Mincor Resources NL (ASX: MCR) is a mineral exploration company, headquartered in Perth. It focusses on the re-establishment of nickel produced in the Kambalda district of Western Australia. In the Kambalda region, the company has more than 300 km square land position.
On 23rd May 2019, the company announced that it had signed an agreement with the Independence Group NL (ASX: IGO) for 100% acquisition of the Long Nickel Operation. The acquisition has further strengthened the company’s dominant land holding in the Kambalda District. This is an add on the company’s existing nickel sulphide portfolio. The company has plans to restart nickel production, given the strong momentum.
The Long Nickel Operation is situated at the Kambalda District of Western Australia. It is an underground nickel sulphide mine located near the company’s Durkin and Ken/McMahon deposits. It has incurred 16 years of extensive and consistent production with approximately 10ktpa of nickel produced per annum. IGO was maintaining and taking care of the Long Nickel Operation since June 2018. It has well placed assets and infrastructure along with an underground mine which remains de-watered and ventilated.
The company would pay A$3.5 million, through the issue of 7,777,778 fully paid shares. An additional A$2.0 million would be paid on the production of 2,500 tonnes of contained nickel in ore. On 7,500 tonnes, an additional A$4.0 million would be payable by MCR and the company would pay these through shares or in cash. Gross consideration payable to IGO is up to A$9.5 million.
The acquisition is a logical, low cost consolidation of the company’s dominant holding in the area. Access to Durkin North would be an advantage, to test areas which were not accessible with ease prior to this. As the DFS advances, MCR would provide updates on its strategies.
The access drive between Long and Durkin North is an opportunity to attain access to unexplored areas for drilling and operations. The Durkin North is untested as of date.
IGO had acquired Long, Victor South and Gibb South ore bodies which have 69,000t of nickel resources. Ever since, it has produced 3.6Mt at 3.9% Ni for 139kt of contained nickel. The Existing high-grade JORC compliant Mineral Resource is of 0.75Mt at 4.2% Ni (32kt of contained nickel) and expands MCR’s Kambalda Mineral Resources to 4.3Mt at 3.7% Ni (161kt of contained metal).
Besides this, there is great potential to realise additional value by leveraging off the recently announced offtake term sheet with BHP Billiton Nickel West. BHP Group Limited (ASX: BHP) had recently confirmed its commitment to nickel sulphides within their portfolio.
IGO has subscribed for A$1.5 million of Mincor shares in the Mincor’s capital raising activity. Mincor shares are on a trading halt due to its capital raising plans, the shares would be on halt till 27 May 2019 or upon the release of information with regards to the capital raising activity.
Share Price Information:
The market capitalisation of MCR is A$99.13 million. The stock has been on a trading halt since the notification of the above furnished information. It last traded on 22nd May 2019 at A$0.450. In the last one year, the stock has delivered a return of 3.45%, and the YTD return stands at 26.76%.
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