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There was strong activity in capital raising this week, with Nickel Mines (NIC) a clear leader, seeking over $300 million to fund the acquisition of a large stake in another nickel project in Indonesia.
The project is Oracle Nickel, a total of 70 per cent of which is being acquired from Shanghai Decent Investment through a staged acquisition, starting with 30 per cent stake for $316 million. The overall majority interest will ultimately be purchased through a cash and scrip deal worth more than $700 million.
The company has already secured $148 million in institutional funding. The vendor will receive that same amount in shares — subject to Foreign Investment Review Board approval — and from next Wednesday, existing shareholders can take part in a share purchase plan (SPP) which has a target of $18 million.
Managing Director Justin Werner said there’d been strong support from new and existing institutional investors for the company’s growth.
“We currently have four operating RKEF (Rotary Kiln Electric Furnace) lines that are producing between US$60 million and US$70 million EBITDA on a quarterly basis — margins are very strong, cash flows are very strong — we benefit from a seven-year tax holiday,” he said.
“We’ve expanded that production with the Angel Nickel transaction which we signed last year, [and I’m] happy to say the first line commissioned just two weeks ago, so that’s another four lines which will more than double our current production.
“Then the Oracle Nickel is really more of the same: Another four RKEF lines and, again, as with the previous deals, it comes with a capex guarantee, a name plate guarantee, so in terms of new nickel units, this time next year we’ll be at more than triple our current production, our EBITDA will be more than triple, and we’ll be up there as a top 10 global nickel producer above the likes of BHP and just behind the Vale and Glencore. It’s a tremendous result considering we’ve only been listed a little over three years.”
The full interview with Justin Werner will be uploaded to The Deal Room early next week.
Nickel Mines’ equity raise is being done with $1.37 shares. On market, the stock value has held up above that — today opening at $1.42.
One of Nickel Mines’ peers and fellow mid-cap, AVZ Minerals (AVZ), announced yesterday it will commit $25 million to early works on its Manono lithium mine in the Congo. The funds were from $75 million the company raised late last year.
Managing Director Nigel Ferguson said the company was continuing to work with the DRC Government to obtain its Mining Licence.
“We’re well advanced on the project, just waiting on the third of three favourable opinions from the Government to have the Mining Licence awarded, it should be I hope, in the next few weeks,” he said.
“It’s taking a little bit longer than we expected, but that triggers everything for us to go into final investment decision and move the project forward.
“We’ve got 400 million tonnes of resources, 132 million tonnes of reserves and some really good numbers from the DFS (Definitive Feasibility Study).”
The company has a market cap of almost $3 billion and share trade opened at 85 cents this morning.
Carnavale Resources (CAV) has reported positive drilling results in its quest for gold and has raised $2.64 million to keep the exploration momentum going on it projects north of Kalgoorlie.
CEO Humphrey Hale said the capital raising was heavily oversubscribed.
“We’ve got the tail of the tiger, I think, and we’re keen to expand on that and get into drilling again very soon,” he said.
“So we’re aiming to get back to Kookynie in March with an RC (reverse circulation drilling) rig.”
Carnavale will continue its work on the Ora Banda gold project which lies to the south, closer to Kalgoorlie and the Grey Dam nickel project in the same region.
Carnavale has a market cap above $35 million and share trade opened at 1.2 cents today.
There were two IPOs this week, WA1 Resources (WA1) and Killi Resources (KLI), which both attained market caps over $6 million.
A Western Australian company launched its prospectus this week — Allup Silica opened its IPO in a bid for $5 million with 20-cent shares. It’s aiming for a March debut with the ASX code ASP.
Executive chair Andrew Haythorpe said demand for high-purity silica sand was increasing for glass and technologies including mobile phone screens and photovoltaic (PV) cells.
“We started the company two years ago and we’ve now got four projects with potentially very high purity silica at reasonable distance to four ports, so we have a key foundation for a business plan moving forward,” he said.
The Deal Room this week also included interviews about capital raising at Carbonxt (CG1), Emperor Energy (EMP) and Caprice Resources (CRS), and we looked at the recent IPO of Orexplore Technologies (OXT). For more information on these companies, or any other ASX-listed company, go to the search tab on this website.
