Nordic Mining ASA

OSE:NOM

Earnings Call Transcript 2022-Q3

[Ivar Fossum, executive]

Good morning, everyone, and welcome to this extended company presentation and third quarter results here at Nordic Mining. My name is Ivar Sund Fossum. I'm the CEO of Nordic. Please observe that this webcast will be posted on our homepage after this presentation. Also, you can post your questions on the web during my presentation, and we will read the questions under our Q&A session to the end. So then we move on.

Today, I will present together with Chief Financial Officer, Christian Gjerde; and Vice President, Resource and Sustainability, Mona Schanche, and we will do a bit of handshaking here at the stage and talk to the various parts of the presentation.

Before we move on, a few highlights. We have come a long way with the Engebø project, and we have secured the vast majority of product financing at Engebø. We have secured $55 million from the American Resource Fund, Orion, and we had just recently closed a senior secured bond of USD 100 million.

We have also seen in the recent months that the economics of the project has increased substantially, increasing the net present value with approximately 70%. There are growing interest for the minerals we will produce from Engebø, and we have now signed 2 long-term offtake contracts for natural rutile and we are experiencing increasing global interest for our garnet products.

I'm glad to say that the project is progressing according to plan, and we will tell you more about all this later on today, and we are heading towards production start-up in the second half of 2024. Also, we will tell you more about our ESG focus, particularly on climate but also biodiversity. Finally, we recently saw that our mining rights, again, has been reconfirmed by the second win in the appeal court here in Oslo.

So with that, we move on to today's agenda. I will start to give a brief overview and company updates before we go more into detail about the Engebø, rutile and garnet project, tell you about the status and Christian will tell more about the economical parameters of the project.

We have seen over the recent years and in particular recent year maybe that there has been a strong political push towards establishing more mineral production in Europe, in Scandinavia and also in Norway. This summer, the employer organization, the labor organization, the Norwegian Quarry and Mining Association as well as the Industry Association held jointly together with the government, come together in order to make the basis for creating new value chains on basis of minerals, but also into batteries and other critical material and products which we need in a modern society and to enable the green shift.

Yesterday, there was a broad stakeholder meeting here in Oslo, jointly with EU and the Norwegian Ministry of Trade and Shipping, to establish a strategic partnership with EU. This is a result of the direct engagement by Mrs. Ursula Von der Leyen in the EU to make this happen. And we are extremely excited about this type of collaboration that we think will be important for our sector.

At Engebø, we see that there is a combination of a unique deposit in combination with a special location of this deposit. First of all, it's unique in the sense that it has high grades of both titanium and garnet, which in itself is a rare occasion, but secondly, the location of the deposits are blessed with being on the West Coast of Norway.

The West Coast of Norway has 2 favorable parameters the Gulf Stream is coming up along our West Coast. So it's ice-free conditions year around. And secondly, it's a wet part. It's raining a lot. And therefore, we have a lot of hydropower in the region. But also, we can tap into a region with a skilled labor force stemming from shipping industry, marine farming, service bases for oil and gas industry as well as smelters and other mineral industries. This is extremely important when building a cornerstone new industry for 40 years in Norway.

And we have good infrastructure. Two local airports, plenty of roads and there is a nearby city 40 minutes away from the site itself. At Engebø, we produced 2 industrial minerals. Rutile is the purest form of all titanium feedstocks with the property that it can go directly to the plants for making pigment or metal without going into another plant for refining or smelting. This makes rutile a niche and highly valuable feedstock.

In addition to having been sort of the basis for modern production of titanium metal but also environmentally friendly production of pigments, we see that rutile and titanium feedstock are moving into the renewable sector for making batteries, solar cells, but it's also crucial to make geothermal energy plants, which we will see growing in the years to come.

