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Nordic Mining ASA reported its third-quarter 2025 earnings, highlighting operational difficulties and higher-than-expected costs. Despite these challenges, the company maintains a strategic focus on future production targets. The stock price saw a slight decline, reflecting investor concerns over the company's financial performance and operational hurdles.
Key Takeaways
- Nordic Mining faced higher production expenses and mining costs in Q3 2025.
- The company exited the quarter with $292 million in cash, supported by a $22.5 million bond tap issue.
- Nordic Mining is targeting its first rutile cargo shipment by Q1 2026.
- The stock price decreased by 0.28% following the earnings call.
Company Performance
Nordic Mining's Q3 2025 performance was marked by operational challenges, with a negative cash flow from operations amounting to $94 million. The company mined 550,000 tons of rock during the quarter, bringing the year-to-date total to 1.65 million tons. Despite these efforts, production expenses exceeded expectations, and mining costs were above target unit costs. The company aims to achieve design capacity by Q2 2026, signaling a focus on long-term growth despite current setbacks.
Financial Highlights
- Negative cash flow from operations: $94 million
- Cash reserves at quarter-end: $292 million
- Additional funds raised: $22.5 million through bond tap issue
- Limited revenue due to only one small garnet shipment
Market Reaction
Nordic Mining's stock experienced a slight decline of 0.28% following the earnings call. The stock closed at $14.04, moving closer to its 52-week low of $13.56. The market reaction reflects investor concerns over the company's immediate financial health and its ability to manage operational challenges effectively.
Outlook & Guidance
Looking ahead, Nordic Mining is focused on optimizing its mining fleet for 2026 and increasing operational stability. The company plans to start publishing quarterly production statistics and is prioritizing the reduction of equipment wear. With fixed pricing for its rutile and garnet contracts over the next five years, Nordic Mining aims to leverage its strategic partnerships to stabilize its market position.
Executive Commentary
Kenneth, Operations Manager, noted, "We have increased the design load on the crushing circuit," highlighting efforts to improve efficiency. CFO Tord emphasized, "Our focus remains on production," underscoring the company's commitment to meeting production targets. CEO Finn Ivar stated, "The customers are ready. They want to take delivery," reflecting confidence in future demand.
Risks and Challenges
- High production expenses and mining costs could impact profitability.
- Operational challenges, including equipment wear and material handling issues, need addressing.
- Market conditions, such as weakening titanium dioxide prices, may affect revenue.
- Legal proceedings and funding requirements pose potential risks to financial stability.
- Achieving design capacity and meeting production targets are critical for future growth.
Q&A
During the earnings call, analysts inquired about plant reliability issues, material handling challenges, and the status of legal proceedings. Nordic Mining addressed concerns regarding its financial buffer and future production expectations, indicating a strategic focus on overcoming current hurdles to achieve long-term objectives.
Full transcript - Nordic Mining ASA (NOM) Q3 2025:
Finn Ivar, CEO, Nordic Mining: Good morning and welcome to Nordic Mining's third quarter 2025 interim presentation. We have a challenging quarter behind us, with operational technical issues as well as a court case, but this is not without some bright spots. On the positive side, during the quarter, we crushed and milled more material during a six-week period than we did in the preceding six months. The produced volumes of garnet and rutile were in spec, but the volumes were low. The issue that we faced was one of operational time, continuous operational time. We've taken steps to address this by bringing on-site expertise from our customers and partners. The Barton Group, that has 150 years' experience running their own mining operation, have their Operations Manager on-site working alongside our people. The Iwatani Group has a mineral separation plant in Australia that does titanium dioxide.
They're also on-site assisting us, as well as technical support from Orion Resource Partners, our financing partner on the royalty side. Together, we've charted a new path forward, with the stated aim of having a rutile cargo available for shipment at the end of the first quarter next year, and also operating at the design capacity towards the end of the second quarter next year. In order to provide transparency on our progress towards those targets, we're going to start publishing quarterly production statistics immediately following the quarter end so that you can follow and track how we go forward. In order to create a runway, we raised additional capital through a tap issue of our high-yield bond during the quarter. Given that additional capital and our plans going forward, this should carry us through to positive cash flow.
