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Jervois Global Quarterly Activities Report to 31 March 2023

V.JRV

(TheNewswire)

Jervois Global Limited

Australia - TheNewswire - April 27, 2023 - Jervois Global Limited (ASX/TSX-V: JRV) (OTC:JRVMF)

Highlights

Jervois Finland:

  • Positive cash flow from operations of US$1.3 million resulting from business stabilisation and working capital improvements

  • Q1 2023 cobalt sales of 1,558 metric tonnes, representing a +15% increase compared to prior quarter;

  • revenue US$58 million

  • Q1 was final quarter where high priced 2022 raw material purchases impacted financial results; Kokkola refinery expansion Bankable Feasibility Study pivoted to the U.S.

Idaho Cobalt Operations (“ICO”), United States (“U.S.”):

  • Final construction and commissioning suspended due to cobalt market conditions and U.S. inflationary impacts; restart to occur with higher cobalt prices

  • In-fill and expansion drill holes all intersected RAM’s main mineralised horizon

  • Updated Mineral Resource Estimate for RAM deposit offers opportunity to extend ICO mine life

  • U.S. Government (Department of Defense) grant for drilling and to assess construction of a U.S. cobalt refinery

São Miguel Paulista (“SMP”) Nickel and Cobalt Refinery, Brazil:

  • Initial supply contract secured from Gordes plant in Turkey (marketed by Traxys Europe SA); up to 25% SMP nickel capacity for three years

  • Refinery restart pace moderated pending financing

Corporate:

  • Mercuria increased its shareholding to 8.8%

  • Jervois ends March 2023 quarter with US$50 million in cash, US$66 million physical cobalt inventories in Jervois Finland, and total drawn debt of US$170 million1

Resetting of business priorities for 2023

With cyclical weakness in the cobalt market currently impacting the business and operations of Jervois, the Company has adjusted its priorities to ensure long-term resilience and sustainability across the asset base.

The key priorities for 2023 are:

  • Consolidate Jervois Finland turnaround with objective of returning to positive EBITDA in April 2023 and maximising cash generation across Q2.

  • Deliver cost effective suspension phase at ICO and maximise restart optionality.

  • SMP restart pause; debt and partnership funding options advancing.

  • Execute U.S. Government funded ICO drilling programme and domestic refinery studies; advance other U.S. Government funding applications, including ATVM loan.

  • Maximise value for Nico Young nickel-cobalt laterite project via sales process.

Management is focussed on delivery of these priority activities as they will provide a solid foundation for the medium to long-term future of the Company. Even at current low cobalt prices, Jervois has a pathway to sustain its revised strategy.

Jervois Finland

  • Quarterly revenue: US$57.6 million (Q4 2022: US$73.0 million)

  • Cash flow from operations: US$1.3 million (Q4 2022: -US$6.0 million)

  • Adjusted EBITDA2 -US$10.4 million (Q4 2022: -US$7.1 million)

  • Sales volume: 1,558 metric tonnes (Q4 2022: 1,355 metric tonnes)

  • Production volume: 1,082 metric tonnes (Q4 2022: 1,258 metric tonnes)

Sales and Marketing

Jervois Finland produced 1,082 metric tonnes and sold 1,558 metric tonnes of cobalt in the quarter. Production was temporarily reduced early in the quarter to take account of finished goods inventory levels and underlying market demand.

Cobalt markets remained weak in the quarter driven by ongoing Chinese destocking, as reported in Q4 2022. The outlook across 2023 is expected to be more stable than the volatility experienced across 2022. Cobalt tonnage requested from the battery sector, including automakers, across the back end of 2023 and particularly from 2024 and beyond continues to be positive. Consumer electronics demand, which makes up around half of cobalt battery demand today, is expected to recover in 2024, from a record 13 per cent decline in 2022.

The Company’s outlook for key market segments is summarised below.

Batteries:

  • Inventory levels from existing customers remains high and demand subdued, and this is not expected to recover until Q4 2023 or 2024 at the earliest.

  • Recent U.S. Inflation Reduction Act of 2022 ("IRA”) indication that Japanese cobalt containing products will be considered eligible for the consumer electric vehicles (EVs”) credit have been positively received.

  • European and U.S. OEM or automaker enquiries have increased significantly, with strong volume and pricing requests from the start of 2024, and rising sharply in following years.

  • With increasing pressure to separate battery supply chains from China, Jervois Finland is undertaking a qualification process with many South Korean battery producers.

Chemicals, Catalysts and Ceramics:

  • Catalysts: Cobalt consumption in refinery applications firming across 2023, consumption by Jervois’s customers expected to be higher year on year.

  • Chemicals: Demand across key applications such as electrowinning, coatings and rubber adhesion chemicals are stable.

  • Ceramics: Key global ceramics markets are experiencing softer demand after the Covid-related surge in the home improvement market.

Powder Metallurgy:

  • Automotive remains weak across all global markets, with recovery expected in Q4 2023 and moving into 2024.

  • General engineering, including construction, is experiencing softening with interest rate increases and a slowing global economy.

  • U.S. oil and gas has remained robust. Aerospace has been strong due to high order intake.

Financial Performance3

Jervois Finland achieved revenue of US$57.6 million in the first quarter, a 21 per cent decline relative to the prior quarter. A 15 per cent increase in sales volumes, was more than offset by the impact of lower cobalt prices in the period.

Cash Flow Performance

Cash flow from operations (before interest payments) was US$1.3 million in the quarter. Positive cash flow resulted from the stabilisation of the Jervois Finland business following a period of volatility in 2022. Working capital improvements contributed to the cash flow results, with the planned unwind of inventory commencing in the quarter. Production rates were temporarily reduced in early Q1 as part of Jervois Finland’s response to market conditions, that generated cash savings and enabled the company to reduce inventories to meet sales commitments.

Adjusted EBITDA

Adjusted EBITDA was -US$10.4 million in the quarter, impacted by a decision to accelerate processing of remaining high-priced cobalt raw materials. Q1 2023 is expected to be the final quarter where raw material purchases linked to 2022 cobalt prices have an adverse impact on Jervois Finland’s EBITDA result. The high-priced raw materials are a legacy of contractual arrangements for purchasing cobalt hydroxide established prior to Jervois’ acquisition of the business. This has a resulted in feed costs realised in the profit and loss account in the first quarter that are significantly higher than the average cost (both payable and price) for settlement of new purchases in 2023. Normalisation of feed pricing in late first quarter is a key factor that underpins the company’s near-term expectation to return to positive EBITDA.

Operating cost pressures continued to impact margins in the quarter, including due to elevated pricing of key input costs, particularly into Umicore’s refinery. Caustic soda prices began to ease late in the first quarter. A continuation of this trend would contribute to stabilisation of operating margins in 2023. Jervois Finland has implemented operating efficiency and cost reduction programmes to offset headwinds from external factors.

