Photo by: Bloomberg
PERTH (miningweekly.com) – ASX-listed Poseidon Nickel is hoping to raise about A$75-million through a fully underwritten entitlement offer to restart its Silver Swan and Black Swan mines, and bring the Black Swan processing plant back into production.
Poseidon on Friday said that an initial placement will be made to sophisticated and professional investors, including Andrew Forrest’s Squadron Resources, to raise A$5.8-million, priced at 5c a share.
A total of 116.77-million shares will be issued under the placement.
An entitlement offer will also be launched to raise a further A$68.8-million, also priced at 5c a share, with eligible shareholders entitled to apply for 11 new shares for every 10 existing shares held.
Squadron and its associates would subscribe for some 221.6-million shares, or around 18% of the expanded capital of Poseidon post the share placement, and is also sub-underwriting 100% of the entitlement offer.
“We are delighted by the response to the capital raising and welcome Squadron Resources’ support. Funds raised from the placement and entitlement offer will enable the company to bring the Black Swan and Silver Swan mines and processing plant back into production,” said Poseidon chairperson Chris Indermaur.
Poseidon earlier this month received a A$76-million conditional cash bid from Black Mountain Metals, and while no formal bid was made, the informal proposal consisted of 6c a share.
The US group warned Poseidon that it would terminate the takeover proposal if a capital raising was pursued.
“The company has always been positively leveraged to the nickel market but now, with a fully underwritten capital raising to allow us to be fully funded for the previously disclosed restart, investors have the opportunity to retain exposure and the company is positioned to take advantage of the strong nickel market dynamics with certainty of funding,” said Poseidon MD Rob Dennis.
“We look forward to putting investors’ money to work, targeting first production within 12 months. In addition, we plan to commence initial exploration in the prospective areas below the Black Swan Pit and at the Abi Rose prospect at Lake Johnston, to guide the direction for the future extension of ore deposits.”
A July feasibility study confirmed that the restart of the Silver Swan underground mine and the Black Swan openpit mine and processing plant will generate revenues of A$288.6-million, and a pre-tax net present value of A$43.6-million, with internal rates of return of 92%.
The project is expected to cost A$56.7-million to bring back into production, and will deliver some 8 000 t/y of nickel in a smeltable grade concentrate from the Back Swan process plant, and direct shipping ore from Silver Swan.
The integrated project will have a mine life of just over three years, with a number of resource extensions possible.