As it stands, during the quarter, we also had a lawsuit filed against us for a temporary injunction, that is a stop of our mining operations. We spent five days in the district court at Songdo Fjordana. We met well prepared, and we had the government's attorneys at our side. What we brought in that case, which was actually new compared to the other cases that have arisen, is an argument that the environmental impact indeed is quite low and significantly lower than has been stated, and also raising the question if indeed the EU water directive is applicable in our case. The verdict in that case is expected on or about the 10th of November, and we will, of course, inform the market immediately. Another positive news item during the quarter, or rather, two days ago, was during the Fennoscandia conference in Finland.
We were actually awarded the Fennoscandian Mining Award for 2025. In the picture here, you can see our Manager of Resource and Development, Trond Langeng, receiving the award on our behalf. This is a proud achievement for us and a testament to all our employees that work 24/7 to make this a success. Indeed, a very happy news item there. This time I'm going to introduce a new face. Since our last quarterly report, we've been joined by our new Chief Commercial Officer, also responsible for Strategy and Business Development, Andreas Davidsen, and he will go through the market development. Andreas.
Andreas Davidsen, Chief Commercial Officer, Nordic Mining: Thank you, Finn Ivar. As you know, our rutile goes as a feedstock for titanium dioxide production and titanium metals production. We have five-year contracts with the price fluctuating with the natural rutile price. In the titanium dioxide market, we saw the prices weakening in Q3 across most regions compared to the first half of the year. The main reason for the weakening of the prices is continued exports from China. However, we see a continued demand for titanium sponge, and the market there remains strong. There is quite limited trade of natural rutile in the market, and we see the prices being flat from 2024. Below you will see a graph of the natural rutile price, which we have produced together with our consultant, TZMI. You will see that the price is down from 2022, 2023, but flat from 2024.
We expect 2025 to be as 2024 and increasing somewhat thereafter. We see closures of mines of natural rutile, and we don't see much new supply. On the garnet market, we see the market as relatively tight in Europe and North America, with strong demand for our products. In garnet, Nordic Mining has fixed price for the first five years of the contract. In conclusion, we see demand for all the volume we can produce for the next year. We see flat prices or slightly increasing for natural rutile, and we have a fixed price for garnet. Thank you. I will introduce Kenneth, who will speak about operations.
Kenneth, Operations Manager, Nordic Mining: Thank you. Moving into the Engebø rutile and garnet. Looking at the mining site, we can see a huge project moving forward into operation. We started the mining roughly one year ago, and we have been focusing on waste rock in the last months. If we look at the overall numbers, we have in the quarter mined roughly 550,000 tons of rock, and year to date, 1.65 million tons. In general, the ore grade is in line with the feasibility study after we have done grade control of the mined ore. We have been prioritizing waste rock movement as the process plant has not been able or available to receive ore in certain periods. We are roughly 9 to 12 months ahead of ore mining as per now.
In a totality of all of these items, we do not see any change to the mine plan, except that we are ahead in waste rock. In terms of next year, we are preparing a new plan, an updated plan on the basis of the waste rock mined already, and we plan to optimize the fleet and reduce the mining fleet for 2026 because of this. The mine is well positioned for next year. Looking into the process plant and the production from a mineral separation point of view, we see that we have significantly increased the throughput on the mill and into the wet plant in the last quarter. We have increased the design load on the crushing circuit, but are still not 100% in that sense. We have not progressed significantly in the dry plant because of operational time and stability issues.
Looking at the illustration on the left side, we have tried to show the totality of what we're doing throughout the ramp-up. We always need to have quality in place, and we are focusing on the throughput. Our operative challenge right now is to maintain a significant operational time throughout the plant. Having 100% design load on the mill means that we are inputting at the design capacity when we run the mill, but are not achieving the expected output and recovery on the basis of the input. This is due to some limitations in our dry plant, which we are aware of, and it's failure related to material handling equipment moving dry material from A to B. We know what the cause is and are waiting replacement.
We have, for the last week, had roughly 70% operational time on the mill, which is a great achievement, and we work towards those numbers for the rest of the year. In terms of mineral production, we are still meeting the quality on the concentrate, but because of the instability, we have not been able to increase the production of rutile. When we are now increasing the throughput, we are also constantly having to change and tune this mineral separation equipment all the way from the mineral separation in the wet plant throughout the dry plant. It takes a lot of time to adjust, but we are moving very positively forward.
