvements in plant throughput and met recovery
• 10.7Mt of total material mined, a material 47% increase versus the same period last year reflective of improvements in Santa Rita's capability to deliver and stay ahead of its mine plan
• 1.7Mt of ore processed at average NiS recovery of 82.7%, reflecting 11.7% and 5.0% improvements, respectively, compared with performance during the same period last year
• 28.7kdmt of concentrate produced with an average NiS grade of 13.8%
• Despite the inflationary environment in Brazil, the Company delivered a C1 cost of US$3.37/lb, net of by-product credits, which is 22% lower than the US$4.34/lb achieved during the same period last year

Financial update

During Q1 2023, Atlantic Nickel made three shipments of concentrate to its offtake partners, with 27.9kdmt of concentrate containing 3.9kt of payable nickel sold with average realized commodity price of US$10.63/lb Ni. This resulted in revenue of US$76.3m, Adjusted EBITDA of US$51.2m and an Adjusted EBITDA margin of 67%.

Since the date of its January 31, 2023 press release, Atlantic Nickel has entered into no new additional non-deliverable forward contracts but remains well positioned to enhance its cash flow throughout the remainder of 2023 with its current contracts:

• 5.2kt, or 11.6mlb, of nickel at an average forward price of US$13.07/lb
• 0.6kt, or 1.3mlb, of copper at an average forward price of US$4.31/lb

Progress on the underground expansion

Atlantic Nickel continues to advance the underground project, having invested over US$17m in 2022 towards the execution of a 35,000m drill program, followed by US$2.8m in Q1 2023, and is progressing studies which will be required to declare a reserve.

The Company is currently focused on the final activities of a hydrogeological program (totaling 2,236m) at Santa Rita, which it expects to conclude in the following weeks. Atlantic Nickel is targeting the delivery of a Prefeasibility Study in H1 2024 remaining well on track for the commencement of underground development.

In parallel with the underground expansion, Atlantic Nickel's exploration continues, focusing on the drill out and declaration of a resource at Palestina, the Company's most advanced exploration target. Palestina sits approximately 25km from Santa Rita with easy access to Santa Rita's existing processing infrastructure. The Company has completed the campaign started in 2022 for resource drilling (totaling 8,494 m) and a geotech/hydrogeological program (totaling 1,297m) during the quarter.

About Appian

Appian Capital Advisory LLP is the investment advisor to long-term value focused private equity funds that invest solely in mining and mining related companies.

Appian is a leading investment advisor in the metals and mining industry, with global experience across South America, North America, Australia and Africa and a successful track record of supporting companies to achieve their development targets, with a global operating portfolio overseeing 6,300 employees.

Appian has a global team of 65 experienced professionals with offices in London, Toronto, Lima, Belo Horizonte, Montreal, Perth, Mexico City and Dubai.

For more information please visit www.appiancapitaladvisory.com^[1], or find us on LinkedIn, Twitter or Instagram.

About Atlantic Nickel

Atlantic Nickel is the owner and operator of Santa Rita, an open-pit nickel-copper-cobalt sulphide operation located in Bahia, Brazil. Santa Rita is an operating open pit mine that is planning to transition to underground mining to extend its mine life to 34 years. The mine benefits from US$1bn of prior investment and has a plant capacity of 6.5 Mtpa. One of the largest open pit nickel sulphide mines in the world, Santa Rita is a high-quality asset operating at a first quartile cost position. It is one of a few remaining nickel sulphide mines globally that can offer additional supply towards the production of Class I nickel products and so has exposure to the high-growth potential of the electric vehicle industry.

References

1. ^{^} www.appiancapitaladvisory.com (www.appiancapitaladvisory.com)