PERTH (miningweekly.com) – ASX-listed Nickel Mines has signed a binding definitive agreement with partner Shanghai Decent Investment to acquire a 70% interest in the Angel Nickel project, in Indonesia, for $490-million.

Nickel Mines in October inked a memorandum of understanding to build, own and operate four next generation rotary kiln electric furnace (RKEF) lines within the Weda Bay industrial park, allowing the company to double its attributable nickel production profile within two years.

The four RKEF lines making up the Angel project will have a nameplate capacity of 36 000 t/y of nickel metal, and will include a 380 MW coal-fired power plant.

The formal agreement allows Nickel Mines to now acquire an initial 30% interest in Angel Nickel, and 30% of all shareholder loans due to Shanghai Decent at a cost of $210-million, with the initial acquisition to be finalised by no later than the end of March next year.

An additional 40% interest in Angel Nickel and 40% of all shareholder loans due to Shanghai Decent will subsequently be acquired at a cost of $280-million, with the second acquisition to be finalised before the end of next year.

Nickel Mines on Monday said that the actual construction cost for Angel Nickel is not expected to exceed $700-million, with Shanghai Decent undertaking to indemnify Angel Nickel for any construction costs exceeding this cap.

Furthermore, Shanghai Decent will also procure all of the product produced at Angel Nickel at market price.

“We are extremely pleased to have converted our initial memorandum of understanding into a binding agreement with Shanghai Decent and to have secured our equity participation in the Angel Nickel development project currently under way within the Indonesia Weda Bay industrial park,” said MD Justin Werner.

“This transaction is transformative for the company in that it will essentially double the company’s production capacity and provide us with operational footprints within what will be the two largest nickel production centers globally over the next decade.

“Additionally, this Weda Bay collaboration cements and further extends our excellent relationship with Shanghai Decent, who have continued to deliver both exceptional operational performance across our existing shared projects and valued shareholder support to the Nickel Mines executive team. With construction of Angel Nickel already under way, we look forward to providing regular updates to the market on the progress of this exciting new development project.”

The transaction is subject to shareholder approval, with Nickel Mines telling shareholders on Tuesday that an independent expert valuation report was nearing completion. A general shareholder meeting is scheduled for late December or early January.