Looking at 2025 and what we have done and achieved, we can go a little bit back to Q1, where our focus was ramping up the mining activities, increasing crushing throughput, and we were running both crushing and mineral separation separately. In the second quarter, our focus was de-bottlenecking the materials handling in the crushing circuit. We also started both crushing and mineral separation plants simultaneously. In Q3, as we have presented before, we've done modification to a large amount of pump circuits and slurry lines. After doing this, we have achieved the design throughput on our mill. We also have seen operational and technical challenges after this that have hampered our progress in the ramp-up. In Q4, we are seeing that our wet plant performance is deliberately by ourselves limited due to the capacity in the dry plant at the current stage.
We need to expect and replace some parts because of the limitations and design defects. I will come a little bit back to these defects in a few slides. Our focus going forward is to reduce wear and equipment failures to increase the operation time plant-wide. Some examples of what we are working with: on the left side, we have pump circuits that have been changed, a significant part of it, but we do also see other challenges as we are running right now. Start and stop of a plant introduces increased wear. We still see some design layout issues, mainly on how the pumps and the pipes are designed in and around each other, that incurs cavitation in certain pumping systems and reduces then the internal life of the pumps.
We are constantly doing changes on this, and we see a significant effect in reducing the wear across the plant. We are also running an operator program where high-wear pumps are changed into a bigger size to reduce the required RPM on the system, which then limits the wear on the pump internals. Specifically on the dry plant, the identified bottleneck is a simplistic screw feeder in a complex system. We are limiting the throughput to reduce wear. We have seen increased wear, which we have done temporary repair to and refurbishment with our own engineers, awaiting a new type of material handling system by the end of November. You can say, why didn't we see this before? Sometimes when you start a plant, excessive wear in points, equipment failures are not seen until you actually start up and run the plant.
In our throughput increase now, we have seen more items that we need to deal with and repair, modify, and move on. This is what we do on a constant basis, and I'm working with the plant. Our team is doing an excellent job with the limited time at our plant and new people coming in. Our people, both from a maintenance and an operator perspective, are doing an excellent job in lifting up the production and keeping up 70% last week and plans for the coming weeks. Leaving to Tord.
Tord, CFO, Nordic Mining: Thank you, Kenneth. The cash flow was affected by several factors. First of all, very limited revenue as only one small boat of garnet was shipped in the quarter, combined with a high activity in both the pit and the process plant. With extensive maintenance work, we have a $94 million negative cash flow from operations. Other factors include use of both external services and spare parts related to the maintenance stop in July to handle challenges in the plant later in the quarter. CapEx from the construction project is limited this quarter, and remaining CapEx is holdback related to one EPC. We are exiting the quarter with $292 million in cash and have subsequently increased liquidity by $22.5 million through a tap issue of the existing bond. By this, we have secured a runway to support the updated ramp-up plan.
The focus remains on production, which is very important for the financial performance going forward. To keep you somewhat more closely updated, we will start publishing quarterly production figures that will be published in the first couple of days after the end of the quarter. Therefore, you will receive an update on production for the fourth quarter in early January. Over to the P&L. There is an increase in the production expenses this quarter. First of all, the mining costs are higher than expected, which relates to the mining contract. Parts of this relate to one-offs, but in general, the unit cost per ton is higher than what we are targeting. The cost level will have a focus as we now move forward, together with the reduction in the activity level in the pit, as explained by Kenneth. In addition, operational challenges impact the operational cost as well.
As mentioned in the previous slide, we have had a maintenance focus this quarter, which has resulted in increased use of spare parts and material, as well as extra costs related to external services. There has also been a high use of overtime by our own employees. Finally, the OpEx is also somewhat impacted by legal bills relating to ongoing court cases, which are continuing into the fourth quarter. With that, we move over to the Q&A.
Thank you. We have quite a few questions, and some of them are similar, so we'll try to group them. We could start with Kenneth. Those are the questions looking a little backwards. Why did a plant designed and engineered by Hatch with extensive front-end engineering and process simulation still face such fundamental reliability issues in the dry plant and materials handling system?
Yes, I think it's a good question. To start off, it is important to notice that our mineral separation equipment is not seeing any difficulties in achieving the grade and the quality of our products. The mineral separation equipment is working as intended as per design. In terms of material handling, such as the pumps that we have already changed and other items that we are working with, it is our responsibility of the EPCs to deliver and move the material from A to B in between the mineral separation equipment. This is, of course, items we have on our defect list towards our EPC contractors.
