Jervois secures US $ 100 million bond offer to fund Idaho Cobalt operations

Strong points:

• –Jervois managed to price and close the books of its subsidiary’s offer of senior secured bonds to raise US $ 100 million, guaranteed by Jervois

• –The proceeds from the bond issue will be used to finance the construction of the Idaho Cobalt Operations (“ICO”) in Jervois in the United States (“US”) and its commissioning.

• –Jervois plans to start commercial concentrate production at ICO from mid-2022

• –The bond issue is redeemable in mid-2026 and preserves commercial flexibility thanks to the construction of the ICO by not forcing Jervois to make an irrevocable commitment to supply cobalt at the start

• –Jervois continues to advance financial support discussions with the U.S. government

TheNewswire – July 5, 2021 – Jervois Mining Limited (“Jervois“or the”Company“) (ASX: JRV) (TSXV: JRV) (OTC: JRVMF) announces that it has fixed the price and closed the books of the offer of its subsidiary (the”Offer of bonds“) senior covered bonds in the aggregate principal amount of US $ 100 million, guaranteed by Jervois (the”Obligations“). Clarksons Platou Securities AS (“Clarksonâ€) Acted as managers for the Nordic style bond issue, launched as a private placement for proceeds of US $ 80 million to US $ 100 million. The bonds were valued with an annual coupon of 12.5% ​​and an issue discount at par of 2%.

Commercial flexibility preserved

Jervois is not required to enter into any external offtake agreements for Idaho Cobalt Operations (“ICOâ€) Is focused, except in certain limited circumstances at a later date, under the Terms of the Obligation (as defined below). The Company will continue its concentrate processing plans at São Miguel Paulista (“SMPâ€), Subject to Jervois finalizing its acquisition of SMP and successfully restarting the refinery in stages in 2022 and 2023. The Jervois sales team plans to sell SMP’s refined cobalt products to key customers in the United States, and potentially in Europe, Japan and South Korea. This sales strategy is expected to maximize shareholder value relative to committing to an early sale of large volumes of ICO cobalt concentrates under external off-take agreements. The Company continues to have discussions with concentrate customers and, for commercial reasons, may choose to place a limited volume of concentrate outside. SMP’s cobalt circuit is expected to be restarted in 2022 on the feedstock of cobalt hydroxide, the same material that was previously purchased and refined by the facility.

Customer interest in ICO cobalt in a refined SMP form is high, reflecting its uniqueness as the only cobalt mined in the United States at a time of increasing focus on ESG standards and security of supply chain risk for critical minerals due to geopolitical influences.

Ongoing discussions on US government support

The Biden administration has completed a comprehensive review of vulnerabilities in critical U.S. mineral supply chains, including cobalt, and is preparing to propose a series of measures to address these gaps.

Jervois had positive conversations with the U.S. government prior to this comprehensive review on the importance of a U.S. domestic source of cobalt and ICO’s funding needs. Jervois will continue to advance these discussions on the appropriate forms of financial support for ICO and / or Jervois, as the policy prescriptions arising from the review are reflected in the priorities of the US government funding agencies. Jervois may seek financing options for ICO and / or other parts of its business with the US government which may either be implemented in addition to the Bonds, be made available prior to the drawdown of the Bonds, or refinance all or part. of the Bonds, in each case in accordance with the Terms of the Bond. Jervois does not plan to inform the market about these financing options until a final agreement has been reached.

Description of Obligations

The Bonds are denominated in US dollars with a term of five years, except redemption or repayment, and bear interest at the rate of 12.5% ​​per annum, payable semi-annually in arrears.

The Bonds will be senior debt of Jervois Mining USA Limited (the “Transmitter»), An indirect 100% American subsidiary of Jervois and owner of ICO, and will be guaranteed by Jervois. The Bonds will be guaranteed as a priority by (i) a pledge of shares on all of the Issuer’s shares, (ii) a pledge on all loans by and between the Issuer, Jervois and / or Jervois owned US subsidiary which holds all shares of the Issuer, and (iii) a guarantee on all tangible assets (tangible and intangible) of the Issuer, such as the Escrow Account (defined below), among others.

The net proceeds of the Bond Offering will, upon disbursement to the Issuer from the Escrow Account, be used for the payment of capital expenditures, operating costs and other costs associated with the construction of ICO and when it goes into production. The first production of ICOs continues to be expected from mid-2022.

