Good morning, and welcome, everyone, to this webcast and, second quarter interim presentation here at, Nordic Mining. My name is Ivar Fossum. I'm the CEO of Nordic, together with CFO Tor Meling and Managing Director Kenneth Nakken Angedal of Engebø Rutile and Garnet. We'll give you jointly the presentation this morning. Please note that the full quarterly report, along with the presentation, and, the stock exchange release has been published, this morning, and please also note that the webcast will be recorded, and posted on the website, so you can look at it later at any time you want. As normal, you may post your questions when we do our presentations, and we will have a Q&A after we have finalized, where we'll read the questions aloud and do our best to answer all of those.
With that, let's start. The agenda today is quite normal. After my brief introduction with highlights and a few other things, I will yield the word to Kenneth to give an updated and more detailed status on Engebø. I will give a few words on the market, and Tor will finalize with an update on financial and economy. But first, let us underscore some highlights for the quarter and year to date. As in the last quarter, also the second quarter was without any lost time injuries, and we are extremely pleased and also a bit proud about these statistics. We see that our focus to foster a strong safety culture among ourselves, our contractors, and subcontractors really pays off, and it's crucial for us.
We have, in the second quarter, finalized a comprehensive task force in monitoring environmental impacts and status, both in the marine environment and onshore, so that we have a clear reference for the state of nature before we start production later this year. In the second quarter, NOK 385 million were invested in Engebø, somewhat down from the previous quarter due to the natural evolvement of our project construction. Totally, NOK 2.3 billion have now accumulated been invested in Engebø. We are on schedule to commence production ramp-up during the fourth quarter of this year, and Kenneth will take you through the various steps we will go into before we reach that stage. We are carrying out a number of various activities to prepare for production and to start up the industry at Engebø.
In the second quarter, we signed a five-year agreement for a mining operator. It's a local company, and we will give you more details on that. We have just commenced what we call commissioning. That is the startup procedure, the testing procedure of process plant machinery at Engebø. And we are pleased to announce that our offtake partner on garnet is the Barton Group of United States. And we'll give you more details on all of these points as we go through the presentation. In the second quarter, mid-May, we released the second drawdown of $30 million from the bond escrow account, and over the last month, we have reduced significantly our exposure on foreign currency through hedging and exchange. And as in the last quarter, we are confident in guiding on increased robustness on the project economy.
And to give a little bit more flavor on the milestone, for the project, On August 15, we did the final drawdown on NOK 48 million from the escrow account, and that was the final release of the total financing package for Engebø. And this milestone is important because it implies that, we have carried out four independent cost-to-complete tests for Engebø, validating our own, forecasts and projections in terms of project overall construction costs and schedule towards production ramp-up. So, it's been, a comprehensive exercise, each of these drawdowns. As we have guided previously, there has been volatile exchange markets. We're pleased to see that we now have taken down these risks and that we have remaining construction costs fully covered, in NOK, on our accounts. Then to a few other, interesting aspects of Nordic.
In second quarter, we entered as the sole owner of the exploration rights at the Kvinnherad quartz deposit, which we know for over quite a few years. We are carrying out preliminary test work to check out the homogeneity of the deposit itself, and we're also doing preliminary assessment of potential use of lands and social and environmental impacts for a possible new industry in Kvinnherad. We're also having interesting dialogues with both national and international potential partners, both regarding offtake and possible joint cooperation. We see fluctuations in the solar cell market, especially internationally and in Asia.
But this deposit may have a very sustainable and competitive place in the value chain of making crucibles for the PV sector, and we strongly believe in that sector going forward. As mentioned, we're proud to say that our offtake partner on garnet is the Barton Group of U.S. It's a seven-generation family company, and since many years ago, they have been the name in the abrasive industry. The strongest brand, we should say, in the garnet industry as we speak. And also Barton has experience from mining hard rock garnet in their own hard rock mine in Upstate New York, in the Adirondack Mountains. That means that they are a perfect partner for us, when we are launching the Engebø garnet to the international markets.