Garnet is a younger industrial mineral that has its own properties which make it unique. It's completely inert and it allows for low temperature cutting of all kinds of materials through waterjet cutting technology. It has the right properties also to be recirculated and cannot cause any harm with regard to lung diseases and other things, which you might find in other slag materials or natural sand. Nordic Mining will be the second producer of rutile in Europe, and we will be the only long-term producer of industrial garnets in Europe, a unique position that is offered to us.

Looking back a little bit, we have now stepped into a new chapter in our history in Nordic Mining and for the Engebø projects. After 15 years of developing impact assessment, permitting discussions, we have now entered into a completely new era for the project when we broke ground in April and started construction of the Engebø plant.

What we have now is a well-matured and very well-defined projects, where we have step by step established the foundation for making a new generation of mineral industry in Norway, but it also will be the first new mine in Norway for almost 40 years.

So before leaving the word to Christian, that will explain the economical parameters to us, I will give you a brief update on the status at Engebø and what is going on there right today. First of all, we focus on health and safety, and we're glad to see that we don't have any injuries either in third quarters or year-to-date in our operations.

We have had 1 high potential incident. We had a dumper that was reversed and almost tipped over on the side of one of the access roads. And these are incidents, which may happen but makes us cautious. So we see that we need to implement a good system and follow up closely with our entrepreneurs and everybody in the project staff.

A lot of activity is going on at the Engebø sites, down at the process plant area, on the whole road and access road up to the mountain and other places, including careful monitoring of the environment, both as referenced, but also in order to monitor what is going on when we actually carry out construction.

On this map, you see an overview over the plant site, and we have been doing work down at the key in leveling out the process plant area. We have been working excessively with the access road, which you can see on the right-hand side, going up to the open pit and mining area. And recently, we have been carrying out preparations for entering the underground tunnel that will make the infrastructure and the ore shaft, where we also will have the primary crusher for the ore from the open pit mining area. A lot of activity, a total of over 50 persons together in the project, both our own people and entrepreneurs currently at site.

So with that, I'll leave the word to Christian to take you through the project economics.

[Christian Gjerde, executive]

Thank you for that, Ivar. So I will then give you an update and status on the project financing for Engebø. 2022 has, as Ivar just explained, been a milestone project for the Engebø project. Year-to-date, we have secured $190 million in funding from large financial and strategic investors, which all have done extensive due diligence, giving sort of a very firm third-party validation of the Engebø project.

It started with a $16 million convertible loan from a local EPC investor group in February of this year, which funds have been used to start early construction works at Engebø, procure the main properties and really get the momentum for this year going. Further to that, we this summer secured $19 million from our retail offtake partner, Iwatani, which will contribute into the broader project, equity project financing, which will be announced later on.

In October, so last month, we also secured a $55 million investments from leading Minerals Resource Fund, Orion Resource Partners, which will contribute $50 million in a non-dilutive royalty and $5 million in equity. Subsequent to that, we have also successfully secured $100 million in senior secured bonds at the 12.5% coupon and a 90% issuer discount, giving in yield to maturity of around 16.3%, which is, in this current environment, a very solid debt financing.

In addition to the funds that we have raised from the market, we've also secured close to EUR 47 million from the sale of our investment in Keliber, that was successfully divested in September, giving a realized return on that investments from when we initially invested back in 2008 of over 550%. These funds has been started to contribute into the Engebø project, and we will continue to deploy those funds into the Engebø project as we move forward.

Looking a bit more on the details of the ongoing project financing. So we have to date secured around $211 million total in project financing, which comprise around 75% or just above 75% of the total contemplated project financing package of $277 million, leaving a puzzle -- the last piece of the puzzle of around $66 million to be raised in equity.

The financing package that we have secured gives a robust capital structure with an additional $30 million in project reserves, really to ensure that we have a solid basis for executing the project in this challenging market. And it also delivers us a very competitive cost of capital that minimizes dilution for existing shareholders. Now when it comes to the remaining $66 million to be raised in equity, we'll come back on the structure terms and timing of that in due course.