Figure 2: Jervois Finland Adjusted EBITDA (US$M, unaudited)

Working Capital

Jervois Finland cobalt inventories reduced from 2,540 mt at 31 December 2022 to 2,196 mt at 31 March 2023. This represented an improvement from ~155 days to ~134 days. Jervois will continue to pursue a disciplined approach to the unwind of its inventory and expects to reach a target level of 90 to 110 days later in 2023. Jervois anticipates that a proportion of the cash released from working capital reductions will be used to meet partial repayment of the Mercuria working capital facility.

The net realisable value (“NRV”) of cobalt inventories as at 31 March 2023 was lower than historic cost and, therefore, a US$25.5 million non-cash accounting adjustment has been recorded in the first quarter. The NRV write-down is a non-cash adjustment to the book value of inventory and does not impact the economic gain or loss associated with the inventory position. The economic gain or loss is expected to be realised in future cash flows according to market conditions and other circumstances in the future period when the inventory is sold. The cost has been excluded from Adjusted EBITDA.

Kokkola Refinery Expansion Bankable Feasibility Study (“BFS”) Pivots to U.S.

The BFS for a proposed refinery expansion at the Kokkola Industrial Park in Finland will be redirected to be a study for a greenfield cobalt refinery in the U.S.; the BFS is now expected be completed based on this new location.

Jervois Finland’s technical team and engineering and consulting company AFRY Finland Oy (“AFRY”) have designed a BFS flowsheet for an initial refinery capacity of 6,000 mt per annum of contained cobalt in sulphate, the physical form required for the battery industry, including EVs.

AFRY will continue to provide specialist refinery expertise and leadership from Finland, but with the BFS to be run out of AFRY USA LLC. Jervois USA’s team in Salmon, Idaho, will also provide specialist support for the U.S. BFS across key areas such as environment and permitting, logistics, utilities and construction readiness. Jervois Finland, a leading supplier of high quality cobalt products and with 50 years of experience in cobalt refining and advanced manufacturing at Kokkola, will continue to provide stewardship of the BFS.

The IRA is a landmark piece of federal legislation designed to incentivise domestic energy production, promote clean energy, and support a U.S. transition away from fossil fuels, including for transportation. The legislation provides for more than US$390 billion to support U.S. climate and clean energy policies. A key focus of the legislation is to increase domestic extraction and processing rates of key battery materials and critical minerals including cobalt.

The IRA is designed to stimulate U.S. domestic cobalt refining and recycling activities. Jervois’ future U.S. cobalt refinery is expected to benefit from, inter alia, a 10 percent operating cost credit for the duration of its operating life. Despite initial steps by Europe through its recent 2023 European Union Critical Raw Materials Act and Net Zero Industry Act, this represents a material competitive advantage over facilities not located in the U.S. In addition, Jervois is encouraged by discussions with the U.S. Department of Energy (“DOE”) regarding various loan and grant programmes that are expected to be available to support refinery construction. Jervois announced on 24 April 2023 its funding application under the DOE’s Advanced Technology Vehicles Manufacturing Loan Program (“ATVM”).

Idaho Cobalt Operations (“ICO”), U.S.

ICO Development

The mine component of ICO’s construction has been completed, with a successful start to underground stoping and more than 30,000 short tons of ore ready for processing.

However, the current U.S. inflationary construction and cost environment, particularly at ICO’s remote location, has proven challenging for Jervois to manage effectively.

In late March, Jervois announced a decision to suspend final construction and full concentrator commissioning at ICO due to continuing low cobalt prices and the U.S. inflationary impacts on construction costs.

ICO’s mineral resource and reserve is the largest and highest grade confirmed cobalt orebody in the U.S. and, when commissioned, will represent the country’s only primary cobalt mine supply. Cobalt is a critical mineral as declared by the U.S. Government. Jervois has determined that not mining ICO cobalt at cyclically low prices will preserve the optionality and inherent strategic value of ICO for shareholders and key stakeholders, including local communities and the State of Idaho. The Company also views not mining ICO at current prices is consistent with U.S. Government critical mineral policy objectives.

Jervois remains confident regarding the medium- and longer-term future of cobalt. The trajectory of structurally higher prices is expected to be increasingly influenced by rising cobalt demand from the energy transition including EVs. The Company’s expectation also is that Western cobalt purchasers will increasingly prefer cobalt from sources with Western ESG credentials, particularly given the concentration of supply from the Democratic Republic of Congo and China.

The U.S. Department of Defense (“DOD”) has advised that it intends to award Jervois an immediate need for Defense Production Act (“DPA”) Title III with US$15 million of funding through a Not to Exceed Technology Investment Agreement. The DOD award is subject to Jervois successfully completing required documentary steps including agreement to terms and conditions of the award; this process continues.

Jervois applied for the DOD award monies to accelerate its drilling aimed at increasing the ICO mineral resource and reserve, and for studies to assess construction of a U.S. cobalt refinery; both can proceed despite ICO’s suspension.

Jervois views the DOD’s intention to issue its award as an indication of the importance to the U.S. Government of securing its cobalt supply chain. Accordingly, the Company continues to engage with the U.S. Department of Energy and EXIM, the official export credit agency of the U.S., on further financing initiatives. Whilst there can be no assurance any additional funding will be received, Jervois believes U.S. Government support in developing a viable domestic cobalt supply chain is important given the energy transition and Jervois’ expectation that Western cobalt purchasers will increasingly prefer cobalt from sources with Western ESG credentials, such as ICO.

Jervois has safely completed ICO site demobilisation and total workforce, including contractors, will be ramped down to approximately 30 during suspension, which represents a fit-for-purpose workforce to maintain the site in compliance with its regulatory requirements and execute the envisaged DOD programmes.

ICO continues to be a key part of delivering Jervois’ strategy of acquiring and operating geopolitically strategic mining and critical mineral processing assets important to energy transition and the defence industry.

Updated Mineral Reserve and Resource Estimate and Drilling

In-fill and expansion drilling campaigns conducted throughout 2022 returned promising results which Jervois has incorporated into an updated Mineral Resource Estimate (“MRE”) for the RAM deposit, which was calculated in accordance with standards set forth in both the Australasian JORC Code 2012 (“JORC”) and by the Canadian Institute of Mining (“CIM”).

The 2022 drilling programme at ICO consisted of 10,300 metres (“m”) in 69 completed diamond drill holes. With the exception of a single geotechnical drillhole, the 2022 drilling focused on the RAM deposit underpinning current mine development at ICO, and its down-dip extents, and comprised 62 infill drillholes (totalling 7,730m) and six targeted RAM resource expansion drillholes (totalling 2,300m).

In-fill Drilling:

In-fill drilling targeted the Main Mineralised Horizon (“MMH”) of the RAM deposit. All holes drilled intersected the MMH, indicating continuity and consistency with existing RAM resource drilling and correspond well with grades and widths predicted by the previous 2020 RAM resource model.

In total, Jervois has now drilled 81 drill holes targeting the MMH of the RAM deposit since acquiring the project in mid-2019 (including 19 holes completed in late 2019), with all holes intersecting mineralisation. This represents an increase of more than 80 per cent with respect to the total number of resource drillholes defining the RAM deposit prior to Jervois ownership; a step change in orebody delineation and de-risking its mine plan.