In our offtake discussions, we have also agreed that we will carry out a co-branding in our product, and, I just want to show you a brief example of how, one of these products could look like in the marketplace once we start to sell and distribute garnet to the markets. And finally, from my side, we want to inform you that, we have resolved in Nordic, to seek, a transfer of listing from the current Euronext Expand, listing to the main board at, Oslo Stock Exchange. We believe that, over time, that will, give the company improved ability to grow our position in the mineral sector, both in the Nordics, but possibly also, internationally. So with that, I will leave the word to Kenneth, who will take you more into detail of the sectors of Engebø.
Please, Kenneth.
Thank you, Ivar. Starting with HSE, the construction team at Engebø has yet again delivered a quarter without LTIs, and we have now a total project to date, 854 LTI-free days. The focus over the last months and quarters has been to make sure that we are ready for the commissioning stage by introducing more strict HSE rules in the process plant buildings. We have, in the last quarter, focused on closing up the buildings, roughly around 125 construction workers at site, with a little less during the main holiday in July. We expect now in the commissioning phase, and with people working in all different stages of the project, around 160 construction workers at site in the third quarter, moving it downwards from 180 in August towards 125 in September and October.
The majority of the lifts remaining in the project was executed in August, with the silo tops being placed on top of the silos. We are pleased to announce that we finalized an agreement for a mining collaboration and alliance with Sunnfjord Industripartner in second quarter. The partner is responsible for drilling and blasting, loading, and hauling of ore in the open pit. The company will make sure that the management of the mine design and schedule is in place and according to our UDFS and financial requirements. The fleet will consist of Volvo hauling trucks and excavators, and Sandvik will deliver drill rigs to the mining partner. Orica will also support from a blasting perspective into the contract.
The contract is expected to be roughly NOK 450 million over a five-year period, and includes predefined targets with an element of profit and loss sharing between the parties, depending on meeting the targets in the contract. The construction at Engebø progress according to plan for our productions ramp-up in Q4 this year. We have received all the process plant equipment at site, and they are also installed by the S and PP contractor, Nordic Bulk, into the process plant buildings. The civil and building contractors has started installation of the last building roof and wall panels, and we expect to be finalized within this week. All major civil works has been completed at the site, and we are closing up on starting to refurbish with asphalt and fencing around the plant on the external side of the buildings.
The E&I contractor, Normatic, is progressing well on cable installations, and the automation system is fully up and running and ready for commissioning. We have started with mechanical completion walkthroughs in the primary crushing and comminution and milling building. Looking at mechanical completion, we have entered into commissioning of the process plant. The activities are executed in stages and are progressing area by area. As mentioned, we have now started commissioning in the primary crushing and comminution side of our process plant. On a high-level point of view, you can divide our next steps into three. It's the cold commissioning, the hot commissioning, and at the last stage, the tuning of the process plant. In the cold commissioning, we want to make sure that all equipment are installed according to the manufacturer requirements.
We want to make sure all the signals from equipment into our automation systems are connected correctly and are giving us the right information as an operator. We are also testing and finalizing all the bulk material handling, making sure that we can move the ore from primary crushing all the way into our final destination in our production silos. We are filling and testing all our water lines and making sure the pumps are working as required to feed the slurry lines into different equipment in the wet plant. When all of these are finalized, we are starting with hot commissioning, and it's important to notice that we will get support from our PMC partner, Hatch, during this operation startup. It's evident that it's important for us to make sure the quality and the stability of the process plant are according to their design.
The first thing we will do is to start up and test, and make sure our crushing circuits are working as intended with manufacturing the right quality and particle size into our buffer silos. After that, we will start ramping up our production when all the mineral separation equipment in the wet and dry plant are ready for ore. After we have managed to got a stable production, making sure we have throughput in our process plant, we will start tuning our operations to make sure we achieve the full production capacity, and we expect to do this during twenty twenty-five. There is a long period of ramp-up to full production, which is then planned in line with what was set out in the UDFS. Throughout these different stages, we will have support from the OEMs, the manufacturers of the process equipment.
