AXIOM MINING LIMITED The inal quarter of 2015 has been a challenging time for nickel producers, and mine developers like Axiom have not been exempt from the turbulence.
However, I am pleased to say- even while waiting for the Court of Appeal decision on the Isabel Nickel Project and falling nickel prices- Axiom has continued to deliver.
On the corporate front, we achieved two key milestones-a strategic partnership with InCoR that provides funding of up to $15 million and access to innovative ore benefciation technology, and an off-take and agreement with global trading house Gunvor Singapore Pte Ltd (Gunvor) that provides up to AU$5 million of ore pre-payment fnancing.
We successfully upgraded the project's JORC Mineral Resource estimate and defned the frst fve years of production. The high grade saprolite total Mineral Resource tonnage almost doubled to 3.9 million
tonnes at 1.7% Ni, demonstrating the potential of this world class asset.
This was achieved from the second phase of drilling across our Kolosori tenement on Santa Isabel Island, with plans to resume drilling there as well as commence on the south San Jorge tenement in the new year-to further upgrade our JORC Mineral Resource estimate.
In addition, project development works are underway to achieve our frst shipment of ore by end of 0"1, 2016. As previously announced, we have adjusted project timelines to ensure alignment with the
requirements of our new commercial partner Gunvor and now in anticipation of the delivery of the
final Court of Appeal ruling.
Whilst awaiting the Court of Appeal decision, we remain optimistic and continue to work towards positioning Axiom to meet demand now and when global market conditions improve. We will continue to maintain strong relationships with key stakeholders, including our landowner partners, to ensure we are prepared for the outcomes of the court decision.
Ryan Mount Axiom CEO
3 | Axiom - Quarterly Activities Report for the period ended 31 December 2015
Axiom continues to work towards becoming a signiicant nickel producer in the Paciic region, to ensure we will be in the best position to meet demand when the market turnsDespite current subdued market conditions, global demand has grown at an average of 6.3% since 2010 and China remains reliant on imports, with only 15% of their nickel consumption sourced domestically.
As such, China is ncreasingly leveraged to its growing appetite for nickel.
Their current intensity of use is only 60% of fully industrialised countries. As their economy industrialises, demand is expected to move from basic materials like carbon steel into stainless steels and ultimately into specialty alloys that require a lot of nickel and will drive non-stainless nickel consumption, eg castings, electro-plating, batteries and chemicals.
Chinese mine supply as a % of demand
85%
54%
57%
67%
29%
15%
18%
PGM Nickel Copper Iron Ore Lead
Aluminium
Tin
Zinc
Large, low cost sulphide mines are not being replaced. The rate of nickel sulphide discoveries cannot keep pace with increasing global demand.
Sulphide production as share of global supply has fallen from 57% to 37% in the last 15 years with laterite ore filling the gap. The world's six largest sulphide mines have seen a 32% decrease in head grade over the last 20 years. Indonesia, the world's largest producer with the largest nickel deposits, introduced a ban on ore exports in 2014 that removed 25-30% of global supply.
There are few new discoveries or known world class deposits that are production-ready. Also, Indonesia's strategic plan to incubate a nickel metal processing industry is not eventuating to targeted timeframes and is unlikely to satisfy any increase in nickel demand.
Axiom - Quarterly Activities Report for the period ended 31 December 2015 | 4
Limited alternatives to replace high grade Indonesian laterite oreThe Philippines can only supply 5-10 million tonnes per annum (Mtpa) of high grade ore, which cannot replace the 50 Mtpa Indonesia supplied prior to the ban taking effect. It is also likely that the Philippines high grade deposits were depleted in 2015, leaving only medium to low grade ore remaining for export.
World saprolite resources | |||||||||
1.7-1.8% | |||||||||
1.7% | |||||||||
1.4% | |||||||||
2.6% | 1.6% | ||||||||
1.5% | |||||||||
45
40
35
30
25
20
15
10
5
0
Indonesia New Caledonia
DSO or developed
Philippines Americas
Tied to producing smelter
Indonesia = Ore grade
Industry consolidation and national interests underpin the value of available and independent world class nickel laterite depositsFollowing a regional trend of consolidation, the fnal half of 20"15 saw:
Philippines' largest nickel company Nickel Asia Corporation acquire Geogen Corporation
Philippines' second largest nickel company Global Ferronickel Holdings acquire the country's third largest nickel company Southern Palawan Nickel
Independence Group complete their acquisition of WA's Sirius Resources.
Another major regional producer, New Caledonia, only supplies to their traditional markets of Japan, Korea and Australia (with a recent government declaration not to supply China, the biggest consumer of nickel and nickel ore).
Indonesia continues to hold steadfast to their ban on the export of ores as they continue to develop their processing capabilities.
Axiom Mining Limited issued this content on 29 January 2016 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 30 January 2016 23:48:11 UTC
Original Document: http://www.axiom-mining.com/IRM/PDF/2433/QuarterlyActivitiesReport