Ivar mentioned that there has been significant changes and improvements in the Engebø project financials. And I'll outline a bit of that here on this slide. So we've seen significant improvements in many of the key financials of the project driven by several factors, one being increase in price expectations both for rutile and garnet compared to the UDFS of May last year. We also see slightly reduced operating cost as a result of the weakening of the NOK compared to the dollar, which is the base currency that we value the project at and also driven by the fact that we have continued to develop and execute the project and we are moving closer to free cash flow. So all of that is impacting the overall economic outlook for the project.

If we look at the details of the graph, the 2 minerals will generate in total around $80 million in revenues in the first full year of operations, increasing to just over $100 million in 2030, as we ramp up production of garnet. In total, you will see that we will generate, including the prepayment of the royalty, over $620 million in revenues in the years 2023 to 2030. And this combined with a low-cost integrated beneficiation process gives us a very healthy EBITDA of around $62 million on average in the period, after deducting the 11% royalty to Orion, corresponding to an EBITDA margin, again after deducting the 11% to Orion of around 65%. So all of this really has improved the overall fundamentals of the project.

Now if we sort of look at this more holistically, This, in combination really drives the value. So as Ivar alluded to, we have seen a significant increase in the valuation of the project of around 70% compared to the UDFS of May last year. We are now forecasting unlevered net present value discount at 8% of around $450 million, so really a step change in the economics of the project.

We are seeing very healthy, again, post Orion royalties being paid over the life of the mine of $1.9 billion. So really strong fundamentals for us to be able to, in a very short period from now, deliver healthy distributions and dividends back to our shareholders.

Key numbers. So I alluded to an unlevered net present value $453 million, up 70% from UDFS of May last year; unlevered post tax IRR 24.4%, up close to 5%, again from the UDFS; healthy EBITDA of $62 million on average in the years 2024 to 2030, which is post 11% being paid to Orion and free cash flows of $50 million. So all fundamentals of the project has really significantly improved from May last year.

So with that, I'll hand back to Ivar again.

[Ivar Fossum, executive]

Thank you, Christian. At Engebø, we are talking about one of the world's largest, but also one of the world's richest deposits of rutile. It's a very, very special deposit that we have been fortunate to have in Norway, but it's not only large and rich, is also extremely pure. First and foremost, with regard to radioactive elements, which is important in all the products and all the processes that these feedstocks will undergo, but also other elements that you don't want to have in this kind of raw materials.

And this is one of the reasons why we have signed a long-term and strategic partnership with a Japanese trading house, Iwatani. They will be an offtaker for a majority of our rutile production from Engebø, but they also will be our long-term investor and partner to the project and to Nordic Mining.

In addition, we have signed another rutile offtake agreement for production from Engebø with another global major in the titanium space. And jointly, these 2 represent all the rutile production in the first 5 years from Engebø.

As we are getting closer to production and realizing the project, getting all permits in place, we have realized an increased interest also for the Garnet production, which we will have from Engebø and we are continuing our dialogues and discussions both with a European partner for a long-term offtake. And also, we have signed an MOU with a partner in the U.S.

The garnet mineral is special in the sense that the price is much lower, so logistics and shipping are important elements in the world trade of garnet. Again, all garnet is currently imported to Europe, and we will be the only long-term producer of garnets in a very, very important market, and we'll also be able to reach other overseas market from the West Coast of Norway.

As mentioned, fortunately, we were able to do prefinancing by way a convertible loan in February this year, which again allowed us to break ground and start preparatory construction works already in April. And this has enabled the project to move forward with important early works so that we can keep our schedule towards starting production in September 2024. It's fantastic to see how the project is establishing itself with new employees and building a whole new family of enthusiastic people, and that jointly will make this project happen in [indiscernible].

Being a new mine in Norway, a long-term industrial player, but also a global player within the minerals we will sell to the world, we focus on sustainability and are conscious on building a strong culture regarding sustainability within ourselves, with our stakeholders, with our entrepreneurs, with everybody we do business with.

