Nickel Mines Forges Ahead with Acquisition of Angel Nickel Project
- $US175 million senior unsecured notes offering completed
- Nickel Mines may diversify into the EV Battery supply chain in the future
- The company is now listed in the ASX 200 index
Nickel Mines (ASX:NIC) announced the completion of a US$175 million senior unsecured notes offering on 6 April 2021. The offering is another step towards Nickel Mines’ goal of securing an 80 per cent stake in the Angel Nickel Project. Notably, the offering was originally for US$300 million, but the company decided to reduce this to US$175 million due to increased volatility on the market and is now exploring other options for obtaining the funds.
The company, along with its partner, Shanghai Decent Investment Group (Shanghai Decent), executed a binding definitive agreement to acquire a 70 per cent interest in the Angel Nickel Project on 24 November 2020. This was later amended to 80 per cent on 20 January 2021. The acquisition was planned to take place in two stages.
The first stage involving a US$180 million payment to acquire 30 per cent of the project, was completed on 1 February 2021 and was funded through an equity raising of A$364 million. With the initial stage completed, Nickel Mines now has until 31 December 2021 to come up with the remaining US$350 million required to purchase the remaining 50 per cent.
The progress towards the acquisition was noted by Macquarie, who chose to reiterate its “Outperform” rating of the company on the announcement of the completed offering. Macquarie was pleased to note the Angel Nickel Project’s imminent completion and has stated that it believes that the acquisition will effectively double the company’s nickel production from around 30 kilotons per annum (ktpa) to approximately 65ktpa by 2023.
In a separate development, on 5 March 2021, Tsingshan Holding Group (Tsingshan), the world’s largest producer of stainless steel and one of Nickel Mines’ key strategic partners, announced that it had signed a contract to supply 100, 000 tonnes of nickel matte to CNGR Advance Material and Huayou Cobalt starting from October 2021.
The ability to switch from Nickel Pig Iron (NPI) to higher grade nickel matte represents an exciting opportunity for Nickel Mines to diversify into the rapidly growing electric vehicle battery market. The company was pleased to note that their current facilities would only require minor modifications to be able to produce a nickel matte.
Currently, no changes to operations are being made as supplying Tsingshan’s stainless steel operations with NPI remains the current focus. The potential has been noted though, and Nickel Mines has stated that it will continue to work closely with Tsingshan to identify any opportunities that might exist for the company to benefit from this development.
This is not the only positive news to come out in recent months. In its Quarterly Rebalance, S&P has placed the company into the ASX 200 index, a prestigious distinction that few others can claim and Nickel Mines looks set to continue in its strong performance moving forward.