Nickel Mines Limited (ASX: NIC), a producer of nickel pig iron, holds an 80 percent economic interest in the Hengjaya Mineralindo Nickel Mine. Nickel pig iron (NPI) is a key ingredient in the production of stainless steel. The company has established a financial, operational and strategic partnership with the largest stainless-steel producer of the world, ‘China’s Tsingshan group’.
The company announced on 21 May 2019, that it has signed a binding term sheet and commitment letter with Decent Investment International Private Limited (an associate of the company’s operating partner Shanghai Decent Investment Co. Ltd.). The term sheet has been signed pursuant to the earlier announcement made by the company (on 17th April 2019) for increasing the interest in the Ranger Nickel Project from 17 percent to 60 percent via a funding package comprising a mixture of debt and equity.
As mentioned under the term sheet, Decent Investment will lend US$80 million to Nickel Mines at an interest rate of 6 percent (plus the greater of 3-Month US$ LIBOR or 2.5 percent per annum). The interest period is of one month, and the interest is payable on the last day of each interest period. The principal amount will be an amount equal to 1/15 of the amount borrowed under the Facility at Financial Close, and it will be paid in quarterly instalments by repaying on the last business day of each November, February, May and August (beginning on 30 November 2020).
As security, Nickel Mines will grant its 60 percent equity interest in Ranger Investment Private Limited and its 60 percent equity interest in Hengjaya Holdings Private Limited.
The Shanghai Decent Investment will receive US$40 million worth of Nickel Mines shares as partial consideration for the 43 percent interest in Ranger Investment that they are divesting to Nickel Mines, as stated under the term sheet. Nickel Mines shall seek to raise up to an additional US$30 million of equity by placement.
According to Nickel Mines’ Managing Director, Justin Werner, this simplified debt package will allow the company to accelerate the acquisition of an increased interest in the Ranger Nickel Project. The company looks forward to accommodating existing and new shareholders into the company’s proposed equity raise.
A week before, Mr Werner presented a investors’ presentation at the Global Metals, Mining & Steel Conference organised by the Bank of America Merrill Lynch, being held in Barcelona, Spain.
Also, the company had announced its quarterly activities report for the quarter ending 31st March 2019 on 30th April 2019. During the quarter, one of the Hengjaya Nickel kilns began commissioning and produced its first NPI, which was a milestone achieved by the company.
During the period, the company’s Indonesian operating entity, PT Ranger Nickel Industry was granted a material corporate income tax relief for its Ranger Nickel Project by the Minister of Finance of the Republic of Indonesia.
The stock of the company was trading at A$0.425 (as on 22 May 2019, 1: 00 PM AEST), up by 1.19%. The company’s stock has performed extremely well in the last few months, delivering a YTD return of 58.49 percent.
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