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Nickel Mines secures more capacity

16th October 2020

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia

     

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PERTH (miningweekly.com) – ASX-listed Nickel Mines has signed a memorandum of understanding (MoU) to acquire a 70% interest in a development project within the Indonesia Weda Bay Industrial Park (IWIP).

The development project with PT Angel Nickel Industry (ANI), and in collaboration with Nickel Mine’s largest shareholder SDI, will comprise four next-generation 54 KVA rotary kiln electric furnace (RKEF) lines with an annual nameplate production capacity of 36 000 t of nickel metal, and a 380 MW coal-fired power station.

Nickel Mines’ interest in the project would represent 25 200 t/y of attributable nickel metal production.

Under the terms of the MoU, Nickel Mines would acquire a 70% interest in the development project for $490-million, which will be paid in two stages.

The first $210-million will be paid by the end of the first quarter of next year, and would ensure an initial 30% interest, while the remaining $280-million payment would become due by the end of the fourth quarter of next year.

On signing of the MoU, Nickel Mines paid a $10-million good faith deposit to SDI, and has committed to a further $20-million down payment on the execution of a definitive agreement, which will be offset against the Stage 1 payment.

This initial $30-million payment will be funded from the company’s existing cash reserves, while the remaining funds would be acquired from a combination of cash reserves, debt and equity.

The company said on Friday that the development project would be structured under similar corporate structures as existing RKEF assets, and would see SDI take a lead role in the design, construction and operation of the project. SDI will also contractually commit that the total cost of the project would not exceed $700-million.

“We are extremely pleased for Nickel Mines to have been offered this opportunity for the next phase of growth for the company to further strengthen its relationship with Tsingshan,” said Nickel Mines MD Justin Werner.

“In addition to our existing RKEF assets, our commitment to the ANI project within the IWIP will provide the company with production footprints within what will be the two largest nickel production centers globally over the next 20 years.

“The acquisition of 70% of ANI will more than double Nickel Mines’ attributable annual nameplate nickel metal production capacity and further cement Nickel Mines as a globally significant, low cost nickel producer.”

Formative project development activities at ANI have started, and commissioning of the RKEF project is scheduled for the third quarter of 2022.

Edited by Creamer Media Reporter

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