Expansion Drilling:

Expansion drilling (holes outside the existing wireframes supporting the current MRE) returned results of:

  • 6.0m calculated true width (CTW”) @ 0.58% cobalt (“Co”), 0.66% copper (“Cu”) and 0.31 grams per metric tonne gold (“g/t Au”) (Drill hole JS22-001B)

  • 2.4m CTW @ 0.27% Co, 0.67% Cu and 0.14 g/t Au (Drill hole JU22-064)

  • 3.1m CTW @ 0.43% Co, 0.17% Cu and 0.34 g/t Au (Drill hole JU22-065)

  • 3.9m CTW @ 0.16% Co, 2.20% Cu and 1.03 g/t Au (Drill hole JU22-066)

  • 5.8m CTW @ 0.31% Co, 1.50% Cu and 0.38 g/t Au (Drill hole JU22-068)

  • 5.7m CTW @ 0.37% Co, 1.37% Cu and 0.89 g/t Au (Drill hole JU22-069).

All holes encountered mineralisation with all of their respective hanging walls, and all except one of their MMH intersections occurring outside of the extents of the current JORC and CIM compliant MRRE and current mine model, as described in the ICO BFS. Together with two 2019 holes that tested foot wall targets underlaying the RAM deposit4, all eight targeted exploration or expansion holes outside of the 2020 defined MRRE intersected mineralisation.

These drilling results continue to confirm that the RAM orebody is expected to support extended mine life at ICO and introduces the potential for higher annual production rates5. The RAM deposit remains open at depth and along strike, and Jervois is confident that there is significant potential of both resource and reserve expansion.

Table 1: RAM deposit Expansion Drilling Results

Hole ID

Zone

From (m)

To (m)

Calculated True Width* (m)

Cobalt (%)

Copper (%)

Gold (g/t)

JS22-001B

MMH

417.9

425.2

6.0

0.58

0.66

0.31

JU22-064

MMH

294.4

297.8

2.4

0.27

0.67

0.14

JU22-065

HW

300.7

306.3

2.9

1.21

2.04

0.99

JU22-065

MMH

375.8

381.3

3.1

0.43

0.17

0.34

Including

375.8

378.6

1.6

0.71

0.32

0.62

JU22-066

MMH

241.1

247.4

3.9

0.16

2.20

1.03

JU22-068

MMH

274.9

282.6

5.8

0.31

1.50

0.38

Including

281.0

282.6

1.3

0.63

3.81

0.86

JU22-069

MMH

312.4

321.6

5.7

0.37

1.37

0.89

Including

313.0

317.9

2.9

0.50

2.13

1.41

Updated Mineral Resource Estimate

Jervois completed an updatedJORC/CIM compliant MRE in April 20236, which incorporates the above drilling results.

An updated MRE for the RAM deposit is presented below (Tables 2 and 3) at a series of cut-off grades (“CoG”) that includes a 0.15% Co CoG, which was the reported CoG for the previous 2020 MRE, as well as the 0.20% Co CoG that has been selected for current reporting, due to a revised evaluation of anticipated mining and processing costs. The current ICO mineral resource estimation work incorporates revised geological modelling that more accurately represents Co-Cu mineralisation within the RAM deposit. The revised modelling approach, along with modified resource categorisation criteria, has resulted in a minor decrease in tonnage (-11%) of the 2023 total Measured and Indicated (“M&I”) resources relative to the 2020 MRE. However, these changes have also resulted in corresponding increases in Co and Cu grades of +6% and +12%, respectively.

Table 2: Measured and Indicated Mineral Resources (Inclusive of Mineral Reserves)

Measured and Indicated Mineral Resources (Inclusive of Mineral Reserves)

2023 MRE

2020 MRE

Co Cut-off (%)

Metric

tonnes

Co (%)

Co (lbs)

Cu (%)

Cu (lbs)

Au (g/t)

Au (Oz*)

Metric

tonnes

Co (%)

Co (lbs)

Cu (%)

Cu (lbs)

Au (g/t)

Au (Oz*)

0.15

4,350,000

0.48

45,750,000

0.79

76,270,000

0.50

70,354

5,230,000

0.44

50,100,000

0.69

80,060,000

0.53

89,260

0.20

3,780,000

0.52

43,540,000

0.84

69,820,000

0.54

65,299

4,260,000

0.49

46,300,000

0.75

70,080,000

0.60

82,300

0.25

3,260,000

0.57

40,990,000

0.87

62,680,000

0.57

59,447

3,500,000

0.56

42,600,000

0.79

61,270,000

0.65

73,220

0.30

2,780,000

0.62

38,110,000

0.92

56,180,000

0.61

54,211

2,920,000

0.61

39,100,000

0.83

53,620,000

0.68

64,220

0.35

2,410,000

0.67

35,420,000

0.95

50,330,000

0.64

49,390

2,440,000

0.66

35,600,000

0.86

46,520,000

0.73

57,450

*Troy ounce

Table 3: Inferred Mineral Resources

Inferred Mineral Resources

2023 MRE

2020 MRE

Co Cut-off (%)

Metric

tonnes

Co (%)

Co (lbs)

Cu (%)

Cu (lbs)

Au (g/t)

Au (Oz*)

Metric

tonnes

Co (%)

Co (lbs)

Cu (%)

Cu (lbs)

Au (g/t)

Au (Oz*)

0.15

1,940,000

0.45

19,330,000

0.83

35,550,000

0.58

36,156

1,570,000

0.35

12,000,000

0.44

13,820,000

0.45

22,490

0.20

1,590,000

0.51

17,990,000

0.92

32,250,000

0.65

33,053

1,110,000

0.42

10,300,000

0.50

11,100,000

0.55

19,520

0.25

1,370,000

0.56

16,880,000

0.98

29,660,000

0.69

30,558

830,000

0.49

8,900,000

0.56

9,300,000

0.62

16,380

0.30

1,160,000

0.61

15,580,000

1.05

26,800,000

0.75

27,885

610,000

0.57

7,600,000

0.65

7,930,000

0.72

14,070

0.35

970,000

0.67

14,280,000

1.09

23,420,000

0.80

24,877

450,000

0.65

6,400,000

0.71

6,390,000

0.72

10,500

*Troy ounce

Table 4: ICO Underground Constrained Mineral Resource Estimate @ 0.20% Co CoG

Classification

Tonnes

Co

(%)

Co

(lbs)

Cu

(%)

Cu

(lbs)

Au

(g/t)

Au

(Oz*)

Measured

460,000

0.70

7,100,000

1.16

11,800,000

0.783

11,500

Indicated

3,320,000

0.50

36,500,000

0.79

58,000,000

0.504

54,000

M&I

3,780,000

0.52

43,600,000

0.84

69,800,000

0.538

65,500

Inferred

1,590,000

0.51

18,000,000

0.92

32,300,000

0.645

33,000

*Troy ounce

Notes:

  1. Mr. Andrew Turner, P.Geol. of APEX Geoscience Ltd., a Qualified Person as defined by NI 43-101 and a Competent Person as defined by JORC, is responsible for the completion of the updated mineral resource estimation, with an effective date of April 1, 2023.

