Good morning, everyone, and welcome to this Fourth Quarter Interim Presentation here at Nordic Mining. My name is Ivar Fossum. I'm the CEO of Nordic, together with CFO Tord Meling and Managing Director of Engebø, Kenneth Nakken Angedal. We will jointly give you the presentation this morning. As usual, please note that the full interim report and the presentation have been published in our release this morning, and this webcast will be recorded and also published on our web page. Let us begin. We have a very standard agenda this morning. After my brief introduction, Kenneth will take you through the details of Engebø and where we are at present. Before I tell you a little bit about the market outlook, as well as an update of our quartz project, before Tord will finalize with an update on financials.
As normal, please remember that you can post your questions during our presentation, and we will read them up in our Q&A session towards when we have finalized our presentation. Let's start. Once again, it's a pleasure to point your attention to the safety records. Once again, we have no lost-time injuries in the fourth quarter, and the Engebø construction has been completed without any LTIs. From now on, the overall safety management and focus has been transferred to the Nordic Mining organization from the EPC contractors, which have been responsible for this during the construction period. The fourth quarter brought a number of important and very interesting milestones for Nordic Mining. First of all, we produced the first kilos of mineral concentrate just before Christmas.
Since then, we have been working with ramping up the production, doing adjustments to the process, operational learning, and to make the whole plant work towards our production ramp-up plan. Kenneth will give you more details about this later on in the presentation. Having said that, we target to have the first shipment of product from Engebø during the first quarter. That means towards the end of March. My successor, Mr. Finn Ivar Marum, will commence his position as new CEO of Nordic Mining on March 1st , and we are carrying out onboarding jointly as we speak.
We have also strengthened the corporate staff here in Oslo, first and foremost to support the operation at Engebø, but also to have the resources necessary for the reportings that are coming against us from the EU and other places, as well as having the foundation for further growth in Nordic Mining going forward. The Engebø organization is now fully operational with five shifts for the process plant, as well as the mining operations. Kenneth will tell you more about this in a second. We exited the fourth quarter with a very solid cash position of NOK 467 million, and altogether we have invested NOK 2.75 billion in Engebø to year-end. Despite some minor delays of revenue forecasts, we are fully funded towards positive cash flow for Engebø, and Tord and Kenneth will give you more details.
Before I end, I want to highlight again the health and safety focus in Nordic. From now on, we will report the safety records on group level. I would like to applaud the four EPCs, which until now have worked over 400,000 hours without LTIs in the Engebø Project. It is a fantastic achievement, and that has been an extremely strong focus and joint cooperation between we in Nordic and the contractors. With that, I leave the word to you, Kenneth, to tell more about Engebø.
Thank you, Ivar. Taking a bird's view at Engebø in a recent picture, we do see that the pit is progressing, and we do see where the material goes from the pit into the underground crusher and into the process plant along the fjord. You also see the access road being completed on the way up from the county road through to the mining area. It's a proud moment to say that our construction phase has been completed. It's been fantastic work by all at site, both our own construction and operative departments, along with the EPCs, both on an HSE way, as mentioned by Ivar, but even more on how we have cooperated to meet our deadlines and targets all the way from 2021.
There is some work remaining, but it's only minor balance of plant, which will be dealt with on the side and does not impact our ramp-up. We will have a small project team at site and at Engebø to make sure that we verify all the as-built drawings and documentation from both the EPCs and our process equipment suppliers. We have, by this, established punch lists and defects notices that we follow up towards the contractors. We are not yet into full operation, which means that we are still defined as a construction site. We are also, in parallel, finalizing all requirements from the Planning and Building Act to close out all these items according to our building applications. Among that, as Ivar mentioned, the transfer of the HSE coordination is now moved from the EPCs to our operative department.
Looking at ore coming from the underground crusher into the first building, which is the comminution and milling building, we do see the crushing ring on the picture, which leads to crushing the material down from roughly 10 cm to 9 mm. The conveyor on the right side of the picture feeds the ore then to the mill, which mills down to roughly .5 mm . This guides and leads the slurry, which we introduce water in the mill, into our wet plant building. As you can see on the picture, it's a structure focusing on pipes. It is focusing on sumps, pumps, and the required machinery and separation units to separate the ore into our three main production lines going out of this building.
