The Outlook for Critical Battery Metals - Nickel & Rare Earths

• Nickel and rare earth element (REE) mining companies are competing for investor capital to fund exploration and development in the face of China's market dominance
• Government funding and strategic partnerships with downstream players like OEMs are emerging as alternative financing options
• Establishing strong community and stakeholder relationships early on is critical for securing social license to operate
• Recycling will play a role but cannot replace the need for significant new primary production of nickel and REEs to meet EV and renewable energy demand growth
• Featured companies Namibia Critical Metals, Nordic Nickel, and Alaska Energy Metals each offer investors exposure to advanced, strategically located REE and nickel projects

Introduction

As the global transition to electric vehicles (EVs) and renewable energy accelerates, securing reliable supplies of critical battery metals like nickel and rare earth elements (REEs) is becoming a top priority. However, mining companies focused on these metals face significant headwinds in attracting investor capital due to China's dominance of the REE market and new nickel supply from Indonesia. In a recent panel discussion, CEOs from three companies advancing nickel and REE projects – Namibia Critical Metals, Nordic Nickel, and Alaska Energy Metals – shared their perspectives on the outlook for these critical metals and how they are navigating the challenging financing environment.

Panel session with Namibia Critical Metals, Nordic Nickel & Alaska Energy Metals

The China Factor

A major challenge highlighted by the panelists is China's control over critical metal supply chains, particularly in the REE space. "China has 85% of the refining capacity of rare earths right now," noted Darrin Campbell, CEO of Namibia Critical Metals. "That has to change."

The panelists agreed that Western governments are waking up to the need to diversify supply, with the US and EU recently launching the Mineral Security Partnership and countries like Japan taking an active role in directly funding upstream projects. However, more needs to be done to level the playing field."

In the US there still seems to be a disconnect," observed Greg Beischer, CEO of Alaska Energy Metals. "It's full hard on go, electrify, but not at the same time streamlining the mine permitting system and encouraging domestic mine development to the extent, in my view, that they should be."

Alternative Financing Strategies

With traditional equity markets challenging for junior mining companies, the panelists are pursuing alternative financing options. Strategic partnerships are emerging as a key strategy, both with larger mining companies and downstream players like OEMs."We've been very much looking at the strategic partnerships angle from the outset," said Todd Ross, Managing Director of Nordic Nickel.

"Mining houses, obviously, but also with the OEMs who are looking to try and get access to material...They might be willing to provide some capital injection earlier on to allow you to advance the project a bit further."

On the government funding front, Campbell suggested flow-through share structures and direct strategic investment, as practised by Japanese agencies, as potential models for Western countries to support domestic critical mineral development.

The Social License Imperative

The importance of early, sustained and authentic community engagement was also emphasized. Earning social license to operate is essential to de-risking projects.

"Getting that social license is just as important as any of the technical work," stated Campbell. "It's a lot of work and effort that you have to undertake right from the get-go of the project if you really want to be successful."

Ross echoed this perspective. "Our exploration geologists that are on the ground are very much our ambassadors," he said. "We make sure that the people in the local community have a direct line of communication back to me, back to our management team, if there's concerns that they raise."

Recycling's Supporting Role

While recycling will undoubtedly play a growing role, the panelists agreed it is not a panacea, at least in the near to medium term. Most demand will need to be met by new primary production.

"Recycling is absolutely going to be part of the future, but to get there, we've got to mine a whole bunch more of these metals actually to build out that electrical economy," emphasized Beischer. "You can't recycle what hasn't been mined in the first place."

Company Profiles

Each of the featured companies offers investors a differentiated exposure to the battery metals theme:

• Namibia Critical Metals is advancing the Lofdal Heavy Rare Earth Project in Namibia. Lofdal hosts one of the largest heavy REE deposits outside of China, particularly in the critical magnet metals dysprosium and terbium. The company holds a full 25-year mining license and has secured development funding through a joint venture with Japan Oil, Gas and Metals National Corporation (JOGMEC). An updated resource estimate released in April 2023 establishes Lofdal as a globally significant deposit with 5,500t of contained dysprosium and 800t of contained terbium. Management believes the project is significantly undervalued by the market based on its advanced stage, strategic partner, and scale. With China controlling 85% of global REE refining capacity, the company is well-positioned to help meet growing demand for secure heavy REE supply as the energy transition accelerates.
• Nordic Nickel, an ASX-listed company, is focused on nickel exploration in the Central Lapland Greenstone Belt of Finland. Its flagship Pulju Nickel Project has an existing resource of 862kt of contained nickel from just 5km2 of the total 240km2 land package, highlighting the belt's significant exploration upside. Finland is a top-tier mining jurisdiction hosting Europe's only two nickel mines and offering excellent infrastructure and a streamlined permitting process. However, with both of the country's existing sulphide nickel mines fully committed, Nordic is positioning to help fill a strategic supply gap for battery-grade nickel in Europe. The company has attracted early interest from BHP, which selected Nordic for its Xplor program, providing a US$500,000 grant. Discussions around BHP earning into the balance of Nordic's Pulju land package are ongoing, underscoring the project's potential to be a globally significant nickel sulphide discovery.
• Alaska Energy Metals' flagship Nikolai Nickel Project in Alaska hosts a large nickel deposit with accessory copper, cobalt, and platinum group elements. The company has rapidly delineated a major resource of over 8 billion pounds of contained nickel, establishing Nikolai as one of the largest undeveloped nickel sulphide resources in the US. The project's bulk tonnage potential and location near existing infrastructure position it to become a significant contributor to secure, domestic critical mineral supply. As a long-term operating jurisdiction for major companies like Anglo American, Rio Tinto, and Teck, Alaska provides a stable regulatory environment with well-defined permitting processes, settled land claims, and strong community support for responsible mine development. CEO Greg Beischer, building off his prior discovery success, has quickly advanced the project over the past year, though he believes the market still undervalues Nikolai based on its size and strategic location.

The Investment Thesis for Battery Metals

• Focus on companies with advanced, well-located projects in stable jurisdictions to mitigate development and geopolitical risk
• Look for alternative financing sources like strategic partnerships, OEM offtake agreements, and government funding/grants to supplement traditional equity
• Prioritize management teams with strong ESG credentials and a track record of earning a social license
• Consider a portfolio approach to gain diversified exposure across the battery metals suite
• Take a long-term view; while near-term volatility is likely, the demand growth and supply deficits facing key battery metals are expected to reward patient investors

while taking a patient approach could offer significant upside as EV adoption and renewable energy growth accelerateThe CEOs of Namibia Critical Metals, Nordic Nickel, and Alaska Energy Metals are each advancing significant battery metal projects that are well-positioned to help diversify global supply chains and meet the growing demand from the energy transition. While financing remains a challenge, a combination of strategic partnerships, alternative funding sources, and strong ESG practices is helping these companies advance their projects up the value curve. For investors, selectively building exposure to long-life, low-cost critical metal assets in stable jurisdictions, while taking a patient approach, could offer significant upside as EV adoption and renewable energy growth accelerates.