  2. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.

  3. The estimate of Mineral Resources may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues.

  4. The Inferred Mineral Resource in this estimate has a lower level of confidence than that applied to an Indicated Mineral Resource and must not be converted to a Mineral Reserve. It is reasonably expected that the majority of the Inferred Mineral Resource could potentially be upgraded to an Indicated Mineral Resource with continued exploration.

  5. The Mineral Resources were estimated in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum (“CIM”), CIM Standards on Mineral Resources and Reserves, Definitions (2014) and Best Practices Guidelines (2019) prepared by the CIM Standing Committee on Reserve Definitions and adopted by the CIM Council.

  6. The cut-off grade of 0.20% Co is based on an estimated process cost and GA cost of US$123.17/t, and metal prices of US$25.00/lb Co, US$3.00/lb Cu, and US$1,750/troy oz Au, with process recoveries of 91.0% Co, 95.4% Cu, and 84.9% Au. An average contribution of 22% to Co payable values from Cu and Au has been assumed based upon the relative concentrations of the payable metals within the reported MI resources.

  7. The reported mineral resources are constrained by manually created wireframe solids (mineable shapes) that encapsulate contiguous blocks demonstrating reasonable prospects for eventual economic extraction within the minable shapes.

Jervois anticipates it will continue expansion drilling throughout 2023 to further explore the open extents of the RAM deposit, provided documentary steps to formalise the U.S. DOD US$15 million award under the DPA Title III programme can be finalised rapidly.

In addition, Jervois continues permitting efforts to drill 12 holes at the neighbouring Sunshine and East Sunshine deposits this coming U.S. summer (June – August 2023) to confirm historic datasets of more than 100 holes and 19,000m of prior drilling. A final decision on drilling the Sunshine deposit will be made based upon the timing under which the DPA Title III programme can be finalised.

Sunshine is a 100%-owned Jervois property located a short distance from ICO’s processing facilities and infrastructure. In addition to the Sunshine area, Jervois continues to evaluate additional exploration targets at ICO.

Non-cash Impairment Charge

As noted in the ASX release “Jervois suspends final construction at Idaho Cobalt Operations” (29 March 2023), Jervois commenced a review of ICO’s asset carrying value on the group's balance sheet because of the suspension. The review was completed in April 2023 and has resulted in a non-cash impairment charge of US$40 million at 31 March 2023. The impairment is based on Jervois’ best estimate at this time. As outlined in the 31 December 2022 accounts, the recoverable amount is sensitive to a number of future assumptions. Future changes to assumptions could lead to further impairment or reversal of the impairment charge recorded at 31 March 2023.

São Miguel Paulista (“SMP”) Nickel and Cobalt Refinery, Brazil

Jervois has moderated the pace of restart of the SMP nickel and cobalt refinery in São Paulo, Brazil. First production is estimated to be 12 months from full mobilisation. The project cost guidance remains unchanged (R$345 million or ~US$65 million) with near-term costs minimised. Discussions with lenders and other interested parties continue to advance.

During the quarter, Jervois announced it has entered into a raw material supply agreement for the restart phase of SMP with Traxys Europe S.A. (“Traxys”) for the supply of MHP from the Gordes nickel-cobalt facility in Turkey.

Jervois supply agreement with Traxys is expected to provide a base load of MHP feed of up to approximately 25 per cent of SMP’s annual nickel feed requirement over an initial period of 36 months. Jervois will initially restart SMP in a staged, capital efficient manner, below its prior 25,000 mtpa nickel capacity, basis the BFS completed in April 2022. Expected initial refined production is 10,000 mtpa nickel and 2,000 mtpa cobalt metal cathode.

SMP is located within the São Paulo city limits with ready access to labour, utilities and services and is 120km via highway from the largest container port in Brazil (Santos), ensuring it is well placed to serve domestic and export markets.

SMP previously produced ‘Tocantins’ nickel and cobalt products, which are well established domestically in Brazil and in key Western export markets such as Europe and Japan. The Company’s commercial team are re-establishing nickel and cobalt customer relationships.

Progress was made with suppliers of materials, equipment and services representing over 50% of capital expenditure identified and negotiated. The main contractor selection (over 30% of total project capital expenditure) has been concluded.

Nico Young Nickel-Cobalt Project, New South Wales (“NSW”), Australia

As part of an ongoing portfolio review, Jervois has determined that Nico Young nickel and cobalt project is no longer core to the company’s strategy. Jervois will commence a divestment process and expects to pursue the sale of all or part of its 100 per cent interest.

During the quarter, Jervois completed an infill drilling campaign at Nico Young as part of work initiated towards a BFS. The drill programme comprised eighty-six drill holes totalling slightly over 3,000m and was designed to increase confidence in the mineral resource by converting portions of the Ardnaree deposit from the Inferred to Indicated category. The drilling was successfully executed by Wallis Drilling Pty. Ltd.

Jervois was awarded funding under the NSW Government Critical Minerals Activation Fund, Stream 1, for environmental studies and metallurgical testwork associated with a BFS for Nico Young. The Critical Minerals and High-Tech Activation Fund is designed to support regional NSW to become a global leader in these sectors. The award of A$0.5 million will supplement Jervois’ and/or future Nico Young owners’ contribution to these studies.

The funding supports further environmental and metallurgical testwork and will underpin environmental and infrastructure permitting required to advance the project’s development. These studies are a critical element that will improve process definition, progress water access management and key Environmental Impact Studies, define the product path-to-market, de-risk the project and support project financing. Funding for the complete BFS is subject of a separate application under the Australian Federal Government’s Critical Minerals Development Program.

Nico Young nickel and cobalt deposits are comprised of mineralisation bodies held under separate but adjacent exploration licenses, “Ardnaree” and “Thuddungra”. The project envisages heap leaching nickel and cobalt laterite ore to produce MHP. In prior roles, Jervois’ Directors and Executives constructed, commissioned, and operated the only commercially successful nickel – cobalt heap leach operation outside of China at Glencore’s Murrin Murrin facility in Western Australia, which was based on ores similar to Nico Young.

Jervois’ view is that heap leaching is the most attractive development route for the low-grade nickel-cobalt laterite mineralisation typical of Eastern Australia. Heap leaching nickel laterites containing a high silica and low iron contents in dry climates has lower capital intensity, a reduced carbon footprint and less technical and environmental risk compared to the high capital, energy intensive, elevated construction and operating risk nature of high-pressure acid leach facilities.

Corporate Activities

Liquidity

Jervois ended the March 2023 quarter with US$49.8 million in cash, US$66.0 million in physical cobalt inventories in Jervois Finland, and total drawn debt of US$170 million.

At 31 March 2023, Jervois has spent ~US$130 million in cash on construction at ICO. Since the December 2022 year end, Jervois has paid down US$45 million of its US$150 million Mercuria loan facility, resulting in a decrease from the end December 2022 drawn balance of US$115 million to US$70 million. The Company’s US$100 million senior secured bonds remain due in July 2026, with no prior amortisation.