And it's natural for us in the mineral sector to focus on 3 main areas: first of all, to be environmentally responsible in everything what we do; to be a good neighbor, we will be a long-term player in the local community, we will impact families and be a long-term employer; and finally, to offer a safe and healthy working environment for everybody that work in construction and through production.

And with that, I'll leave the word to Mona Schanche, Vice President, Resource and Sustainability to continue on this topic. Please, Mona.

[Mona Schanche, executive]

Thank you, Ivar. Two independent studies show that Engebø project is the world's most climate-friendly titanium feedstock producers. On the left-hand side, you can see a study that was carried out by SRK, where the Scope 1 and 2 emissions for the Engebø project were calculated. So the Scope 1 is the direct emissions from the process plant and the mine and Scope 2 is the emissions of the electric grid.

And these results were benchmarked against producers of titanium feedstock globally. As you can see from the graph, the Engebø project is top rated in terms of greenhouse gas emissions. And there are several reasons for this. First of all, we have a zero emission -- emitting process plant due to the available hydroelectric power in the area. Also, we have a low energy consumption due to tight infrastructure and efficient design. We have reduced our emissions by 85% by swapping from gas dryers to electrical dryers. And we are working towards zero emissions by phasing out fossil fuel dependency at the mine.

On the right-hand side, you can see a life cycle analysis that was carried out by Minviro Consultant for our rutile product. This study also included Scope 3 emissions, which are the indirect emissions from the project. Again, as you can see in the graph, the Nordic rutile product is top rated in terms of global warming potential compared to other feedstocks such as titanium slag, synthetic rutile and other natural rutile sources.

As a response to the United Nations goal to stop loss of biodiversity, Nordic Mining has set an ambitious goal of net biodiversity gain for the Engebø project over the life of mine. This means that the positive effects on biodiversity should outweigh the negative effects over time. In order to achieve this, we are making a biodiversity action plan together with DNV and Asplan Viak currently. And the plan really sets out a road map with actions to obtain net gain by avoiding, minimizing, restoring and compensating loss, as illustrated in the figure to the right.

An important knowledge -- or important is to have a good knowledge base on biodiversity before starting this work, and we have done comprehensive mapping of biodiversity in the project area. And we have already started work to enhance biodiversity through the construction phase. Among other things, we are removing planted forest to allow for the natural forest to expand, which is high in biodiversity and has a number of red-listed species.

We are making plans for progressive restoration of the mine and vessel facilities during operation. And while we cannot 100% restore, we seek to compensate loss of biodiversity in the region in close collaboration with local communities.

And with that, I'll leave the word to Christian again.

[Christian Gjerde, executive]

Thank you, Mona. So I'll then give a brief status on the financials for the third quarter of 2022. So as alluded to earlier, we did execute our sale of Keliber in September and secured the funds from that around the 20th of September. So with that -- with the closing of that sale, we have secured a solid basis for moving forward with our early construction works at Engebø. So at quarter end, we had $525 million in cash sitting on our accounts, allowing us to continue as we have previously announced to continue the early works at Engebø.

In the quarter, we have spent about $51 million into the execution of Engebø, which has been capitalized undermine under construction in the quarter. And the total carrying amount of the Engebø asset in our balance sheet now as mine under construction is around NOK 168 million. As a part of the close of the sale of Keliber, we had a small loss related to foreign exchange on the sale itself, but we also had an offsetting effect on the euro considerations that we received. So a small -- or a positive gain of around NOK 10 million on foreign exchange related to the closing of the Keliber sale. We've also assessed again the convertible loan from fair market value of NOK 143.3 million, recognizing a marginal gain in the quarter of NOK 1.9 million.

For the full details of the quarterly report, please see to our website for all the details. So with that, I would -- yes, so with that, I would invite Ivar and Mona back for Q&A.

[Ivar Fossum, executive]

Thank you, Christian. So we'll leave [ Morten ] to guide us through the questions.

