PERTH (miningweekly.com) – ASX-listed Nickel Mines has unveiled plans to raise $225-million to fund the acquisition of an initial 30% stake in the Oracle nickel project, in Indonesia.
Nickel Mines in December inked a definitive agreement with partner Shanghai Decent Investment to acquire a 70% equity interest in the Oracle nickel project for $525-million, comprising $371-million of acquisition funding and $154-million of shareholder loans.
The development project comprises four rotary kiln electric furnace lines that have commenced construction within the Indonesia Morowali Industrial Park, and which will have an annual nameplate capacity of 36 000 t/y of contained nickel in nickel pig iron.
Nickel Mines has now launched a $225-million capital raise to fund the acquisition of an initial stake in the nickel project. The equity raise will consist of a $106-million fully unwritten institutional placement, a $106-million non-underwritten placement to Shanghai Decent, and a non-underwritten share purchase plan (SSP) to shareholders in Australia and New Zealand, raising up to $13-million.
The institutional placement will see Nickel Mines place 108.1-million shares, at a price of A$1.37 a share, under the company’s existing placement capacity, while the share placement to Shanghai Decent will be subject to both shareholder and Foreign Investment Review Board approval.
Under the SPP, eligible shareholders will be able to subscribe for up to A$30 000 worth of additional shares in Nickel Mines, also at an offer price of A$1.37 a share. The SPP will open on February 16, and close on March 8.
The company told shareholders that the majority of the equity raise would go towards funding the initial 30% acquisition, as well as the first $46.2-million shareholder loan, which was due by the end of September this year.
A further $258.2-million in funding will be required by the end of December this year to fund the third acquisition payment, to acquire a further 40% interest in the Oracle project for $212-million, as well as to fund the second shareholder loan of A$46.2-million.
Nickel Mines on Wednesday said that it had considerable optionality and flexibility to meet these remaining funding requirements. Strong cashflows from its existing operations were expected to be materially increased by cashflows from Angel nickel project, which is anticipated to commence during the second quarter of 2022.
Furthermore, the company has a very lowly leveraged balance sheet providing it ample capacity to explore additional debt funding. Nickel Mines intends to be fully funded for the remaining transaction payments as soon as practically possible in 2022.