Mincor Resources’ Oversubscribed Placement to Restart Nickel Sulphide Production

Summary

• Mincor’s capital raising marks another important milestone in its journey to resume profitable and sustainable nickel sulphide mining in Kambalda
• Recent strong appetite from institutional investors reflects quality and grade of Mincor’s nickel sulphide assets, lucrative location in Tier-1 Australian mining district, exciting potential to grow resource and reserve inventory with ongoing exploration
• The Company plans to mandate a bank(s) and/or a resource finance specialist in September 2020 quarter to provide the debt component of funding package. This raising has the dual benefit of providing potential debt providers with confidence while also giving Mincor a very strong foundation from which to negotiate from.

The success of Capital raising amidst coronavirus crisis deserves closer attention, when busines survival critically depends on robust cash and balance position. While, some ASX players are garnering key attention with oversubscribed placements - a fundraiser’s dream. They illustrate that the company has more buyers than shares on issue, further demonstrating trust and willingness of investors to be part of the company.

Focused on high grade nickel sulphide development and production, Mincor Resources NL (ASX:MCR) has been aiming to re-establish sustainable, high-grade nickel production in the world-class Kambalda district of Western Australia.

At the back of a successful Definitive Feasibility Study concluded in March this year, an integrated mining and production plan with relatively low capital intensity, low forecast operating costs and attractive financial returns, the Company has a clear blueprint to return to nickel production.

Recently, it received firm commitments from investors to raise $ 50 million (before costs) via a two-tranche Placement of new fully paid ordinary shares. The Placement was well oversubscribed, supported by existing shareholders and will possibly see several new, high quality institutions join the bandwagon.

Successful Completion of Mincor’s Institutional Placement

As reported by Mincor on 26 June 2020, $ 50 million was committed in fully underwritten two-tranche placement at $ 0.72 per share. Existing strategic shareholder, IGO, subscribed for $ 13 million whereas Wyloo Metals Pty Ltd, part of Tattarang, subscribed for $8.3 million of the Placement in line with their current shareholding of 13.8%.

The first tranche of ~24 million new shares (allotment date 2 July 2020) are to be issued at $ 0.72 per share to raise close to $ 17.3 million, and the subsequent tranche will be completed subject to the Company’s shareholder approval at a General Meeting scheduled to be held in early August 2020. If approved, the second tranche will result in the issue of a further ~45.4 million new Shares and raise a further approximately $ 32.7 million.

Share Purchase Plan to Open on 3 July 2020

Besides this, a Share Purchase Plan (SPP) aims to raise up to $ 10 million (before costs) and will enable all Company shareholders (with registered addresses in Australia and New Zealand) the opportunity to apply for new shares at the same offer price of $ 0.72 per share (free of brokerage and commission). The Board retains discretion to close the SPP as soon as $ 10 million in applications is received (oversubscriptions might be accepted or scaled back at the Directors’ discretion).

New shares issued under the SPP will rank equally with the Company’s existing Shares with effect from their issue.

Placement Advantages for Mincor

Proceeds from the Placement will be used to fund early pre-production costs. They would also help in maintaining strong momentum with resource growth and exploration programs, as per the company.

Moreover, the Placement and SPP is expected to fully fund the Kambalda Nickel Restart Project into production and offer prudent contingency buffer, coupled with existing cash and expected debt. This means progress to a potential Final Investment Decision (FID) for Kambalda Nickel Operations and fund a portion of project development costs through equity.

The proceeds would also allow the Company to undertake resource extension and exploration programs centred around Cassini Main, Cassini North, the untested 1.1 km space between Durkin North and Long and other regional targets. It would also establish a working capital buffer during project development for contingency or any unforeseen project delays.

Managing Director, David Southam further states that Mincor might emerge with a substantially strengthened balance sheet that will place it in an enviable position as the Company finalises debt funding and paves towards a potential Final Investment Decision next quarter.

Key Recent Milestones

Mincor has achieved several key recent milestones that have positioned it to move towards FID and execute its nickel restart strategy in the second half of 2020:

• Completion of the DFS and release of a maiden Ore Reserve at Cassini
• Completion of early works program at Cassini on time and budget
• Fourth increase in Mineral Resources at Cassini
• Execution of a binding mining contract with Pit N Portal
• Securing key senior management personnel for Cassini and the Northern Operations

MCR quoted $ 0.755 on 26 June 2020 and has delivered returns of 55.67 % in the past three months.

(Note: All currency in AUD, unless otherwise specified)