Nickel Mines Fasttrack Debt Repayment Over Recovery in Base Metals Prices

  • Sep 01, 2020 AEST
  • Team Kalkine
Nickel Mines Fasttrack Debt Repayment Over Recovery in Base Metals Prices

Summary

  • The recovery in base metals price is aiding ASX-listed base metals mining companies such as IGO Group Limited (ASX:IGO), Sandfire Resources NL (ASX:SFR) gain traction on the exchange.
  • Furthermore, the price recovery in base metals is now prompting many miners to re-evaluate their prospects, which have been hibernating for quite a while over a deep plunge in base metals prices over the COVID-19 outbreak.
  • ASX-listed nickel mining Company – Nickel Mines Limited (ASX:NIC) is now drawing attention over the recent increase in its ownership of key nickel assets.
  • The Company has finished the half-year ended 30 June 2020 with a 30.9 per cent surge in revenue and a significant early voluntarily repayment of debt facilities.

Base metals prices have recovered swiftly since the onset of the second quarter with copper and nickel mainly leading the front, prompting many ASX-listed base metals mining companies to expand on prospects to lock-in the decent recovery.

Also Read: Copper Rush Drawing Australian Titans; Australia To Climb the Supply Ladder?

LME copper prices (near-future) have recovered ~ 45.70 per cent from the level of USD 4,617.50 a tonne (as on 23 March 2020) to the present level of USD 6,728.00 a tonne (as on 28 August 2020) while nickel prices have recovered ~ 39.43 per cent.

The surge in base metals prices is now prompting ASX-listed mining companies to re-evaluate their prospects, which have been hibernating for quite a while over a deep plunge in base metals prices over the COVID-19 outbreak.

While many ASX-listed mining stocks such as IGO Group (ASX:IGO), Sandfire Resources NL (ASX:SFR) are making their way to the top over the gush in base metals prices, ASX-listed nickel mining company – Nickel Mines Limited (ASX:NIC) is now drawing attention over the recent increase in its ownership of key nickel assets.

Furthermore, the Company has finished the half-year ended 30 June 2020 with a 30.9 per cent surge in revenue and a significant early voluntarily repayment of debt facilities.

To Know More, Do Read: Copper Miners Ballooning on Exchange As Copper Surge Lifts Market Sentiments

Nickel Mines Limited (ASX:NIC)

Half-year Revenue Climbs 30.9 per cent Against PCP

The Company reported a 30.9 per cent surge in revenue for the half-year ended 30 June 2020 at USD 227.8 million against the previous corresponding period.

However, despite strong growth in the revenue, the profit from ordinary activities after tax declined by 63.9 per cent against pcp to stand at USD 24.4 million. 

  • On the operational counter, the Company produced a combined 148,999.8 tonnes of nickel pig iron (or NPI) from the rotary kiln electric furnace (80 per cent owned), containing 21,395.2 tonnes of nickel metal equivalent.
  • NIC managed to sell a total of 147,475.9 tonnes of NPI containing 20,594.0 tonnes of nickel metal equivalent during the period at an average grade of 14.0 per cent nickel, leading to an EBITDA from the prospect of USD 74,032,506.

Nickel Mines Increases Stake in Hengjaya Nickel and Ranger Nickel RKEF project

During the period, the Company secured approval from shareholders related to increasing its interest in the Hengjaya Nickel and Ranger Nickel RKEF project from 60 per cent to 80 per cent.

  • The increase in interest from 60 per cent to 80 per cent amounted to USD 120 million along with 20 per cent of undistributed retained earnings attributable to Shanghai Decent and associates.
  • Nickel Mines funded the consideration via the completion of a $231 million 1 for 3.6 Entitlement Offer.

Early Retirement of Debt Facilities

Apart from increasing its stake, NIC made a further voluntary early repayment of USD 10M against the Ranger senior debt facility in April, reducing the outstanding debt to USD 55 million; and,

  • By the end of the period, the Company paid another USD 10 million against the outstanding debt facility, taking the total outstanding debt to USD 45 million.
  • In total, Nickel Mines has now made early prepayments of USD 35 million against the Ranger Facility.

To understand debt: read here

Furthermore, during the onset of the year 2020, Hengjaya Nickel commenced routine monthly repatriation of funds to its Singaporean holding company, and during the six-month ended 30 June 2020, the entity has repatriated USD 25.2 million to Nickel Mine.

  • During the period, the prospect produced a total of 212,568 wet metric tonnes of nickel ore with an average stripping ratio of 2.2.
  • The Company managed to sell 209,628 wet metric tonnes during the period at an average grade of 1.81 per cent of nickel.

The Group’s attributable nickel metal production for the six months ended 30 June 2020 stood at  6,446.0 tonnes.

New Resource Estimates

NIC updated its resource estimates post increasing its stake in the Hengjaya mine, and as per the Company, it now holds a total of 185 million tonnes of Resources at an average grade of 1.3 per cent Nickel, 0.08 per cent Copper, and 28 per cent iron.

  • Out of total 185 million tonnes, NIC holds 20 million tonnes of JORC 2012 classified Measured Resources at the prospect with an average grade of 1.3 per cent Nickel, 0.08 per cent Copper, and 28 per cent iron.
  • Likewise, the Indicated Resources now stand at 109 million tonnes at an average grade of 1.3 per cent Nickel, 0.08 per cent Copper, and 29 per cent iron.
  • The Inferred Resources at the prospect now stands at 56 million tonnes at an average grade of 1.3 per cent Nickel, 0.07 per cent Copper, and 27 per cent iron.

As per the Company, the combined Mineral Resource of 185 million tonnes at the prospect now represent 2,405,000 tonnes of nickel and 148,500 tonnes of cobalt, from an area of 1,144 hectares of the 5,983- hectare Hengjaya mine tenement area.

The total updated resources exceed the previous resource estimate, and the Measured and Indicated Resources category have now increased by 185 per cent 117 per cent, respectively.

However, Inferred Resources have now declined by 49 per cent in the wake of strong resource confidence.

The Stock of the Company last traded at $0.687 (as on 1 September 2020, AEST: 2:00 PM), up by 1% as compared to its previous close on ASX.

 

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