Jervois remains in compliance with its bond covenants and there is no expected adverse impact on the bonds to Jervois based on the suspension of operations at ICO.

Director On-Market Buying

In March 2023, Jervois Board members acquired more than A$0.65 million of Jervois shares in on-market purchases.

This included Non-Executive Chairman Peter Johnston, who acquired 3,681,317 shares for A$0.225 million, Non-Executive Director David Issroff, who acquired 5,000,000 shares for A$0.315 million and Non-Executive Director Brian Kennedy, who acquired 2,000,000 shares for A$0.112 million.

Environmental, Social, Governance (“ESG”) and Compliance

ESG Integration:

Embedding ESG within management Key Performance Indicators (“KPIs”) is a powerful tool for driving sustainable business practices and building a strong, resilient company that can thrive in the long-term. In efforts to further embed ESG throughout the organisation, a review was completed with all members of the executive and senior management team to identify entry points to strengthen the integration of ESG within management KPIs. In 2022, three-quarters of the management team had KPIs related to ESG with an average weight of 21%. In 2023, Jervois aims to ensure each management team member has at least one ESG KPI, with areas of focus aligned with core functions of individuals.

Given the phase of activities at SMP in Brazil, considerable focus was given in the quarter to ESG integration within legal, finance, human resources, procurement, environment, health and safety and community engagement functions. With a strong focus on emerging ESG legislation and industry standards, the groundwork was laid to enable SMP to align with Jervois’ group-wide efforts to support responsible supply chain management, enhanced environmental and human rights due diligence and diversity, equity and inclusion. In conjunction with this, SMP’s management team initiated a joint review of its risk management processes and mechanisms to further integrate human rights and other ESG dimensions. Considerable progress was made towards finalising SMP’s Stakeholder Engagement Plan as outreach to adjacent communities continued.

Sustainability Disclosures:

Work during the quarter focused on finalisation of Jervois’ second annual Sustainability Report. Jervois looks forward to disseminating this report, highlighting progress across the spectrum of material ESG priorities, in the next quarter.

Engaging the Global Community:

During the quarter, Jervois’ Group Manager, ESG, Dr. Jennifer Hinton, took on the role as Chair of the Cobalt Institute (“CI”) Responsible Sourcing and Sustainability Committee (“RESSCOM”). Engagement in RESSCOM and CI’s Government Affairs Committee and Chemicals Management Committee included participation in committee meetings and various working groups, including on decarbonisation and the circular economy, and contribution to ESG related submissions.

In the quarter, Jervois continued its engagement with the National Mining Association including through participation in resource sessions on the Task Force on Nature-related Financial Disclosures and Chain-of-Custody Solutions from the London Metal Exchange.

Exploration and Development Expenditure

During the quarter, Jervois incurred cash outflows of US$0.3 million relating to exploration and development at the Nico Young nickel-laterite project in New South Wales, Australia.

Insider Compensation Reporting

During the quarter, US$0.1 million was paid to Non-Executive Directors and US$0.1 million was paid to the CEO (Executive Director).

Non-Core Assets

The non-core assets are summarised on the Company’s website. Jervois will continue to assess options to divest these interests.

ASX Waiver Information

On 6 June 2019, the ASX granted a waiver to Jervois in respect of extending the period to 8 November 2023 in which it may issue new Jervois shares to the eCobalt option holders as part of the eCobalt transaction.

As at 31 March 2023, the following Jervois shares were issued in the quarter on exercise of eCobalt options and the following eCobalt options remain outstanding:

Jervois shares issued in the quarter on exercise of eCobalt options:

Nil

eCobalt options remaining7

1,179,750

1,980,000

eCobalt options exercisable until 28 June 2023 at C$0.61 each

eCobalt options exercisable until 1 October 2023 at C$0.53 each

3,159,750

By Order of the Board

Bryce Crocker

Chief Executive Officer

For further information, please contact:

Investors and analysts:

James May

Chief Financial Officer

Jervois Global Limited

james.may@jervoisglobal.com

Media:

Nathan Ryan

NWR Communications

nathan.ryan@nwrcommunications.com.au

Mob: +61 420 582 887

Forward-Looking Statements

This news release may contain certain “Forward-Looking Statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities laws. When used in this news release, the words “anticipate”, “believe”, “estimate”, “expect”, “target, “plan”, “forecast”, “may”, “schedule” and other similar words or expressions identify forward-looking statements or information. These forward-looking statements or information may relate to future sales for the group, operations at Jervois Finland, construction work undertaken at ICO, timing of restart of operations at ICO, timing of restart of SMP refinery, third party feed to SMP, sales from SMP and the reliability of third party information, and certain other factors or information. Such statements represent the Company’s current views with respect to future events and are necessarily based upon a number of assumptions and estimates that, while considered reasonable by the Company, are inherently subject to significant business, economic, competitive, political and social risks, contingencies and uncertainties. Many factors, both known and unknown, could cause results, performance or achievements to be materially different from the results, performance or achievements that are or may be expressed or implied by such forward-looking statements. The Company does not intend, and does not assume any obligation, to update these forward-looking statements or information to reflect changes in assumptions or changes in circumstances or any other events affections such statements and information other than as required by applicable laws, rules and regulations.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Financial Summary

Reconciliation of NPAT to EBITDA and Adjusted EBITDA

EBITDA is a non-IFRS financial measure. EBITDA is presented as net income after adding back interest, tax, depreciation and amortisation, and extraordinary items. Adjusted EBITDA represents EBITDA adjusted to exclude items which do not reflect the underlying performance of the company’s operations. Exclusions from adjusted EBITDA are items that require exclusion in order to maximise insight and consistency on the financial performance of the company’s operations.

Exclusions include gains/losses on disposals, impairment charges (or reversals), certain derivative items, NRV adjustments to inventories, and one-off costs related to post-acquisition integration.

Tenements

Australian Tenements

Description

Tenement number

Interest owned %

Ardnaree (NSW)

EL 5527

100.0

Thuddungra (NSW)

EL 5571

100.0

Nico Young (NSW)

EL 8698

100.0

West Arunta (WA)

E80 4820

17.9

West Arunta (WA)

E80 4986

17.9

West Arunta (WA)

