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BHP to make an initial US$50 million investment in Kabanga Nickel and Lifezone with further investments to be agreed

Highlights

  • Kabanga is the largest development-ready nickel sulphide deposit in the world. Located in western Tanzania, it has contained in-situ nickel equivalent resources estimated at 1.86 million tonnes and an in-situ nickel equivalent grade of 3.44%1,2 .
  • Project timeline anticipates first production in 2025, targeting minimum annual nickel equivalent production of 65,000 tonnes2 , with 30+ years life of mine and exploration upside potential.
  • US$40 million investment from BHP, a world leading resources company, to accelerate development of the Kabanga Nickel Project to produce Class 1 battery-grade nickel, cobalt and copper.
  • Further US$10 million investment from BHP to progress Lifezone’s low-carbon hydrometallurgical processing technology which is more cost-efficient than smelting and has a significantly lower environmental impact.
  • Future investment tranches in Kabanga Nickel have been agreed subject to certain conditions, including a second tranche of US$50 million and the right for BHP to make further investment subject to achieving certain agreed milestones.
  • Full beneficiation of battery grade metals without smelting will be achieved in Tanzania. The Government of Tanzania has a 16% interest through local partnership entity, Tembo Nickel Corporation, Kabanga Nickel Ltd (UK) holds the balance.

Dodoma (Tanzania), London (United Kingdom), 10 January 2022 – Kabanga Nickel Limited (“Kabanga Nickel”), a UK registered private company, is pleased to announce that BHP, a world leading resources company, has invested US$40 million into Kabanga Nickel. The money will be used to accelerate the development of the Kabanga Nickel Project (“the project”) in Tanzania, the world’s largest development-ready nickel sulphide deposit. In parallel, BHP has invested US$10 million into Lifezone Limited (“Lifezone”) to advance the roll-out of its patented hydrometallurgical (“hydromet”) technologies. Lifezone hydromet is more cost-efficient than smelting, has a significantly lower environmental impact, and will ensure that finished Class 1 battery grade nickel, copper and cobalt will be produced in Tanzania.

Chris Showalter, Kabanga Nickel CEO, said: “We are delighted to announce this partnership with BHP. It highlights the world-class nature of the Kabanga deposit and its importance in helping meet the crucial decarbonisation challenge facing the world today. BHP is the ideal partner for Kabanga Nickel, bringing significant advantages and expertise that will enable us to move ahead with the project. BHP’s investment reflects the project’s strong ESG credentials and its role in improving environmental performance throughout the nickel value chain. In addition, BHP’s funding support of Lifezone’s hydromet technology – the future of sustainable metals processing – will drive progress towards a greener world. Through development of Kabanga and Lifezone hydromet, Tanzania will have a growing role in the supply of the battery metals needed to move to a global low carbon economy.” www.kabanganickel.com | www.lifezone.tech 2

The Transaction

The transaction is for a total consideration of US$50 million, with investments in both Kabanga Nickel (US$40 million) and Lifezone (US$10 million).

Future investment tranches in Kabanga Nickel have been agreed subject to certain conditions, including a second tranche of US$50m and the right for BHP to make a further investment in Kabanga Nickel subject to achieving certain agreed milestones.

Investment in Kabanga Nickel

BHP will invest US$90 million in unsecured convertible securities in Kabanga Nickel in two tranches:

An initial US$40 million, followed by a further US$50 million on successful agreement of definitive documentation and satisfaction of certain other conditions.

The first tranche of US$40 million will convert into an 8.9% equity stake in Kabanga Nickel (7.5% see-through interest in Tembo Nickel Corporation (“Tembo”)) once approvals and conditions are met. Once invested and on conversion the second tranche of US$50 million will increase BHP’s equity stake in Kabanga Nickel to 17.8% (15.0% see-through interest in Tembo), thereby valuing the project at US$658 million post-money.

On satisfaction of additional conditions, BHP will secure the right to make a further investment in Kabanga Nickel subject to achieving certain agreed milestones.

Investment in Lifezone

In parallel to the Kabanga Nickel US$40 investment, BHP will invest US$10 million into Lifezone Limited. Lifezone is the owner of the hydrometallurgical technology that will be used to build and operate a refinery in Tanzania. Lifezone’s hydromet technology provides a greener, lower emission and higher margin product and will allow full beneficiation of metals in-country.

Use of proceeds

The investment into Kabanga Nickel from BHP will support an acceleration in the mine’s development, including an enhanced metallurgical drilling programme to enable update of the Definitive Feasibility Study and support the construction plans for the hydromet refinery. These studies are expected to be completed by the end of 2022. Site and infrastructure development is already underway. The investment will also support hiring and training of local Tanzanian talent.

The investment into Lifezone allows for new patent applications as well as R&D work that will further commercialise the Lifezone hydrometallurgical technology. Lifezone currently has patents granted in over 150 countries. Hydrometallurgy, already in operation at various operations around the world, is becoming increasingly attractive to produce base and precious metals. Crucially, it has lower energy consumption and a smaller environmental footprint.

The current project development timeline anticipates first production in 2025. Output will ramp up to target a minimum annual production of 40,000 tonnes of nickel, 6,000 tonnes of copper and 3,000 tonnes of cobalt.

In partnership with Tanzania

Tanzania is committed to become a significant producer of responsible and sustainable metals to supply the increasing global demand to facilitate the move to a low carbon economy. The Government of Tanzania is an important partner in the development of the integrated Kabanga www.kabanganickel.com | www.lifezone.tech 3 project to create shared value. In her address at the COP26 Summit in Glasgow last November, President Samia Suluhu Hassan stressed the need for developed countries to help the African continent with the challenges of climate change. The partnership in Kabanga with the government, and the backing of BHP is an example of how this can be achieved.

The Honourable Doto Biteko, Minister of Minerals, said: “Tanzania has a vision to become an important hub for critical decarbonisation minerals. I am pleased that Kabanga Nickel Limited recognises this potential and has invested in our future. Thanks to the work of Kabanga Nickel, and our own natural resources, we now stand ready to help the world in the production and refining of the crucial metals that society needs, while creating skilled jobs and benefiting the economy of our country.”

See full release for additional information.

Download Full Release PDF here