Centaurus Metals acquires offtake rights for Jaguar nickel project from Brazilian giant Vale

Nickel developer Centaurus Metals (ASX: CTM) has struck a deal with Brazilian mining giant Vale to buy the off-take rights for its large-scale Jaguar nickel project in northern Brazil.

The off-take rights stem from its original acquisition of the Jaguar project back in August 2019, which set the Perth-based company on a pathway to become one of the world’s leading nickel sulphide developers.

Under the agreement, Centaurus will acquire 100% of the off-take rights for all Jaguar nickel products from Vale in exchange for an increase in Vale’s net operating royalty over the project by 1.2% for nickel sulphate product and 1.25% for nickel concentrate.

The significance of the deal is that it gives Centaurus control and optionality over future marketing and sales from the Jaguar project, opening up a wider array of opportunities for strategic funding and partnerships on unencumbered future volumes of its nickel sulphate product.

“We are very pleased to have reached a mutually beneficial agreement with Vale on this transformational deal – which reflects the strong relationship we have built up with them over a number of years and delivers an outstanding outcome for all project stakeholders,” said Centaurus managing director Darren Gordon.

“Securing 100% control over the sale of our nickel sulphate product will significantly increase the suite of strategic pathways available to us to fund and de-risk the Jaguar development,” he added.

Strengthened alignment with Vale

Centaurus says the clean transaction structure with Vale allows it to preserve its cash reserves for the ongoing definitive feasibility study, due for completion by the end of this year, and avoids any equity dilution of existing Centaurus shareholders while delivering enhanced funding and partnering flexibility.

Vale has agreed to extinguish the offtake rights in exchange for an additional royalty over Jaguar on the same terms as the royalty arrangements included as part of the original Jaguar SPA, which increases Vale’s total net operating revenue royalty over Jaguar to 1.75% for nickel sulphate and 2.00% for nickel concentrate and other products produced from the Jaguar project.

The increase in the net operating revenue royalty is designed to compensate Vale for its previous contractual rights under the SPA, while at the same time allowing Centaurus to explore funding and offtake options with a wide array of potential end-users of the nickel sulphate product from Jaguar.

Centaurus says that, with an increased life-of-mine royalty, Vale’s alignment to the success of the Jaguar project has been strengthened, benefiting all project stakeholders.

“Offtakes for battery raw materials are in increasingly high demand from OEMs, battery manufacturers and other groups, including traders, and it is this interest that is anticipated to open up a wide variety of new funding options for the Jaguar project,” the company stated.