E80 4987

17.9

Uganda Exploration Licences

Description

Exploration Licence number

Interest owned %

Kilembe Area

EL0292

100.0

Kilembe Area

EL0012

100.0

Idaho Cobalt Operations – 100% Interest owned

Claim Name

County #

IMC #

SUN 1

222991

174156

SUN 2

222992

174157

SUN 3 Amended

245690

174158

SUN 4

222994

174159

SUN 5

222995

174160

SUN 6

222996

174161

SUN 7

224162

174628

SUN 8

224163

174629

SUN 9

224164

174630

SUN 16 Amended

245691

177247

SUN 18 Amended

245692

177249

Sun 19

277457

196394

SUN FRAC 1

228059

176755

SUN FRAC 2

228060

176756

TOGO 1

228049

176769

TOGO 2

228050

176770

TOGO 3

228051

176771

DEWEY FRAC Amended

248739

177253

Powder 1

269506

190491

Powder 2

269505

190492

LDC-1

224140

174579

LDC-2

224141

174580

LDC-3

224142

174581

LDC-5

224144

174583

LDC-6

224145

174584

LDC-7

224146

174585

LDC-8

224147

174586

LDC-9

224148

174587

LDC-10

224149

174588

LDC-11

224150

174589

LDC-12

224151

174590

LDC-13 Amended

248718

174591

LDC-14 Amended

248719

174592

LDC-16

224155

174594

LDC-18

224157

174596

LDC-20

224159

174598

LDC-22

224161

174600

LDC FRAC 1 Amended

248720

175880

LDC FRAC 2 Amended

248721

175881

LDC FRAC 3 Amended

248722

175882

LDC FRAC 4 Amended

248723

175883

LDC FRAC 5 Amended

248724

175884

RAM 1

228501

176757

RAM 2

228502

176758

RAM 3

228503

176759

RAM 4

228504

176760

RAM 5

228505

176761

RAM 6

228506

176762

RAM 7

228507

176763

RAM 8

228508

176764

RAM 9

228509

176765

RAM 10

228510

176766

RAM 11

228511

176767

RAM 12

228512

176768

RAM 13 Amended

245700

181276

RAM 14 Amended

245699

181277

RAM 15 Amended

245698

181278

RAM 16 Amended

245697

181279

Ram Frac 1 Amended

245696

178081

Ram Frac 2 Amended

245695

178082

Ram Frac 3 Amended

245694

178083

Ram Frac 4 Amended

245693

178084

HZ 1

224173

174639

HZ 2

224174

174640

HZ 3

224175

174641

HZ 4

224176

174642

HZ 5

224413

174643

HZ 6

224414

174644

HZ 7

224415

174645

HZ 8

224416

174646

HZ 9

224417

174647

HZ 10

224418

174648

HZ 11

224419

174649

HZ 12

224420

174650

HZ 13

224421

174651

HZ 14

224422

174652

HZ 15

231338

178085

HZ 16

231339

178086

HZ 18

231340

178087

HZ 19

224427

174657

Z 20

224428

174658

HZ 21

224193

174659

HZ 22

224194

174660

HZ 23

224195

174661

HZ 24

224196

174662

HZ 25

224197

174663

HZ 26

224198

174664

HZ 27

224199

174665

HZ 28

224200

174666

HZ 29

224201

174667

HZ 30

224202

174668

HZ 31

224203

174669

HZ 32

224204

174670

HZ FRAC

228967

177254

JC 1

224165

174631

JC 2

224166

174632

JC 3

224167

174633

JC 4

224168

174634

JC 5 Amended

245689

174635

JC 6

224170

174636

JC FR 7

224171

174637

JC FR 8

224172

174638

JC 9

228054

176750

JC 10

228055

176751

JC 11

228056

176752

JC-12

228057

176753

JC-13

228058

176754

JC 14

228971

177250

JC 15

228970

177251

JC 16

228969

177252

JC 17

259006

187091

JC 18

259007

187092

JC 19

259008

187093

JC 20

259009

187094

JC 21

259010

187095

JC 22

259011

187096

CHELAN NO. 1 Amended

248345

175861

GOOSE 2 Amended

259554

175863

GOOSE 3

227285

175864

GOOSE 4 Amended

259553

175865

GOOSE 6

227282

175867

GOOSE 7 Amended

259552

175868

GOOSE 8 Amended

259551

175869

GOOSE 10 Amended

259550

175871

GOOSE 11 Amended

259549

175872

GOOSE 12 Amended

259548

175873

GOOSE 13

228028

176729

GOOSE 14 Amended

259547

176730

GOOSE 15

228030

176731

GOOSE 16

228031

176732

GOOSE 17

228032

176733

GOOSE 18 Amended

259546

176734

GOOSE 19 Amended

259545

176735

GOOSE 20

228035

176736

GOOSE 21

228036

176737

GOOSE 22

228037

176738

GOOSE 23

228038

176739

GOOSE 24

228039

176740

GOOSE 25

228040

176741

SOUTH ID 1 Amended

248725

175874

SOUTH ID 2 Amended

248726

175875

SOUTH ID 3 Amended

248727

175876

SOUTH ID 4 Amended

248717

175877

SOUTH ID 5 Amended

248715

176743

SOUTH ID 6 Amended

248716

176744

South ID 7

306433

218216

South ID 8

306434

218217

South ID 9

306435

218218

South ID 10

306436

218219

South ID 11

306437

218220

South ID 12

306438

218221

South ID 13

306439

218222

South ID 14

306440

218223

OMS-1

307477

218904

Chip 1

248956

184883

Chip 2

248957

184884

Chip 3 Amended

277465

196402

Chip 4 Amended

277466

196403

Chip 5 Amended

277467

196404

Chip 6 Amended

277468

196405

Chip 7 Amended

277469

196406

Chip 8 Amended

277470

196407

Chip 9 Amended

277471

196408

Chip 10 Amended

277472

196409

Chip 11 Amended

277473

196410

Chip 12 Amended

277474

196411

Chip 13 Amended

277475

196412

Chip 14 Amended

277476

196413

Chip 15 Amended

277477

196414

Chip 16 Amended

277478

196415

Chip 17 Amended

277479

196416

Chip 18 Amended

277480

196417

Sun 20

306042

218133

Sun 21

306043

218134

Sun 22

306044

218135

Sun 23

306045

218136

Sun 24

306046

218137

Sun 25

306047

218138

Sun 26

306048

218139

Sun 27

306049

218140

Sun 28

306050

218141

Sun 29

306051

218142

Sun 30

306052

218143

Sun 31

306053

218144

Sun 32

306054

218145

Sun 33

306055

218146

Sun 34

306056

218147

Sun 35

306057

218148

Sun 36

306058

218149

Chip 21 Fraction

306059

218113

Chip 22 Fraction

306060

218114

Chip 23

306025

218115

Chip 24

306026

218116

Chip 25

306027

218117

Chip 26

306028

218118

Chip 27

306029

218119

Chip 28

306030

218120

Chip 29

306031

218121

Chip 30

306032

218122

Chip 31

306033

218123

Chip 32

306034

218124

Chip 33

306035

218125

Chip 34

306036

218126

Chip 35

306037

218127

Chip 36

306038

218128

Chip 37

306039

218129

Chip 38

306040

218130

Chip 39

306041

218131

Chip 40

307491

218895

DRC NW 1

307492

218847

DRC NW 2

307493

218848

DRC NW 3

307494

218849

DRC NW 4

307495

218850

DRC NW 5

307496

218851

DRC NW 6

307497

218852

DRC NW 7

307498

218853

DRC NW 8

307499

218854

DRC NW 9

307500

218855

DRC NW 10

307501

218856

DRC NW 11

307502

218857

DRC NW 12

307503

218858

DRC NW 13

307504

218859

DRC NW 14

307505

218860

DRC NW 15

307506

218861

DRC NW 16

307507

218862

DRC NW 17

307508

218863

DRC NW 18

307509

218864

DRC NW 19

307510

218865

DRC NW 20

307511

218866

DRC NW 21

307512

218867

DRC NW 22

307513

218868

DRC NW 23

307514

218869

DRC NW 24

307515

218870

DRC NW 25

307516

218871

DRC NW 26

307517

218872

DRC NW 27

307518

218873

DRC NW 28

307519