Some are only coming for the verification of installations, but some are also participating in the hot commissioning and in the tuning of the process plant to make sure that we are delivering quality to our customers. The operation teams are getting ready for the production ramp-up. We have our team already visiting Barton as our offtake partner and making sure we get good experience from them on training our own people. We are today in our organization 71 team members, and we are ready now and enough people to start up the plant. Even though we are ready, further colleagues will join and onboard in October and November. In total, when we are in stable production, we will be 110 employees taking into account the resources from the mining alliance partner.
In addition to training with some of our offtake partners, we have also built up a lab at the local school and university that are facilitating a lab-scale version of our process plant. This means that our team can already now train and prepare to understand the different equipment in the process plant and what they're supposed to do in the various stages of our mineral processing. Before we start up the production, it has been very important for us to do an update of our E and I, which means that several monitoring facilities and programs and surveys has been executed over the last years. This is, as Ivar mentioned, both in the marine environment and onshore on the terrestrial items. A lot of this has been executed and supported by the Norske Veritas, Asplan Viak, Sweco, and SRK.
In addition to the monitoring and surveys, we have also developed a new water stewardship plan, which facilitates and solutions to follow up water quality, quantity, and potential runoffs. We have followed up our biodiversity plan to make sure that we are documenting our impact during construction period. We have also prepared a plan and strategies for follow-up, both Scope 1, 2, and 3, during operations to make sure we have a plan towards CO2 emission-free operations at Engebø. Then I give the word back to Ivar.
Thank you, Kenneth. A brief update on the TiO2 markets, starting with the pigment sector, which is a bit twofold. We see a decreased inventory level towards the end of 2023 , and we have seen somewhat higher demand in the beginning of 2024 , which is positive, both with regard to the pigment producers as well as the feedstock producers. On the other side, we see the housing market in the Western world is quite subdued, so we're open to see how that market develops in the remaining part of this year. We also see in this industry and in this market, as in many other industries, that geopolitics is coming into play. So EU has imposed preliminary anti-dumping duty on imports on pigment from China, which is quite substantial.
And that may have an impact, also on the feedstock, supply and activity in our region. Although this is now being imposed, we see a strong increase in pigment production within China, which of course have also had a positive effect for the global producers of titanium feedstock, selling their feedstock into China. So it's a mixed picture, and we'll come back and report how this develop for the second half. In the titanium metal sector, the pace and outlook is quite different and much stronger for many reasons, and we have touched upon that in previous quarterly updates. During this summer, both Boeing and Airbus have given their outlook towards 2043. And they are both projecting a massive increase in number of new aircrafts going forward.
There are a lot more travel individuals, and despite each plane likely will hold more passengers, there is a substantial need for building new aircraft, both with regard to replacement of old models, but also new fabricated to increase capacity as such. So, the titanium metal segment is expected to be firm and growing in the years to come, which is, of course, positive news for us producing the ideal feedstock for this sector. So that was a brief update on the titanium market. Now I'll leave the word to Tor to give you a status on financials. Please, Tor.
Thank you. Thank you, Ivar. Financially, the main focus in this quarter has still been on the financing and investment of the Engebø project. So far, NOK 2.3 billion has been invested in the project. This quarter, we have capitalized NOK 385 million on the balance sheet. This is down from NOK 543 million in the first quarter, and reason for that reduction is mainly due to less capital-intensive work being conducted in the last quarter. Also, NOK 41 million has been moved from mine under construction to property, plant, and equipment in the second quarter. This is due to the completion of the administration building that has now been taken into use. On the financing side, we completed the second release of $30 million from the bond escrow in Q2.
Subsequently, we completed the third and the final release of $48 million in August. This amount also includes the accumulated interest over the lifetime of the escrow account. Cost to complete test has been verified by independent technical engineer prior to each release, meaning the last one was done earlier this month. We have solid source of funding available for the project, NOK 409 million in cash and cash equivalent at the quarter end, whereof NOK 306 million is in the Engebø company. At the end of the quarter, we also had NOK 508 million available on the bond escrow, but this also relates to the same amount of $48 million that were released in August.
We have very limited US dollar exposure related to the investment in the Engebø project now, due to exchange of US dollar to NOK to fully cover the remaining construction costs in the project. We maintain the guiding from previous quarter, that the estimated remaining project reserve is $25 million, and this cover also the minimum liquidity requirement of $50 million, and also unexpected costs. So with that, we go over to the Q&A.