The issue date of the Bond Offer is expected to take place on or around July 20, 2021 (the “Date of issue“). After satisfaction of certain conditions precedent customary for these types of transactions, the net proceeds of the Bond Offer will be placed in an escrow account denominated in US dollars of the Issuer (the “â€Escrow account“). These conditions precedent include, but are not limited to, the financing of the Escrow Account by the Issuer such that at the time of deposit in the Escrow Account of the net proceeds of the Bond Offering, the total amount held in deposit (the “Bond Fund“) will be equal to 101% of the total principal amount of the Bonds. The additional provisions of the Bonds are set out in Schedule A hereto.

The first of the two (2) drawdowns of 50% of the bond funds from the escrow account is scheduled for the fourth quarter of 2021, after the satisfaction of the conditions precedent to the withdrawal from the escrow account described in the attached Annex A and the completion of the ‘stage 1 of the Ausenco. -conducting a bankable feasibility study (“BFSâ€) For a restart of the SMP refinery in Brazil, which is expected at the end of the third quarter of 2021.

The Bonds are debt securities only, with no share warrants or share conversion features attached.

The full text of the terms and conditions of the Bonds (the “Conditions of obligationsâ€) Will be filed and available on Jervois’ corporate profile on SEDAR at www.sedar.com following the Issue Date and readers are urged to refer to the full text of the Terms of the Bonds for all terms and conditions of the Bonds.

Jervois’ financial advisor on the Bonds was Magma Capital Advisory.

The Issuer intends to request listing of the Bonds on the Nordic Alternative Bond Market (ABM).

In the name of Jervois

Bryce Crocker, CEO

For more information, please contact:

Forward-looking statements

This press 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 press release, the words “anticipate”, “believe”, “estimate”, “expect”, “target,” plan “,” foresee “,” may “,”, words or phrases identify forward-looking statements or information. Such forward-looking statements or information may relate to the timing of production at ICO, the issuance of Senior Covered Bonds and the timing of issuance, settlement and drawdown of the bonds and certain other factors or information. These statements represent Jervois’ current views regarding future events and are necessarily based on a number of assumptions and estimates which, although considered reasonable by Jervois, are inherently subject to commercial, economic, competitive, political risks. and social, important contingencies and uncertainties. . Many factors, known and unknown, could cause any results, performance or achievements to differ materially from the results, performance or achievements which are or may be expressed or implied by these forward-looking statements. Jervois does not intend, and assumes no obligation, to update such forward-looking statements or information to reflect changes in assumptions or changes in circumstances or any other event affecting such statements and information other than those required. by applicable laws, rules and regulations.

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

APPENDIX A – Main Provisions of Senior Secured Bonds

Transmitter	Jervois Mining USA Limited
Guarantors	Jervois Mining Limited (ASX: JRV, the “Jervois“) and Formation Holdings US, Inc. (the”Intermediate subsidiaryâ€)
Issue amount	$ 100 million
Original discount	2.0%
Product use	The net proceeds of the bonds should be placed in the escrow account until the draw and then allocated to the capital and operating expenses associated with the development of the ICO.
Interest rate	12.5% ​​per annum, semi-annual interest payments
Amortization	Ball
Tenor	5 years
Call options	Not callable for 3 years. Subsequently redeemable at par plus 62.5% of the coupon, decreasing proportionally to par during year 5
Transaction security	1st rank collateral on all material assets of the Issuer, pledge of all of the Issuer’s shares, intercompany loans
Financial commitments	Minimum issuer liquidity of at least US $ 5 million Minimum group liquidity of at least 10% of total debt Minimum accounting capital ratio of at least 35%
Withdrawal from escrow account	Two (2) withdrawals from the escrow account, each ½ of the issue amount. These withdrawals are subject to certain conditions, including i) the US $ 35 million project capital contribution that was spent on the ICO project, ii) Jervois raised additional equity of at least US $ 50 million, iii) satisfactory countersigned test certificates and iv) Some project documents are in place and other preconditions met
Commitments / Commitments	Includes, among others, the specific restrictions and commitments related to operations, investments, insurance, mergers / separations, ownership of the issuer / intermediary subsidiary, disposal of assets, financial indebtedness, security and financial support; No distribution by Jervois Distributions by the Issuer authorized after the date falling 1 year after Project Completion and subject to minimum pro forma cash flow thresholds General commitments and common commitments in the Nordic high yield market
Change of control	Each Bondholder has the right to upgrade the Bonds to 101% in the event of a change of control of the Issuer.
Documentation / Fiduciary / Law	Nordic Trustee / Nordic Trustee / Norwegian model

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