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Highlights:
- Nickel Industries is one of the top performing stocks on the ASX today (as at 11:17 AM AEST).
- The share price movement can be linked to the previous day’s announcement.
- Yesterday, the company announced a US$225 million debt capital raise.
- The proceeds from the raise will be used to acquire Oracle Nickel Project.
The share price of Nickel Industries Limited (ASX:NIC) is heading north today (9 August 2022), most probably pushed up by a capital raise announcement made by the company yesterday (8 August 2022).
At 11:17 AM AEST, the shares of Nickel Industries were spotted trading 7.41% up at AU$1.16 per share making the stock one of the top performing stocks of ASX 200 index. Meanwhile, the benchmark index, ASX 200 Materials (INDEXASX:XMJ) was up by 0.61% to 16,118.30 (at 11:39 AM AEST).
ASX 200 (INDEXASX:XOJ) gained 0.011% to 7,021.40.
What did Nickel Industries announce yesterday?
On Monday, the Australia-based nickel producer shared that it has executed binding agreements for issuing US$225 million of senior secured notes. Reportedly, the interest rate of these senior secured notes is 10%, maturing in August 2025.
The company said it would make the interest payment on the last day of every quarter. The company also informed that notes would be listed on the Frankfurt Open Market Exchange.
The proceeds from the US$225 million debt capital raise will be employed for acquiring Oracle Nickel Project. The proceeds wouldn’t be enough, so the company would use its future earnings from the operations and cash reserves.
Details of the Oracle Nickel Project acquisition
Back in December 2021, Nickel Industries announced that it had executed a definitive agreement with Shanghai Decent Investment Co., Ltd (a partnering company of Nickel Mines) to buy 70% equity interest in the Oracle Nickel Project. The total amount the company need to pay to acquire Oracle Nickel is US$525.0 million.
Image source: © Dzombie | Megapixl.com
Oracle is a development project that has four rotary kiln electric furnace lines (RKEF lines) with 36,000 tonnes of equivalent nickel in nickel pig iron production capacity annually. The project has ancillary facilities that are necessary for the operation of all RKEF lines. Moreover, the project includes a 380MW power plant within IMIP (Indonesia Morowali Industrial Park), in Central Sulawesi, Indonesia. With its own power plant, it is expected that around 20% would be saved on electricity charges.
The company expects to commence commissioning of the first RKEF lines in October 2022, ahead of the February 2023 delivery date. At the commissioning phase, the NPI production at the Oracle Nickel would not run at full capacity. It would depend upon the power availability.
This acquisition is estimated to transform the nickel production profile of the company, taking the combined nameplate capacity to over 100,00 tonnes of nickel in NPI.
