‘Building a Nickle Empire’: Nickel Mines (ASX:NIC) seizes future-facing nickel opportunities

The Nickel Mines Ltd (ASX: NIC) share price finished Wednesday’s trading session in a continued trading halt.

Before market open today, the low-cost nickel producer requested its shares be halted pending a capital raising announcement.

Yesterday’s closing price for Nickel Mines shares stood at $1.455 apiece.

What’s the details in Nickel Mines’ update?

The Nickel Mines share price remained frozen today despite the company releasing the details regarding its capital raise.

According to its afternoon release, Nickel Mines launched a US$225 million capital raise to fund the acquisition of its initial 30% stake in the Oracle Nickel Project (ONI).

In December, Nickel Mines announced that it had executed a binding definitive agreement to acquire a 70% stake in ONI.

Shanghai Decent Investment (Group) Co., Ltd (Shanghai Decent) and Decent Resource are listed as partners in the US$525 million investment. This will comprise US$371 million in acquisition funding and US$154 million in shareholder loans.

Nickel Mines stated that its US$225 equity raise will be broken in the following:

• A US$106 million fully underwritten institutional placement;
• A US$106 million non-underwritten placement to Shanghai Decent (conditional placement); and
• A US$13 million non-underwritten share purchase plan (SPP)

ONI is currently undergoing construction activities within the Indonesia Morowali Industrial Park.

Once the acquisition is completed, this will pave the way for Nickel Mines in becoming a top-10 global nickel producer.

With new capacity from the Angel Nickel Project (ANI) and ONI coming online, the company’s nickel production profile is expected to approximately triple by early 2023.

Under the US$106 million institutional placement, roughly 108.1 million new ordinary shares will be issued at $1.37 per new share. This reflects a discount of about 5.8% on yesterday’s closing price of $1.455.

The new shares issued under the placement represent approximately 4.3% of the company’s total registry.

In regards to the conditional placement, Nickel Mines entered into a subscription agreement with Shanghai Decent. However, this is subject to shareholder approval from Nickel Mines investors, and the Foreign Investment Review Board (FIRB) approval.

The conditional placement will be conducted at the same price as the institutional placement.

Lastly, the SPP will be offered to eligible Australian and New Zealand shareholders who can apply for up to $30,000 worth of shares. The listed price will be the same as above.

A SPP booklet will be dispatched on 16 February, along with the offer opening up.

Nickel Mines share price snapshot

With Nickel pig iron prices rising to unprecedented levels, the Nickel Mines share price has accelerated by 20% in the past year.

The company’s shares rocketed to an all-time high of $1.65 last month, before retracing 12% to late December levels.

Nickel Mines commands a market capitalisation of roughly $3.66 billion, with approximately 2.52 billion shares outstanding.

The post ‘Building a Nickle Empire’: Nickel Mines (ASX:NIC) seizes future-facing nickel opportunities appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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