218874

DRC NW 29

307520

218875

DRC NW 30

307521

218876

DRC NW 31

307522

218877

DRC NW 32

307523

218878

DRC NW 33

307524

218879

DRC NW 34

307525

218880

DRC NW 35

307526

218881

DRC NW 36

307527

218882

DRC NW 37

307528

218883

DRC NW 38

307529

218884

DRC NW 39

307530

218885

DRC NW 40

307531

218886

DRC NW 41

307532

218887

DRC NW 42

307533

218888

DRC NW 43

307534

218889

DRC NW 44

307535

218890

DRC NW 45

307536

218891

DRC NW 46

307537

218892

DRC NW 47

307538

218893

DRC NW 48

307539

218894

EBatt 1

307483

218896

EBatt 2

307484

218897

EBatt 3

307485

218898

EBatt 4

307486

218899

EBatt 5

307487

218900

EBatt 6

307488

218901

EBatt 7

307489

218902

EBatt 8

307490

218903

OMM-1

307478

218905

OMM-2

307479

218906

OMN-2

307481

218908

OMN-3

307482

218909

BTG-1

307471

218910

BTG-2

307472

218911

BTG-3

307473

218912

BTG-4

307474

218913

BTG-5

307475

218914

BTG-6

307476

218915

NFX 17

307230

218685

NFX 18

307231

218686

NFX 19

307232

218687

NFX 20

307233

218688

NFX 21

307234

218689

NFX 22

307235

218690

NFX 23

307236

218691

NFX 24

307237

218692

NFX 25

307238

218693

NFX 30

307243

218698

NFX 31

307244

218699

NFX 32

307245

218700

NFX 33

307246

218701

NFX 34

307247

218702

NFX 35

307248

218703

NFX 36

307249

218704

NFX 37

307250

218705

NFX 38

307251

218706

NFX 42

307255

218710

NFX 43

307256

218711

NFX 44

307257

218712

NFX 45

307258

218713

NFX 46

307259

218714

NFX 47

307260

218715

NFX 48

307261

218716

NFX 49

307262

218717

NFX 50

307263

218718

NFX 56

307269

218724

NFX 57

307270

218725

NFX 58

307271

218726

NFX 59

307272

218727

NFX 60 Amended

307558

218728

NFX 61

307274

218729

NFX 62

307275

218730

NFX 63

307276

218731

NFX 64

307277

218732

OMN-1 revised

315879

228322

Appendix 5B

Mining exploration entity or oil and gas exploration entity
quarterly cash flow report

Name of entity

Jervois Global Limited

ABN

Quarter ended (“current quarter”)

52 007 626 575

31 March 2023

Consolidated statement of cash flows

Current quarter
$US’000

Year to date

(3 months)

$US’000

1.

Cash flows from operating activities

57,950

57,950

1.1

Receipts from customers

1.2

Payments for

-

-

  1. (a)exploration evaluation

  1. (b)development

-

-

  1. (c)production

(55,953)

(55,953)

  1. (d)staff costs

(3,116)

(3,116)

  1. (e)administration and corporate costs

(2,219)

(2,219)

1.3

Dividends received (see note 3)

-

-

1.4

Interest received

628

628

1.5

Interest and other costs of finance paid

(9,356)

(9,356)

1.6

Income taxes paid

(727)

(727)

1.7

Other

-

-

1.9

Net cash from / (used in) operating activities

(12,793)

(12,793)

2.

Cash flows from investing activities

-

-

2.1

Payments to acquire or for:

  1. (a)entities

  1. (b)tenements

-

-

  1. (c)property, plant and equipment – incl. assets under construction

(44,220)

(44,220)

  1. (d)exploration evaluation

(315)

(315)

  1. (e)acquisition of subsidiaries

-

-

  1. (f)transfer tax on acquisition

-

-

  1. (g)other non-current assets

-

-

2.2

Proceeds from the disposal of:

-

-

  1. (a)entities

  1. (b)tenements

-

-

  1. (c)property, plant and equipment

17

17

  1. (d)investments

-

-

  1. (e)other non-current assets

-

-

2.3

Cash flows from loans to other entities

-

-

2.4

Dividends received (see note 3)

-

-

2.5

Other

-

-

2.6

Net cash from / (used in) investing activities

(44,518)

(44,518)

3.

Cash flows from financing activities

-

-

3.1

Proceeds from issues of equity securities (excluding convertible debt securities)

3.2

Proceeds from issue of convertible debt securities

-

-

3.3

Proceeds from exercise of options

-

-

3.4

Transaction costs related to issues of equity securities or convertible debt securities

(55)

(55)

3.5

Proceeds from borrowings

-

-

3.6

Repayment of borrowings

(45,000)

(45,000)

3.7

Transaction costs related to loans and borrowings

-

-

3.8

Dividends paid

-

-

3.9

Other – incl. lease liabilities

(495)

(495)

Other - Government grants and tax incentives

167

167

Other

-

-

3.10

Net cash from / (used in) financing activities

(45,383)

(45,383)

4.

Net increase / (decrease) in cash and cash equivalents for the period

4.1

Cash and cash equivalents at beginning of period

152,647

152,647

4.2

Net cash from / (used in) operating activities (item 1.9 above)

(12,793)

(12,793)

4.3

Net cash from / (used in) investing activities (item 2.6 above)

(44,518)

(44,518)

4.4

Net cash from / (used in) financing activities (item 3.10 above)

(45,383)

(45,383)

4.5

Effect of movement in exchange rates on cash held

(116)

(116)

4.6

Cash and cash equivalents at end of period

49,837

49,837

5.

Reconciliation of cash and cash equivalents
at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts

Current quarter
$US’000

Previous quarter
$US’000

5.1

Bank balances

49,837

152,647

5.2

Call deposits

-

-

5.3

Bank overdrafts

-

-

5.4

Other (provide details)

-

-

5.5

Cash and cash equivalents at end of quarter (should equal item 4.6 above)

49,837

152,647

6.

Payments to related parties of the entity and their associates

Current quarter
$US’000

6.1

Aggregate amount of payments to related parties and their associates included in item 1

203

6.2

Aggregate amount of payments to related parties and their associates included in item 2

-

Note: if any amounts are shown in items 6.1 or 6.2, your quarterly activity report must include a description of, and an explanation for, such payments.

7.

Financing facilities
Note: the term “facility’ includes all forms of financing arrangements available to the entity.

Add notes as necessary for an understanding of the sources of finance available to the entity.

Total facility amount at quarter end
$US’000

Amount drawn at quarter end
$US’000

7.1

Bond Facility1

100,000

100,000

7.2

Secured Revolving Credit Facility2

150,000

70,000

7.3

Other

-

-

7.4

Total financing facilities

250,000

170,000

7.5

Unused financing facilities available at quarter end ($US’000)3

-

7.6

Include in the box below a description of each facility above, including the lender, interest rate, maturity date and whether it is secured or unsecured. If any additional financing facilities have been entered into or are proposed to be entered into after quarter end, include a note providing details of those facilities as well.

