Nickel Industries pulls the $1.26bn trigger at ENC

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11th October 2023

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia


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PERTH ( – ASX-listed Nickel Industries has taken a final investment decision (FID) on its participation in the Excelsior nickel/cobalt (ENC) high pressure acid leach (HPAL) project in Indonesia.

ENC is expected to produce 72 000 t/y of contained nickel equivalent across three major class 1 nickel products. In addition to producing a mixed hydroxide precipitate (MHP), the project will be capable of producing both nickel sulphate and nickel cathode, differentiating it from the current generation of HPAL plants currently being constructed across Indonesia, and providing Nickel Industries with significant operating flexibility through the cycle.

Nickel Industries previously acquired options to collaborate with Shanghai Decent on future battery nickel opportunities for $40-million, consisting of $25-million for an option to participate in the construction of the ENC project and a $15-million consideration for an option to invest in and construct a high-grade matte converter at Oracle.

Nickel Industries will acquire a 55% interest in ENC with the $1.26-billion payment to be completed in instalments over the next two years. The ENC acquisition is subject to shareholder approval before the end of December this year, and the payment of a refundable deposit of $126.5-million before the end of October.

The company is expected to call an extraordinary general meeting in November to allow shareholders to vote on the transaction.

“We are delighted to announce a positive FID to participate in the ENC project, which was unanimously reached by the company’s board following a detailed third-party review of the project feasibility study and expected financial metrics,” said Nickel Industries MD Justin Werner.

“We have once again been provided with a capex, nameplate performance and timeframe guarantee, which given the large number of historical capex ‘blow-outs’ in HPAL projects and more recently across various nickel- and battery-related projects, is extremely valuable in the current high inflationary environment. This has been evidenced recently with a number of announced Indonesian HPAL projects being cancelled, paused or significantly reduced in capacity.

“Participation in the ENC project will allow us to continue to significantly diversify our business into a suite of class 1 nickel products, our existing nickel matte production, supplemented with MHP, nickel sulphate and nickel cathode. The ENC project will be the first global nickel project to have this operating flexibility and will allow us to significantly diversify our customer base and seek to capture maximum value across different sectors of the class 1 nickel market.”

Nickel Industries this year raised A$209.1-million to fund its various transactions and in June struck a A$943-million placement deal with PT Danusa Tambang Nusantara (DTN), a subsidiary of PT United Tractors to give that company a 20% shareholding in the ENC project.

With the introduction of DTN as a major shareholder and potential operating partner of Nickel Industries, Nickel Industries and Shanghai Decent are investigating the expansion of the ENC project to 144 000 t/y of contained nickel equivalent. The Stage 2 expansion will be subject to a positive FID by the joint venture partners, with the ownership interests expected to match those of Stage 1.

Nickel Industries on Wednesday also reported the execution of financing facilities totalling $400-million with PT Bank Negara Indonesia (BNI) to support the funding obligations for the ENC project.

The facilities comprise a five-year senior term loan facility of $350-million, split across two tranches, and a $50-million revolving credit facility for general working capital purposes.

The company said that the funding facility, along with the placement funds from DTN and existing cashflows from its existing operations, left the company comfortably positioned to fund its share of the ENC acquisition payments over the project construction period of 2023 to 2025.

“In reaching a positive FID on the ENC project, a critical determination for the board was that our participation could be responsibly funded. With our strong operational cash flow, the recent $943-million placement to our new strategic partner United Tractors, coupled with this new $400-million financing facility from BNI at attractive rates, we are extremely comfortable that our acquisition payment schedule for ENC can be adequately funded without the need for any future equity raisings,” said Werner.

“Importantly, the BNI loan facility marks our first debt financing from one of Indonesia’s largest and most respected banks and is representative of the company’s growing profile and status within Indonesia. This loan provides important third-party endorsement of the ENC project and we thank BNI for its support to the company and our positive FID.”

Edited by Creamer Media Reporter




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