Jervois Global : BFS for Sao Miguel Paulista refinery restart

29 April 2022 (Australia)

ASX / TSX-V: JRV OTCQX: JRVMF

Jervois releases BFS for São Miguel Paulista refinery restart

Highlights

• • Jervois Global Limited ("Jervois") completes Bankable Feasibility Study ("BFS") for Stage 1 of São Miguel Paulista Nickel and Cobalt refinery ("SMP") restart to process mixed nickel hydroxide ("MHP") and cobalt hydroxide through to metal.

• • Initial Stage 1 forecast production of 10,000mtpa1 and 2,000mtpa of refined nickel and cobalt metal cathode respectively. Stage 2 BFS regarding a return to full 25,000mtpa refined nickel production capacity expected to be finalized in 2H 2022.

• • Net Present Value ("NPV") for Stage 1 restart of US$228 million and US$141 million at an 8% (real) discount rate on a pre-tax and post-tax basis respectively; nominal Internal Rate of Return ("IRR") of 47% (pre tax) and 35% (post tax).

• • At US$8.00/lb nickel and US$25.00/lb cobalt, post ramp up of Stage 1 to BFS production rates, average annual EBITDA in real terms projected to be over US$30 million. Refinery economics resilient to a range of market scenarios, including current spot market conditions for refined and intermediate products.

• • Total project capital cost of US$55 million, representing a competitive refurbishment of an existing brownfield nickel and cobalt refinery. SMP has a long operating history, most recently placed into care and maintenance managed by current owner Companhia Brasil de Alumino ("CBA").

• • Restarting the only electrolytic nickel-cobalt refinery in South and Latin America will deliver significant local and regional economic and social benefits to the São Miguel Paulista area of São Paulo city, Brazil.

• • SMP benefits from competitive low carbon energy (predominantly hydropower), skilled workforce, existing infrastructure including main arterial roads and ~120km from Brazil's largest container port at Santos.

• • Jervois is advancing discussions on commercial supply contracts of MHP and cobalt hydroxide to underpin SMP restart. Work continues on design of an autoclave to process cobalt concentrates from Jervois's 100%-owned Idaho Cobalt Operations ("ICO"); once available, this will be incorporated into the Stage 1 BFS.

• • Execution planning has commenced and a final investment decision for Stage 1 is anticipated to occur in parallel to closing of the SMP acquisition. Jervois continues to advance operating permit renewal process with the São Paulo City Hall, a condition precedent to closing, before 31 August 2022.

• • First commercial production from SMP's Stage 1 restart is expected during 2023.

1 Metric tonnes per annum.

Jervois Global Limited (the "Company" or "Jervois") (ASX: JRV) (TSX-V: JRV) (OTCQX: JRVMF) is pleased to announce successful completion of the BFS for an initial Stage 1 partial restart of the SMP refinery.

SMP, located in São Paulo, Brazil, previously operated for more than 30 years, producing high quality nickel and cobalt electrolytic cathode. Refined products from SMP are registered and marketed as the brand Tocantins, which Jervois plans to continue after restarting the facility. SMP was placed on care and maintenance in 2016 upon the closure of the majority of nickel feed supply at the time, the Niquelandia mine in the Brazilian State of Goias, also owned by CBA.

Jervois engaged Ausenco Pty Ltd ("Ausenco") to lead the BFS engineering and Metso Outotec to complete testwork, using third-party supplier samples of mixed nickel-cobalt hydroxide ("MHP") and cobalt hydroxide. Testwork was carried out in Pori, Finland, at Metso Outotec's laboratory. Brazilian permitting is being handled by Environmental Resource Management ("ERM"), Jervois' environmental and licensing adviser during its SMP due diligence.

SMP's location in São Paulo is exceptional, providing good access to highways and nearby port facilities, access to competitive energy and skilled labour, and due to its nature as an existing refinery, can be refurbished for a fraction of what a similar greenfield would cost to construct.

Key technical and economic outputs from the BFS are summarised in Table 1 below.

Table 1: Key SMP BFS Parameters

Parameter	Input	Parameter	Result
Assumed operating life	20 years	NPV (@ 8% real post-tax)	US$141 million
Capital cost	US$54.8 million	IRR (nominal post-tax)	35%
Nickel price1	US$8.00/lb	EBITDA3, 4	US$33 million per annum
Cobalt price2	US$25.00/lb	Payback (post-tax)
MHP payability	75% CIF Santos	Production rate	10,000 mtpa Nickel metal
Cobalt hydroxide payability	75% CIF Santos	2,000 mtpa Cobalt metal
Brazilian real: US dollar	5.30	10,740 mtpa Ammonium Sulphate

3.3 years

• 1. LME Cash in real 2022 dollars.

• 2. Fastmarkets Metal Bulletin ("MB") Standard Grade ("SG") in real 2022 dollars.

