Centaurus acquired Jaguar from Vale in 2019 for US$220,000 up-front, deferred consideration payments of $6.75 million, a production royalty of 0.75% and offtake rights.
Those offtake rights will be extinguished in return for an increase in the net operating revenue royalty to 1.75% for nickel sulphate and 2% for nickel concentrate.
Centaurus said the deal provided optionality over the future marketing and sales of product from Jaguar.
Centaurus managing director Darren Gordon said the company was pleased to have reached a mutually beneficial agreement with Vale.
“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,” he said.
“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.”
Centaurus had A$23 million in cash at the end of March and Gordon said the structure of the Vale deal allowed the company to retain its cash and avoid dilution.
The company is aiming to complete a definitive feasibility study for Jaguar by the end of the year, followed by a final investment decision in the September quarter of 2024.
Jaguar has a resource of 109.2 million tonnes at 0.87% nickel for 948,900 tonnes of contained nickel, including 737,800t in the measured and indicated categories.
The company successfully produced nickel sulphate from pilot testwork earlier this year, with samples available for marketing discussions.
“The doubling in Jaguar’s measured and indicated mineral resource estimate 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 one global nickel sulphide development project with class-leading greenhouse gas emission credentials,” Gordon said.
“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.”
Argonaur analyst George Ross said this was the deal Centaurus shareholders had been waiting for.
“Release of Vale’s offtake opens the door to downstream EV and battery manufacture involvement in a funding solution,” he said.
“We expect heavy interest considering the low emission nature of Centaurus’ production.
“Centaurus may also become a target for corporate activity.”
