- Nickel Mines (NIC) has signed an agreement with Shanghai Decent Investment (SDI) to acquire a 70 per cent interest at its PT Angel Nickel Industry (ANI) project in Indonesia
- The joint project includes four next-generation rotary kiln electric furnace lines with an annual production capacity of 36,000 tonnes of nickel metal and a 380-megawatt coal-fired power plant
- In exchange for the 70 per cent stake, Nickel Mines will pay SDI US$490 million (roughly A$691.9 million) over two staged payments
- The deal establishes Nickel Mines’ presence in Indonesia’s newest and rapidly-growing nickel production centre
- Company shares are trading 10.4 per cent higher for 85 cents just after midday trade
Nickel Mines (NIC) has signed a memorandum of understanding with Shanghai Decent Investment (SDI) to acquire a 70 per cent interest at its PT Angel Nickel Industry (ANI) project in Indonesia.
Under the agreement, Nickel Mines will take a 70 per cent stake in ANI for US$490 million (roughly A$691.9 million) under two staged payments.
To complete stage one, the company will need to pay SDI US$210 million (roughly A$296.5 million) by the end of the first quarter of 2021 to secure a 30 per cent interest. To secure the remaining 40 per cent interest, Nickel Mines will need to pay US$280 million (roughly A$395.4 million).
As part of the project, four next-generation 54 kilo-volt amp (KVA) rotary kiln electric furnace (RKEF) lines will be built, owned and operated.
The RKEF lines will have an annual nameplate production capacity of 36,000 tonnes of nickel metal. The project will also include a 380-megawatt coal-fired power plant.
The HNI and RNI projects are located in Indonesia’s Morowali Industrial park which the Tsingshan group is aiming to position as a nickel production frontier. SDI owns the remaining 20 per cent of each project.
Strategically, this establishes Nickel Mines’ presence in Indonesia’s newest and rapidly-growing nickel production centre.
Nickel Mines’ 70 per cent stake represents 25,200 tonnes of nickel produced each year. In comparison, the company’s 80 per cent interest in the Hengjaya Nickel (HNI) and Ranger Nickel (RNI) RKEF projects represents a combined 24,000 tonnes per annum of attributable nickel metal production.
Nickel Mines is funding the offset payment from existing cash reserves and the remaining US$460 million (roughly A$649.5 million) from cash reserves, debt and equity.
However, when the agreement was signed, Nickel Mines made a ‘good faith’ deposit of US$10 million (roughly A$14.1 million) to SDI. Once a definitive agreement has been executed, Nickel Mines will pay a further US$20 million (roughly A$28.2 million) as a ‘down payment’ to SDI. This combined US$30 million (roughly A$42.3 million) will be offset against the stage one payment.
“The acquisition of 70 per cent 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,” Nickel Mines Managing Director Justin Werner said.
“We will now work expediently to progress this MoU to a Definitive Agreement over the coming weeks and look forward to keeping the market informed on this exciting next step in our journey,” Justin added.
Project development activities have begun and commission is expected by the third quarter of 2022.
Company shares are trading 10.4 per cent higher for 85 cents just after midday trade.