Nickel Mines Funds its Way to Larger Ranger Stake

After announcing its game plan to raise its stake in the Ranger nickel project in April, Nickel Mines (ASX:NIC) has signed a binding term sheet with Decent Investment International for US$80 million in funding.

Last month, the company stated that it wished to increase its current 17 percent stake in Ranger, located in Indonesia, to 60 percent. The decision came as a collaborative choice between Nickel Mines and operating partner Shanghai Decent Investment, which owns the other 83 percent share in Ranger and is an associate of Decent Investment.

Through the fresh term sheet announced Tuesday (May 21), Shanghai or its associates will receive US$40 million worth of shares in Nickel Mines in exchange for 43 percent of Ranger. At the same time, Nickel Mines will work to raise an additional US$30 million in equity through a placement to investors.

“Nickel Mines is pleased to announce agreement on a simplified debt package with very attractive terms which will allow us to accelerate the acquisition of an increased interest in the Ranger, which is set to commission its first kiln in the coming weeks well ahead of the initial September 2019 schedule,” Nickel Mines Managing Director Justin Werner said in a statement.

The company’s initial announcement in April laid out an acquisition plan that entailed Nickel Mines’ 60 percent stake in Ranger be achieved through a US$160 million financing package, with US$100 million being senior secured debt and US$60 million being equity. Werner touted the revised funding package as a “simplified and more attractive” arrangement.

Once the company achieves its 60 percent stake in Ranger, Nickel Mines’ share in production will grow from approximately 2,805 tonnes per year to 9,900 tonnes per year. In combination with its 60 percent owned Hengjaya project, the company’s total nickel production will be around 19,800 tonnes per year.

Nickel Mines has been working to grow its presence in the nickel market by increasing its interest in partly owned assets over the last several months. In September 2018, the company paid US$70 million to boost its stake in an Indonesian nickel pig iron plant by 35 percent, pushing its ownership to 60 percent.

The company’s share price closed 1.18 percent lower on the ASX on Tuesday, ending the day at AU$0.42. As of Monday (May 20), nickel was trading at US$11,910 per tonne on the London Metal Exchange.

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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.