The main focus of the Company has been and continues to be the Kun-Manie nickel-copper sulphide project (“Kun-Manie” or “the Project”) in the far east of Russia. Despite the disruptive outbreak of Covid-19, work on the Permanent Conditions TEO (“TEO”) has continued throughout the year to date.
Amur Minerals Corp (AMC.L ) Is Kun Manie Now Fully De-Risked
The TEO is an independently compiled Russian feasibility study which enables the Company to proceed to the next stage of development at Kun-Manie. Work on the TEO commenced in 2019, and as a summary of the areas completed so far:
· Completion of an independent Hydrological assessment which established that a more than sufficient water supply is available to support the project
· Completion of the Rock Mechanics study which confirmed that open pit and/or underground operations can be successfully implemented
· Completion of the Base Line Environmental Assessment which defines the base line preproduction environmental setting and conditions
· Completion of metallurgical test work confirming that individual copper and nickel sulphide concentrates can be generated using standard industry sulphide floatation methods
During this time there has also been considerable amount of work undertaken on metallurgical recoveries, process flow sheets and operating costs, as well as reserves and cut-off grade estimation. These areas are all interconnected, and in June 2020 the Company was able to announce that it had received non-binding indicative offtake terms for both the nickel and copper concentrates, thereby providing indicative revenue terms. This information has been fed back into the metallurgical and reserve work programmes which are the last major input elements of the TEO and are very close to completion.
On 25 August 2020, the Company completed an equity placing of £6.1 million and an investment of US$4.67 million in a Convertible Loan Note (“CLN”) on Nathan River Resources Pte Limited (“NRR”) which owns the Roper Bar Iron Ore Project (“Roper Bar”). Roper Bar is a large established iron ore deposit in the Northern Territories of Australia with 446 million tonnes at 39.9% Fe JORC resource defined and 4.76 million tonnes at 60.1% Fe JORC reserve. Pit to port infrastructure is in place, an offtake agreement with Glencore and 194,000 tonnes of stockpile available to ship.
In keeping with the Company’s strategy of investing in income producing assets, the Company will have 14% coupon on the CLN and are convertible into 19% of the current issued share capital of NRR. The Company also believe that there is substantial upside potential in Roper Bar that will provide long term value and serve as a potential revenue stream.
As at 30 June 2020 the Company had cash reserves of US$831,000, up from US$398,000 at the start of 2020 and remains debt free.
The Company has undertaken a number of funding initatives during the period providing total funds from equity placings of US$1,460,000 net of issue costs. On 12 March 2020, the Company entered into a £1.5 million fixed term loan with Plena Global securities LLC (“Plena”) with an immediate initial advance of £0.5 million. As part of this loan facility, the Company also granted Plena 52,447,552 warrants with an exercise price of 1.43 pence per ordinary share.
On 16 April 2020, the Company completed an equity placing of 75,000,000 new ordinary shares at a price of 1p per share to raise gross proceeds of £750,000. Funds raised from this placing were used to repay in full the initial advance of the Plena loan facility on 4 May 2020.
On 27 May 2020, the Company completed an equity placing of 47,619,048 new ordinary shares at a price of 1.05 pence per share to raise gross proceeds of £0.5 million.
Since 30 June 2020, Plena has exercised 47,723,776 warrants providing £682,450 of additional funding for the Company. As at time of writing this report, Plena have 4,723,776 warrants outstanding.
On 19 June 2020, the Company held an Extraordinary General Meeting in which a resolution was passed to increase the number of shares which the Company is authorised to issue to 2,000,000,000.
On the 13 February 2020, the Company appointed Mr. Adam Habib as Advisor to the Board. As part of his appointment, Mr. Habib was granted 12,809,630 options with an exercise price of 1.95 pence per share, with a further 12,809,630 options subject to the successful completion by the Company of an off-take agreement, or the completion of a producing asset investment.. On the 3 April 2020, the Company made a grant of 30,000,000 options with an exercise price of 1.75 pence per ordinary share to Directors, executives and employees. As at 30 June 2020, the Company has 62,531,260 options outstanding of which 6,912,000 expire in July 2020.
Administration expenses for the first half of 2020 totalled US$1.3 million (H1 2019: US$1.2 million). There was a translation loss of US$3.0 million (H1 2019: translation gain of US$2.2 million) was due to the weakening of the Russian rouble to the US dollar. Expenditure on exploration was US$210,000 (H1 2019: US$161,000) as the Company remained focused on the completion of the TEO. The exploration asset saw an exchange loss of US$2.9 million (H1 2019: exchange gain US$2.0 million) also due to the weakening of the Russian rouble to the US dollar.
Since the start of January 2020, Covid-19 has created significant disruption to the global markets and economies, including Russia. In order to keep safe its personnel, the Company has put in place special measures to protect its workforce while at the same time ensuring business continuity. Prior to the outbreak, the Company had the facilities in place to allow remote working for most members of staff. This capability has been enhanced to ensure that the Company can now operate effectively over an extended period of time without requiring regular access to physical offices. The Company maintains close contact with its contractors working on the Permanent Conditions TEO as they also put in place procedures to work effectively over the coming months in order to ensure that these projects are delivered within their original schedules. As an additional assurance to shareholders, the Russian Federation subsoil law does allow for extensions to filing dates.
As of the date of this report, Covid-19 has created a lot of uncertainty and disruption in the financial markets. The Company has not seen any negative impact of Covid-19 on its ability raise funds, having completed equity placements in April 2020 of £750,000, May 2020 of £500,000 and £6.1 million in August 2020. However, the Directors are cognizant that conditions in the financing market are changeable and will continue to monitor developments.
The Company is fully focused on the completion of the TEO with the remaining technical studies very nearly completed. As previously stated, the technical studies generated for the TEO will feed into the next stage of the Kun-Manie project development, which is the Bankable Feasibility Study (“BFS”). The BFS provides the necessary technical, environmental and economic detail for institutional investors to advance funding for construction and into production. The BFS is itself a considerable undertaking and the Amur team has been working on the detailed planning and costing of the BFS programme. This has required considerable interaction with both Russian and international organisations qualified in conducting BFS level work.
In conjunction with the development of the BFS work programme, the Company has also been keeping discussions open with potential offtake partners. It is the Company’s belief that the successful completion of a binding offtake agreement will provide access to the types of institutional investors who provide financing for BFS programmes. We envisage that this funding will be principally through debt and would be sufficient to fund the BFS programme and sustain the Company’s activity through to the completion of the BFS.
Lastly, we look forward to keeping shareholders updated on the activities of NRR, whose management team we have got to know well over the last few months and have impressed us with their knowledge, experience and attention to detail. As stated in the 25 August 2020 RNS, NRR look on track to make their first shipment in October. .
On behalf of the Board of Directors, I would like to thank all the staff for their dedication and hard work throughout this period in getting the TEO programme organised and underway.
Mr. Robert W. Schafer
Non Executive Chairman