The process equipment in the wet plant is consisting of gravity separation and magnetic separation, along with particle size separation to feed both a coarse and fine process stream. The magnetic separation is used to divide the garnet and the rutile to get three main streams into our final dry plant building. As you can see on the picture, the dry plant building is also completed, and you see the belt filters on the back, which are then reducing the moist content down to roughly 5% before it goes into our electric dryers, and then electrostatic and magnetic separation to upgrade our product into final concentrates. The material goes from the dry plant building and into our product silos. Looking a little bit closer into the pits, we see that our first benches have been established and are progressing well in the northeast corner of our Pushback one plants.
We are leveling out the area and making sure that we are making progress sufficient to have ore in the future months to come. We have ramped up the mining activities, so we have all primary and secondary machines at sites and the staff onboarded to meet the requirement of both ore and waste rock into the waste rock deposit. We are currently at full capacity on the waste rock, meaning we are using the waste rock deposit according to our permits, and we are feeding the plant with the required ore according to the process plant ramp-up. During this final stage of testing and ramping up, we are producing final concentrates. We are running the plant separately as we have a crushing and a milling and wet separation and a dry plant.
These three parts of the plant are running separately and to some extent in parallel as we move forward. The final products are now being led and produced into the product silos as part of the ramp-up and making sure we are meeting the final and quality grade. When we had these Q&A's at the end of the quarterly presentation for the last few years, many times it's been asked, what are the biggest risks? What are the main challenges? Our answer has always been, it's not necessarily to build the plant, but it is in the stage we actually are now when we are ramping up and producing our first ore. This period has been a significant learning period, and we are very motivated to continue the ramp-up with the great team we have at site.
We did not achieve our goals as planned for January because we saw some defects that were unforeseen becoming visible when we ramped up the plant with more capacity. These have been resolved, and where we have not resolved them, there have been set in place temporary solutions so we can continue our ramp-up. As long as this phase is a bit uncertain, we are very motivated and putting away plans to make sure we continue our plant ramp-up as planned. A big thing that happened in December was our first mineral concentrate. Before that, as announced in the third quarter presentation, we said that we will have two major milestones in the fourth quarter. The first one being the first ore to the mill, and then the second one being the mineral concentrate, which we announced the 23rd of December last year.
The continued plan is to ramp up the capacity of our production facility up to the annual production rate by the end of 2025. We are focusing on the quality of the mineral concentrate so all our products can be sold, what goes through the whole production line. We have, on the basis of the unforeseen challenge in January, updated our ramp-up plans, and we do see that there's a potential delay on our revenue stream of up to one quarter. We are still targeting the first shipment of garnet in the first quarter and rutile in the second quarter. On the basis of the successful mineral concentrate, we do not see a current issue with our process equipment. Our process equipment is working as intended and according to our data sheet created in the DFS stage.
We are then, and by that, remaining at our production level on the long term unchanged. Then back to you, Ivar, on market outlook.
Thank you, Kenneth. A few words on the market outlooks. Again, we see that the metal sector for titanium metal remains strong, and the reports we get are that the producers worldwide are producing at full capacity to maintain the coming demand on metal. In pigment, the picture is somewhat different, as we also reported in the last quarter. Due to conflicts and due to uncertainty, there has been a soft demand during the last half of 2024 and also in the fourth quarter. However, there have been taken some countermeasures in the sense that Europe now has finally sort of resolved import tariffs for Chinese pigment into the EU, and that should help the competitiveness for the European pigment producers. It should support their operating rates at their plants, and we would think that that would lead to also an increased demand for titanium feedstock for this sector.
It is uncertainties, as you all know, with regard to the global picture in terms of trade, which may as well affect us, good, being the sole producer of garnet and one or two rutile producers in Europe. Also, on the garnet side, we have seen a soft industrial market, both in Europe and North America, in the last months, but there are signs that it will recover throughout 2025, and we are very optimistic in introducing high-quality garnet from Engebø into the European market together with Barton, our marketing partner. A little closer look on the rutile prices, which have gradually inclined from lower levels through the last decades up to the level which we saw in 2022, beginning 2023, and then we have seen a dip in the bulk trades of natural rutile. However, we see outlook that the rutile prices again will recover going forward.