Does some of the delay stem from the dual mineral configuration itself, managing both rutile and garnet circuits, comparing to what you would have expected in a single mineral plant?
I do not think there's a specific reason either/or. Of course, garnet as an abrasive material does increase the wear, but I would say that it's about the number of machines and number of streams, which are the main impact. As part of the design, we are also recirculating a significant amount of streams to actually take out the most of the minerals at each given time, which means that this is extra processing capacity and recirculating loads that also wear out pipes and equipment. In many plants around the world, these items are not used in that amount of recirculating circuits and might be a simpler plant somewhere. In total, it's not about rutile or garnet, it's about the size and the amount of streams, which we have started, step by step, stream by stream.
Kenneth, you're using electrical dryers instead of gas-fired systems. Has this contributed to the lower output, increasing equipment wear in the dry plant?
No, the electric dryer versus gas-driven dryers are not a significant impact in terms of wear.
Who owned the overall risk regarding the register during the construction to operation transition, and who signed off that all critical risks were closed before the project was declared complete?
I can answer. Our commissioning plan is five or six steps, depending on how you look at it. At each step, we have done checkouts. Some of these things that are emerging now are not able to be seen in the earlier stage where you run material, not run material, you run only water. Now we are increasing the throughput throughout the plant. There are new things coming that have not been possible to see before. Of course, there might have been inherent items that we could, should, and maybe should have seen before, but this has not been taken into account earlier. We are dealing with it now that we see the issues coming up.
With the plant not operating as intended as of yet, will you receive compensation by the EPC contractors? Is this an ongoing process? If so, when and how much? Yes.
I said our focus is to get the plant to work, and we are writing down and notifying all the defects that we are seeing towards both contractors and EPCs.
Finn Ivar, why have you decided to release reports on production only quarterly? Why not monthly? As an investor, I'd like to be updated more often than quarterly.
I can certainly see that point. We had a discussion about what makes sense from an information point of view. In our view, the quarterly production statistics will provide the best view on operations. The monthly will vary, and the quarterly would provide a better view of actually how we're progressing.
We have some legal questions here. During the trial where the NGOs are requesting a temporary injunction, it was mentioned that the state has the flexibility to grant Nordic Mining a temporary permit or a new production permit. Is that correct?
That is correct. That was a topic during the court case and certainly something that we took note of as a possibility going forward.
Is the CEO positive regarding the court case?
Yes, very much so.
When are you able to give us some news about dividends?
Right now, all our focus is on making the plant operating according to design specifications. That's where our focus is for the next six months at least, and the dividend question we will deal with in due course.
Do you have any update on the Quinn Herad quartz project?
I think we mentioned this at our last quarterly report that we expect to see results from product being tested at customers late in the first half of next year. No news as of now.
Todd, last quarterly presentation, you stated that you were funded until cash flow positive. One month later, the bond was tapped again. Did you honestly not realize that the operational problems would cause a tap issue at that time of the last presentation? What made you decide to raise debt instead of equity to cover the additional ramp-up costs?
Before you start answering that, Todd, if we look at the big picture here, we have a situation where we have a brand new plant that we're working to operate. We have a new organization with most of the people having joined within the last 12 months, and we have a pretty unique ore as well that we need to learn how to deal with. The situation is actually, as I described in the quarterly report, one of continuous challenges that we have to deal with as we move forward. With the experts that we have at hand on site now, we have increased visibility and we have a good plan going forward. Of course, there's always the unknowns that could turn up. I'll let you answer the specific question, Todd.
Yeah, we came out of the maintenance stop in early August very positively. We had fixed many of the issues we were facing before the maintenance stop. We thought that we believed that this was going according to plan. We saw as we moved further down the production line, we saw issues coming. We had to revise the production plan and, thereby, we tapped the bond issue.
Todd, how much financial buffer have you in case you will face more delays in the ramp-up? What if the first shipment of rutile is delayed from end of Q1 to Q2?
We have an updated plan now, including a buffer, which takes into account a ramp-up period, a longer ramp-up period than we previously had planned for. All our efforts now are on getting the production up, production of rutile and garnet so that we can deliver on this plan. We will keep the buffer. We are also bringing in good help these days. We therefore believe that this will result in income in the coming period. The customers are ready. They want to take delivery. It's all come down to us producing minerals.
Thank you. I think we have covered all the questions now.
Thank you.
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