[Unknown Executive]

We have quite a few questions, and we'll try to group them a little bit. We start with the questions about increasing value. Can you say something about which parameters that were adjusted to get this augmentation?

[Christian Gjerde, executive]

Sure. So as I said during the presentation, there are several impacts that have raised the net present value unlevered basis from $260 million to just over $450 million. So one important component is an uplift in the price expectations, both for rutile and garnet. Second one being operational costs being slightly lower due to a weakening of the NOK as we calculate the value in dollars. And the third one, obviously, being the time value of money. So we have progressed the project from May last year until September this year, which is the basis for this calculation. And all of that ensures sort of the improvements in the net present value. I would also like to comment on that we have adjusted the operational and capital cost expenses for inflation -- the inflationary components of it to reflect the current net present value assumption. So it is based on the latest data availability and assumptions.

[Unknown Executive]

With these great numbers of profitability, why haven't any banks lend Nordic Mining money? Is there a political barrier financing Engebø that you meet when you present this project?

[Christian Gjerde, executive]

So I mean we have secured $100 million in a senior secured bond with very high -- I would say, high-level investors, both international and domestic. So there has been a very strong interest in contributing in the financing of the project, both on the debt and equity side. And we've also obviously secured $55 million investment from Orion Resource Partners, which is one of the leading natural resource funds globally.

[Unknown Executive]

We have also many questions about the remaining of the money. Do you know when you will gather the remaining money? And can you be more specific about this work? And are you worried that the equity market will be difficult when obtaining this money? And the last -- and one question there is how big will the repair emission be?

[Christian Gjerde, executive]

So I think in terms of the timing, as I said, we need to come back in due course on the timing and the structure. I think we will -- we are acknowledging the markets being challenging. We have, however, successfully been able to raise $100 million in a bond, again, with very qualified investors. So we have a strong faith in that we will be able to secure the last 20 -- sorry, $66 million, which is just shy of the 25% of the total package, but I think we'll have to come back in due course when it comes to the timing and structure.

When it goes to the, I would say, the repair issue, I think we did have a private placement last year that failed to have a repair, the same happened in the year before, and we've always taken a stand that we want to give a healthy repair contribution to existing shareholders. So we'll have to come back on the exact details of that, but I think we will allow for a sizable participation also for existing shareholders.

[Unknown Executive]

Which deadline to be fully funded according to agreements with financial partners?

[Christian Gjerde, executive]

So in the bond, there is a long stop date, which we call it at 4 months from the issue date and the issue date of the bond being tomorrow. So within 4 months, we will have secured the remaining $66 million of equity financing to be fully funded.

[Unknown Executive]

What are the consequences if the project is not fully funded within the deadline? And how will you ensure that this deadline is met?

[Christian Gjerde, executive]

We will ensure that it's met by obviously engaging and running a thorough process towards the equity capital markets. We have full confidence in our ability to deliver on that. Contractually, that is the deadline that is agreed in the bond term sheet, and if for any reason, we would need to go back to the bond and discuss.

[Unknown Executive]

Yes. And Nordic Mining was quoted that financing was 80% complete in recent media articles, but is now only 75% complete. Why is that?

[Christian Gjerde, executive]

Over 75%. So as you will see in the graph of capital provided, there are various impacts related to, amongst other things, foreign exchange. So there are -- this is a dynamic picture, and it changes slightly from time to time as I think as we move on. But we are -- $66 million is what we're guiding on to ensure fully funding. In the last press release, we said $65 million. So there are only minor changes in this driven by, for example, foreign currency changes.

[Unknown Executive]

Do you plan to refinance the bond when construction starts? And will you consider a buyout of Orion royalty?

[Christian Gjerde, executive]

A project bond is a 5-year bond, so it has a relatively short tenure. It is modeled so that we can fully repay it at the maturity. But obviously, this is a construction financing, and we would seek to refinance it as soon as we have reached a steady-state production.

[Unknown Executive]

We have some questions looking backwards, and shareholders expect that the financing was ready earlier this year. Why did it take so much longer? And why did you not secure a traditional bank loan?