  1. Bond Facility – US$100.0 million:

On 20 July 2021 the Company completed settlement of a US$100.0 million senior secured bond facility. The bonds were issued by the Company’s wholly owned subsidiary, Jervois Mining USA Limited, and are administered by the bond trustee, Nordic Trustee AS. In February 2022, Jervois Mining USA Limited completed the first US$50.0 million drawdown on the bonds, and in July 2022 the second, and final, US$50.0 million drawdown was completed.

Key terms:

  • Issuer: Jervois Mining USA Limited (wholly owned subsidiary of the Company).

  • Maturity: 5-year tenor with a maturity date of 20 July 2026.

  • Original issue discount of 2%.

  • Coupon rate: 12.5% per annum with interest payable bi-annually.

  • No amortisation – bullet payment on maturity.

  • Non-callable for 3 years, after which callable at par plus 62.5% of coupon, declining rateably to par in year 5.

  • Transaction security: First priority security over all material assets of the Issuer, pledge of all the shares of the Issuer, intercompany loans.

  1. Secured Revolving Credit Facility – US$150.0 million:

On 28 October 2021 the Company’s wholly owned subsidiaries, Jervois Suomi Holding Oy and Jervois Finland Oy (together, “the Borrowers”), entered into a secured loan facility with Mercuria Energy Trading SA, a wholly owned subsidiary of Mercuria Energy Group Limited, to borrow up to US$75 million. The Borrowers increased the facility to US$150 million through the execution of the Accordion Increase (as contemplated in the facility agreement entered into on 28 October 2021 and as amended and restated on 4 August 2022).

Key terms:

  • Borrowers: Jervois Suomi Holding Oy and Jervois Finland Oy (wholly owned subsidiaries of the Company).

  • Maturity: rolling facility to 31 December 2024.

  • Interest rate: SOFR + 5.0% per annum.

  • Transaction security: First priority security over all material assets of Jervois Finland, including inventory, receivables, collection account, and shares in Jervois Finland.

  1. Secured Revolving Credit Facility – Unused financing facility:

The Borrowers may draw to the lower of the maximum amount or 80% of the collateral value (referred to as the “Maximum Available Amount”), where collateral is defined as the value of the Borrower’s inventory and receivables, calculated monthly (reduced to 70% for eligible inventory in Finland exceeding US$75.0 million) and subject to eligibility requirements and associated terms of the agreement. Where the amounts drawn exceed 110% of the Maximum Available Amount (the “Shortfall”), the Borrowers are required to prepay or repay any amount of the facility to ensure that, following such payment, the Shortfall no longer exists.

Subject to the Maximum Available Amount, the total unused financing facility may increase in the future to the maximum facility amount of US$150.0 million.

8.

Estimated cash available for future operating activities

$US’000

8.1

Net cash from / (used in) operating activities (item 1.9)

(12,793)

8.2

(Payments for exploration & evaluation classified as investing activities) (item 2.1(d))

(315)

8.3

Total relevant outgoings (item 8.1 + item 8.2)

(13,108)

8.4

Cash and cash equivalents at quarter end (item 4.6)

49,837

8.5

Unused finance facilities available at quarter end (item 7.5)

-

8.6

Total available funding (item 8.4 + item 8.5)

49,837

8.7

Estimated quarters of funding available (item 8.6 divided by item 8.3)

3.8

Note: if the entity has reported positive relevant outgoings (i.e., a net cash inflow) in item 8.3, answer item 8.7 as “N/A”. Otherwise, a figure for the estimated quarters of funding available must be included in item 8.7.

8.8

If item 8.7 is less than 2 quarters, please provide answers to the following questions:

8.8.1 Does the entity expect that it will continue to have the current level of net operating cash flows for the time being and, if not, why not?

Answer: N/A

8.8.2 Has the entity taken any steps, or does it propose to take any steps, to raise further cash to fund its operations and, if so, what are those steps and how likely does it believe that they will be successful?

Answer: N/A

8.8.3 Does the entity expect to be able to continue its operations and to meet its business objectives and, if so, on what basis?

Answer: N/A

Note: where item 8.7 is less than 2 quarters, all of questions 8.8.1, 8.8.2 and 8.8.3 above must be answered.

Compliance statement

1 This statement has been prepared in accordance with accounting standards and policies which comply with Listing Rule 19.11A.

2 This statement gives a true and fair view of the matters disclosed.

Date: 27 April 2023

Authorised by: Disclosure Committee

(Name of body or officer authorising release – see note 4)

Notes

1. This quarterly cash flow report and the accompanying activity report provide a basis for informing the market about the entity’s activities for the past quarter, how they have been financed and the effect this has had on its cash position. An entity that wishes to disclose additional information over and above the minimum required under the Listing Rules is encouraged to do so.

2. If this quarterly cash flow report has been prepared in accordance with Australian Accounting Standards, the definitions in, and provisions of, AASB 6: Exploration for and Evaluation of Mineral Resources and AASB 107: Statement of Cash Flows apply to this report. If this quarterly cash flow report has been prepared in accordance with other accounting standards agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent standards apply to this report.

3. Dividends received may be classified either as cash flows from operating activities or cash flows from investing activities, depending on the accounting policy of the entity.

4. If this report has been authorised for release to the market by your board of directors, you can insert here: “By the board”. If it has been authorised for release to the market by a committee of your board of directors, you can insert here: “By the [name of board committeee.g., Audit and Risk Committee]”. If it has been authorised for release to the market by a disclosure committee, you can insert here: “By the Disclosure Committee”.

5. If this report has been authorised for release to the market by your board of directors and you wish to hold yourself out as complying with recommendation 4.2 of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations, the board should have received a declaration from its CEO and CFO that, in their opinion, the financial records of the entity have been properly maintained, that this report complies with the appropriate accounting standards and gives a true and fair view of the cash flows of the entity, and that their opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively.

1 Debt drawn down represents the aggregate of amounts drawn under the US$150 million working capital facility and amounts drawn under the terms of the US$100 million Senior Secured Bonds. Amounts represent the nominal loan amounts; balances recorded in the Company’s financial statements under International Financial Reporting Standards will differ.

2 Information on the basis of preparation for the financial information included in this Quarterly Activities Report is set out on page 18 below.

3 Information on the basis of preparation for the financial information included in this Quarterly Activities Report is set out on page 18 below.

4See ASX announcement “Jervois update on drilling at Idaho Cobalt Operations, USA” dated 15 October 2019

5 See ASX announcement “Jervois releases BFS for Idaho Cobalt Operations” dated 29 September 2020

6See ASX announcement “Updated RAM resource – opportunity to extend ICO mine life” dated 19 April 2023 (Australia)

7 The number of options represent the number of Jervois shares that will be issued on exercise. The exercise price represents the price to be paid for the Jervois shares when issued.

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