We do have a few questions.
Mm-hmm.
I will gather them under the same theme, but we'll start with you, Ivar. What is the strategic outlook for leveraging the titanium feedstock from the Engebø project in titanium metal production through Nordic Titanium [ASA] , following the expiration of the five-year offtake agreement?
Yeah, thank you for that, question. We are doing preliminary, how should I say, scoping or fact-finding mission to understand, how could we maneuver long-term to see if it's makes sense for, for us and for this region to enter into that part of the titanium value chain. There are, more and more factors that could point in that direction. It's still at a very early phase.
Is the current rutile prices in line with what Nordic Mining has forecasted?
... Yes, as we mentioned also in the last quarter, we are slightly above what we have forecasted on prices. We are moving into a time period we will see a further significant drop in the world supply of rutile, both from East Africa and also West Africa, which may have a further impact on price increases for rutile.
Is there any updates on the iSiCAL project?
There is no update as such from our side. Likely, the research base that also iSiCAL represented will spark new and more detailed scoping studies, which are pointing towards more industrial application of the technology. Yeah, I think that's a fair answer at this stage. It was a comprehensive R&D project. It still remain to see whether it's also commercial benefits included in the scope of this technology.
Do you have any comments on the statements from ESA and the European Commission that [Foreign language] view as support for their case against the state?
No, we don't have any particular view on that. We're not part of that case, and we remain confident with regard to our permits, which are all in place for Engebø, and we think the city court verdict was very comprehensive and clear, the way we understand it.
There is one viewer who is thanking you for the fantastic job you have done as CEO. How do you envision the process of finding a new CEO moving forward? Will that be an internal hire or external?
We have no specific comments to that. We are moving on with that process as we speak.
Kenneth, during the initial construction phase, the company provided monthly progress updates. Could you consider reinstating these reports?
Mm
... for the later stage of the project as well?
I believe we did the quarterly updates, where we show some monthly progress, and status, and we have done also at each summer, a certain update of the status. At this time in our project, there is no reason to go into monthly details. There's so much happening on a weekly basis right now. And that's why we focus today on showing the stages that we're doing from now mechanical completion and into commissioning and startup.
Has the ISPS certification been granted for the port facilities at Engebø?
The ISPS approval is fully in place, and we have had boats coming in, offloading the top of the product silos and other conveyors and the ship loader, as part of, and after receipt of, the permit from [Foreign language].
There are some questions about the opening date of the mine, and. Are you able to provide some more details regarding the process of going to full production capacity? When in 2025 is this expected to be achieved?
I think the details of that we will come back to later as part of both our revenue and ramp-up, projections going forward. It's a little bit too early to come into those details right now.
We have a few questions about the stock listing, which will we gather in one question. And it's very nice to hear that Nordic Mining will be applying to start trading at Oslo Børs and not just at Oslo Expand. But how long will the application period be? And do you think that Nordic Mining will be on the main list by year-end?
What we have decided right now is that we are going to apply. We are working with the application now, and we will come back to you later this fall with the formal application. So, we are mapping out how this will... How long time this will take, right now.
Ivar, will shareholders be invited to a tour at Engebø at the mine startup?
That's a very good question. We have 15,000 shareholders. It's hard to invite all of those to visit, but we will, of course, seek to welcome as many visitors as possible. However, we ask for understanding that we are now in a very, very hectic phase at Engebø, completion of construction and kicking off ramp-up. We will continue for 40 years, so there will be plenty of time to visit the mine and the industry at Engebø.
That was the last question I noticed here. We could wait just for one minute. Perhaps, Ivar, you want to close up with some comments?
I can do. Thanks for all the questions. Please, if you have any more questions, send it to us per mail or try to call us, and we will do our best to answer. We are, of course, extremely excited about the phase of the project and what are just in front of us during fall. We're happy to see that recruitment is successful, and that there are very many young talents that want to engage in a new mineral industry at the west coast of Norway, being an international player in the titanium and garnet space. So I think I leave it with that, Martin. Thank you all for looking.