On 17 December 2018, Nickel Mines Limited (ASX: NIC) has signed a memorandum of understanding with Tsingshan group companies to supply Limonite ore for the construction High-Pressure Acid Leach (‘HPAL’) plant within the region of the Indonesia Morowali Industrial Park (‘IMIP’).
The purpose of the construction of this plant within the region of IMIP is to produce 50,000t nickel and 4,000t cobalt annually. The production of nickel will be in the form of nickel sulfate and nickel hydroxide which forms an essential component burgeoning electric vehicle (‘EV’) battery market.
PT Hengjaya Mineralindo Mine (‘HM Mine’) which is 80% owned by the company is located 12km in the southward direction of IMIP. Its HPAL plant will be able to process the low-grade limonite ore and also supply to IMIP. HM mine is one of the most massive tonnages with high efficiency in operations.
It will be an opportunity for the company where it can supply the limonite ore to the HPAL plant and simultaneously generate revenue. The company would now be able to utilize its low-grade limonite ore with improved efficiency of HM Mines at low mining cost and enhanced profitability. The volume and price remain confidential as per the MoU. Further, the company is looking forward to the diversification of growing nickel sulfate and hydroxide markets.
At present, the company is working as per the binding definitive agreement for the completion and commissioning of HPAL plant with the Tsingshan. Officially, the company's listing date on ASX was 20 August 2018. Since then the company has given a negative performance.
By the end of the financial year 2018, the company has made a net loss of $2,926,833. The balance sheet of the company highlights that the company has a strong net asset base which is an indication of the company’s potential for meeting its long-term liabilities. However, the company is facing challenges in meeting short-term responsibilities and the working capital requirement. It is due to the reason that the company’s total current asset is below the total current liabilities.
Also, as compared to the previous financial year, there is a further increase in the accumulated losses of the company. It might create a negative impression on the investors and the shareholders of the company. It is also an indication of the poor operating performance of the company. The total shareholder’s equity is worth $75,144,714.
By the end of FY2018, the net cash and cash equivalent available with the company is $806,574. At present, the market price of the share is A$0.235 (AEST: 3:43 pm, 17 December 2018) with the stock holding a market capitalization of $326.18 million. Further, the share price remains constant regarding day’s opening and day’s high price.