• 3. Average life of operations, in real 2022 dollars.

• 4. EBITDA is a non-IRFS measure but is commonly used in evaluating financial performance. While the common definition of EBITDA is "Earnings Before Interest Expense, Taxes, Depreciation and Amortization", EBITDA used in this news release may not be comparable to EBITDA presented by other companies.

Background

The Votorantim Group, a Brazilian diversified family conglomerate, constructed the refinery in 1981. Originally designed by Outotec (now Metso Outotec), the refinery underwent several stages of debottlenecking and expansion up to its nameplate of 25,000mtpa nickel and 2,000mtpa cobalt, in refined metallic form.

Due to a change in proportion of nickel feed, from nickel carbonate to MHP, a decision was made to conservatively cap nickel throughput at 10,000mtpa refined nickel. Cobalt third-party feed remains unchanged (cobalt hydroxide), and Jervois notes that approximately 10-20 percent of refinery nickel feed in the years prior its being placed on care and maintenance, was also MHP.

Figure 1: SMP Site Overview

Figure 2: SMP Location

SMP is located in the city of São Paulo, the most populous city in Brazil and the Americas. SMP is 14km by road southeast from the main Brazilian international airport of São Paulo Guarulhos, and 120km by road northwest from the Port of Santos, Brazil's largest commercial port. Access from the Port of Santos is 100km north along BR-050 Highway and 20km east along Ayrton Senna Highway (SP-070 Highway).

The State of São Paulo is the industrial and manufacturing heartland of Latin America, with a population of greater than 45 million people. The State accounts for approximately one third of total Brazilian GDP, with its economy in the region second only to Mexico. The State of São Paulo's GDP exceeds that of other advancing national economies such as Chile, South Africa or Singapore. It is the manufacturing and export hub of South America, and an extremely competitive and attractive investment destination.

Flowsheet Overview

The SMP flow sheet includes a feed preparation circuit, atmospheric leaching and neutralization circuits, impurity removal and filtration, cobalt solvent extraction ("SX"), nickel and cobalt electrowinning, product packaging, and associated infrastructure.

Engineering and testwork are progressing for the future integration of the pressure oxidizing ("POX") leach circuit to process cobalt concentrate from Jervois' Idaho Cobalt Operations ("ICO") in the USA at the existing refinery.

Metallurgy

Metal hydroxides are leached at nominal temperatures of +900C at a pH of <2.0. Nickel and cobalt hydroxides are highly soluble in acid solutions with typical extractions of over 98% readily achieved. The discharge from the atmospheric leach circuit is discharged to the neutralization circuit where the pH is adjusted using soda ash or a mixed hydroxide product to increase the pH to approximately 5.0, where predominantly iron and aluminium are precipitated. As all of the iron is ferric iron, no additional air (oxygen) is required to precipitate the iron during neutralization.

Upon recommissioning the refinery on nickel and cobalt hydroxides, the copper content is low and most of the copper is therefore co-precipitated as a residue with iron and aluminium.

Copper can be recovered separately via a selective precipitation circuit using sodium hydrosulphide ("NaHS"), however the initial restart will not recover the small amount of copper in the hydroxide feed.

Testwork to support the initial restart of the refinery was completed by the Metso Outotec Research Center in Pori, Finland under supervision of the Jervois team. The testwork program was progressed to understand the kinetics and extent of extraction for nickel and cobalt hydroxides. Results were favorable and typically consistent with the plants historical performance when it commercially processed the same feed materials as envisaged in this BFS.

Magnesium and manganese are deleterious elements contained in MHP and cobalt hydroxide feedstock. To manage manganese, an existing fit for purpose SX circuit will be recommissioned in the cobalt electrowinning ("EW") circuit as part of the refinery restart using D2EPHA extractant to remove manganese calcium and zinc. This will be stripped and precipitated in a wastewater stream using lime and soda ash. Similarly, magnesium is also removed from the wastewater stream using lime prior to discharging the clarified liquor to the SABESP (São Paulo State water and sewerage company) treatment facility, located close to the refinery.

A separate cobalt SX circuit extracts cobalt from the "clean" SX feed. The cobalt catholyte is recycled as the cobalt strip solution to strip the cobalt from the Cyanex 272. The cobalt SX raffinate nickel sulphate is discharged to the nickel EW circuit for harvesting. Nickel electrolyte is recycled back to the leach circuit utilising the acid generated at the cathode to re-leach nickel and cobalt hydroxides.

Nickel harvesting is completed in stages, with two days required to prepare the starter sheets and six days required to achieve the optimum nickel cathode product quality with typical dimensions of 1m by 1m by 15mm full plate cathode. Cobalt is harvested after two days; no starter sheets are required as the cathode produced is in broken form, suitable for subsequent dissolution by customers.

Overall nickel and cobalt recovery from blended MHP and cobalt feed is forecast at 99% nickel and 97% cobalt respectively.