For the broad quantities of rutile, we have a market-based pricing mechanism in our contracts, and as you know, we have the full production of rutile covered in contracts for the first five years. On garnet, we have a contract with Barton with fixed volume and also fixed prices in dollars for the first five years for garnet. Some brief comments on the status of the Kvinnherad Quartz Project, which you know is in a very, very early phase, but we did extract around 10 tons of quartz ore from the deposit in November in order to carry out a quite comprehensive bulk processing test work to really specifically check the quality of the potential product from these deposits.
Before we entered that bulk processing test work, we had done some variability test work to start with, and they have shown very promising results reflecting previous test work we have done on the deposit. That is a very good indication and important parameter for us to move on with the development of the project, and we will come back and report on progress. With that, I'll leave the word to CFO Tord Meling to take you through the financials.
Thank you. We exit 2024 with NOK 467 million in cash. This quarter has also been characterized by significant investments, and where a total of NOK 142 million has been invested in the CapEx program at Engebø, NOK 35 million has been used to pay interest on the bond loan. Operationally, we had a positive cash flow. This stems from reimbursements of VAT from previous periods where the CapEx levels were higher than they are today. We have seen a significant weakening of the NOK throughout the quarter, which has had a positive effect on our liquidity. This effect comes from a U.S. dollar account where we keep the $15 million for the minimum liquidity requirement. The CapEx program from the construction project is coming to an end, and we estimate approximately NOK 100 million remains at year-end 2024.
This is an approximate number where there will be some final discussions with various suppliers, so exactly when the last bill is paid is still a bit uncertain. We remain fully funded until positive cash flow, but due to the revenue coming later than we earlier planned, the cash low point will be lower than what we previously expected. We monitor this very closely and expect to move into positive cash flow territory in the second half of 2025. Profit and loss in the fourth quarter has been affected by currency fluctuation. While the cash had a positive effect on this, the accounting effect has been negative. Both the bond loan and the royalty agreement are nominated in US dollar and have resulted in a non-cash negative effect on earnings with $135 million.
We have revised the price estimate on the rutile, which affects the future cash flow related to the royalty agreement, and NOK 48 million has been recognized as financial income in the quarter. We have capitalized cost for the development of the Engebø project also in this quarter with NOK 147 million. Finally, I would like to mention that we have expensed the cost for the quartz project over the P&L with a total where we have a total investment of NOK 10 million in this phase of the project in 2024 and 2025, so we are about halfway into that now. With that, we go over to Q&A.
Yes, thank you. We have a few questions, and we'll try to merge similar-sounding questions. We'll start with the Engebø project. There are some questions about the production quantity of garnet relative to rutile.
Could you say what kind of volumes that you are planning on producing this year and how much you're going to produce during the first half and second half of 2025?
It's a little bit too early to guide on quarterly levels for 2025, but we remain on the position, as explained, that we are planning to ramp up the full production capacity by the end of 2025.
We have some financial questions. Given you drop below $25 million, do you expect to breach the $15 million cash bond covenant?
No, we don't expect to do that. We're planning this very thoroughly now, and our job is to maneuver both the ramp-up and also this liquidity.
Is it increased operational cost or the delay that is causing the lowered low-point liquidity estimate?
It's the delay.
When do you expect your financial obligations to be covered, and when do you anticipate paying dividends? Are there any shifts in this timeline compared to what you mentioned in the report?
No, we haven't changed any views on the long-term plans, so the volumes and the cost in the project remain the same as we have planned out from the DFS.
Do you have any plan to refinance, especially the loan with the 11% interest rate?
We will come back to that when we are up in operation and in steady state. We will come back to that.
This might be for you, Ivar. Could you provide information on the discount Iwatani receives on rutile compared to current market prices, and what is the percentage?
I cannot disclose any on that agreement currently.
Ivar, are you worried about the EFTA outcome and how it could affect the Engebø Project?
Thank you for that. I think we have commented on this quite a few times. We're very confident on our permits and licenses given by the Norwegian State, and we don't see any risk related to that case.
We will give them one or two minutes and see if there are any other questions coming. It does not seem so. If you still have any questions, please reach out to the company. Ivar, perhaps you would like to summarize this session.
Thank you, Marum. Again, it's been a pleasure to present our progress in Engebø. Fantastic achievement by the whole team to make the first new mineral industry in Norway for several decades. That's quite an achievement, and it's fascinating to see how now we are ramping up production. To all shareholders out there, I'd like to say thank you for your support and interest in building a new mineral industry in Norway over these years. Again, thank you for watching.