[Christian Gjerde, executive]

Several reasons why we were delayed. I think we've -- I think every shareholder, who has followed us, obviously, is aware of the delays that we had in the final resolution of the operational license. And I think the window that we had available from 11th of May, I believe it was until summer was too short in a challenging market. So there were several implications of that.

I think when it comes to the structure, we've again successfully raised $100 million in a bond, which is at very competitive, I would say, terms. So we're very happy on our strategy for that.

[Unknown Executive]

So questions about dividends of $624 million cash flow. How much will you be -- how much will be issued as dividends for the year 2023 to 2030?

[Christian Gjerde, executive]

I think we'll have to come back to the details of that once we get closer. But I think we have said and we stand by that, we will have a competitive remuneration policy for shareholders, both through dividend and also potentially share buybacks. I would like to comment, though that, that $623 million is prefinancing. So it includes the royalty but not the bond. So it will be slightly lower, obviously, having repaid the bond. But we will -- we do have a strategy to be competitive on distributions to shareholders, but the details we will need to come back to once we actually get into production and in a position to distribute dividends.

[Unknown Executive]

You did answer some on the inflation, but has the inflation has now impacted the OpEx?

[Christian Gjerde, executive]

Inflation has gone up, which is reflected in our latest financial forecasts. I think it is partly mitigated by the weakening of the NOK. So a large part of our operational costs are NOK based, labor, power, et cetera, et cetera. So it is partly offset, but it has obviously influenced the underlying cost elements.

[Unknown Executive]

Are you considering to sell your patented right for the new technology for production of alumina to increase the equity in the Engebø project? And if so, what is the estimate value of these patented rights? Are there any parts who are interested in that?

[Ivar Fossum, executive]

Thanks for that question. We are very interested in this technology, which we have followed up to get ready for several years and is now coming towards the end of the year Horizon 2020 project. And then we will have an evaluation of the results and sort of decide how could we strategically build on that technology moving forward. Everything can be included in such an assessment.

[Unknown Executive]

The hearing for the [indiscernible] received criticism. And according to this question quite short and superficial, why does not Nordic Mining incorporate with environmental groups when designing this plan?

[Mona Schanche, executive]

Well, first of all, I wouldn't say it's even either short or superficial. I think it's a very thorough, well thought through plan. We are in dialogue with the authorities concerning the hearings that has come in. And of course, we are looking through this and are evaluating changes in the plan based on these hearings. So that will be an ongoing process. And such a document will never be a static document. It's a dynamic document and always looking to improve, of course. But I think it's probably the most comprehensive plan that has been delivered from the Norwegian mining industry so far.

[Unknown Executive]

We have some questions about AMR. What is Nordic Mining's view on the minority part of the judgment from Borgarting [indiscernible]. And how can Nordic Mining's project and financial be impacted if AMR must be compensated for garnet, please elaborate?

[Ivar Fossum, executive]

I can elaborate a bit. I won't speculate too much about the last part of the question. We are a strong sort of supporter of the interpretation taken by the Norwegian state, that has given us the full rights and the full mining rights to exploit all minerals as being a part of the mining license for Engebø and we have to abide to and relate to the license that the Norwegian state are giving us.

[Unknown Executive]

When does Nordic Mining expect the appeal to be held, if accepted by the Supreme Court? And has Nordic Mining attempted to reach any agreement with AMR or [ veteran ] landowners?

[Ivar Fossum, executive]

We currently don't know anything about the timing or any appeal with regard to that case.

[Unknown Executive]

And some questions about garnet. Could you please elaborate on an uptake for garnet on volumes, prices and how this will affect the economy in the project?

[Ivar Fossum, executive]

As we have seen over the years, we have been able to extract more garnet from the project compared to what we assessed in the early years. Still, there is a lot of garnet which will not fall into the brackets of commercial product, but we will try to enhance and see how we could develop various products when we get into production. We think we have a fortunate position being the only and first garnet supplier in Europe, but also the ability to ship garnets overseas, firstly, to U.S. East Coast, possibly also to the Middle East.

However, there is a lot of outside factors impacting the garnet trade in general. There is a ban from India, from doing beach sand mining, where most of the garnet is located. There is an import tariff to the states for Chinese garnet of 25%. We might see other toll barriers for international trades of garnet. So there are a lot of different factors, including all the logistics that might impact the garnet trade. But nevertheless, Nordic Mining will be one of the very few long-term producers of high-quality garnets in the world and likely the only one in this part of the world.

[Unknown Executive]

With the last equity raise happened in Nordic Rutile instead of Nordic Mining, how is that possible, which -- that question we have to split. Is the royalty agreement time limited or life of mine agreement, how much percent is early payments?

[Christian Gjerde, executive]

So the prepayment from Orion for the royalty is $50 million for 11% gross royalty -- gross revenue, sorry, and the agreement is for life of mine.

[Unknown Executive]

Can you pay dividends before the loans are repaid -- is repaid?

[Christian Gjerde, executive]

There are certain covenants related to our ability to pay dividends.

[Unknown Executive]

Did Iwatani have a deadline for equity participation in January?

[Christian Gjerde, executive]

No. There is condition in the agreements with Iwatani that we need to have secured financing by 31st of March of next year.

[Unknown Executive]

The bond investment has very high interest, how come?

[Christian Gjerde, executive]

The interest in the bond reflects the current market environment. So it's a 12.5% coupon. They issued at 90% discount or 10% discount. So it gives an implied yield to maturity of 16.3, which is at par with comparable bonds in the market. So that is a reflection of, obviously, an increase in the underlying interest rates. So the 5-year fixed rate -- dollar fixed rate has increased from around 1% at the beginning of this year towards -- up and towards 4.5%. And also with, obviously, the war in Ukraine and market turbulence, credit spreads have gone out quite significantly. So this is a reflection of the current market and also naturally the inherent risk in a preproduction mining project.

[Unknown Executive]

Will Nordic Rutile be stock listed?

[Christian Gjerde, executive]

Nordic Rutile will not be listed, but the bond will be listed at Nordic ABM or similar?

[Unknown Executive]

Can you get rid of the royalty agreement? And how much will that cost?

[Christian Gjerde, executive]

There is an opportunity for us to buy back parts of the royalty. The details of that we'll have to come back to once the documentation for the royalty is fully finalized and signed.

[Unknown Executive]

We are getting to the bottom and the last question if we're not getting any new in this, do you have any comment regarding to the stock price recently?

[Christian Gjerde, executive]

I'm not going to speculate too much on it, but I think it's a fair observation. So we just presented today a net present value unlevered. So the total value of the Engebø project, $453 million. We are seeing currently a market capitalization of the company at around 10% of that. So I think we -- for comparable purposes, I would say that we're undervalued, but I don't want to speculate on the reasons behind that. I think we're representing the fundamentals of the project, which I think reflects and speaks for itself.

[Unknown Executive]

Why did Nordic Mining have to reduce the [ OED ] from 92%, 94% to 90% and decreased the bounds from USD 130 million to USD 100 million?

[Christian Gjerde, executive]

It's a reflection of a challenging market. So I think the bond market for many has been closed. We were successful in securing $100 million, and the [ OID ] was a result of ensuring that the bond priced competitively on a total yield.

[Unknown Executive]

And one last question. How much in percent is the royalty from the yearly revenue?

[Christian Gjerde, executive]

11% of the gross revenues. And I could add to that, that this is -- so it's treated for tax purposes as an operational cost, so it will actually be tax deductible. So the net cost to the company is below 11%, so 22% below 11%.

[Unknown Executive]

Thank you for your good answers. Ivar, you may sum up.

[Ivar Fossum, executive]

Thank you. Thank you all for following this presentation. And please note it will be posted on our home page. Thank you.