- Nickel Mines (NIC) is proceeding with the 70 per cent acquisition of the Oracle Nickel Project in Indonesia
- NIC has signed a definitive deal with Shanghai Decent to jointly develop the project, which comprises four rotary kiln electric furnace lines and associated facilities
- The buy is said to cost a total of US$525 million (A$735.4 million) and has the potential to place Nickel Mines amongst the top-10 global nickel producers
- The completion of the transaction is subject to shareholder approval, which will be sought at a meeting to be held in the March 2022 quarter
- Company shares have been trading up 1.12 per cent at $1.35
Nickel Mines (NIC) and Shanghai Decent Investment Group have chosen to proceed with the acquisition of a nickel project in Indonesia.
In late November, the companies signed a memorandum of understanding for Nickel Mines to potentially acquire a 70 per cent interest in the Oracle Nickel Project. Now, they have signed a definitive deal that will see Nickel Mines and Shanghai Decent collaborate over the next several years.
Nickel Mines is acquiring the interest in Oracle Nickel via two Singaporean companies that will wholly own an Indonesian incorporated PMA operating company, PT Oracle Nickel Industry, that will wholly own Oracle Nickel’s four RKEF lines and its power plant.
The Oracle Nickel Project (ONI) is a new development project that has commenced construction within the Indonesia Morowali Industrial Park (IMIP) in Central Sulawesi, Indonesia.
It comprises four rotary kiln electric furnace (RKEF) lines with an annual nameplate production capacity of 36,000 tonnes of equivalent contained nickel in nickel pig iron (NPI) and ancillary facilities required to operate each RKEF line.
The ONI project company will also separately build a 380-megawatt captive power
plant that will support both the ONI RKEF lines and IMIP’s overall grid power needs.
To acquire the 70 per cent stake, Nickel Mines will pay a total consideration of US$371 million (A$520 million) together with the obligation to provide Oracle Nickel US$154 million (A$215.8 million) of construction funding via three separate shareholder loan payments which won’t begin until September next year.
Under the deal, Shanghai Decent will lead the design and construction of Oracle Nickel with commissioning of the four RKEF lines to commence by February 19, 2023 and the power plant to begin commissioning by July 19 that same year.
According to Oracle Nickel Managing Director Justin Werner, this transaction will continue to position Nickel Mines as a globally significant nickel producer.
“With 12 RKEF lines in operation by Q1 2023 and approximately 100kt of attributable nickel production, Nickel Mines will sit comfortably amongst the top-10 global producers and be arguably the largest listed pure play nickel exposure globally.”
The transaction won’t be formally completed until it receives shareholder approval at a meeting to be held in the March 2022 quarter.
Company shares were up 1.12 per cent to trade at $1.35 at 3:02 pm AEDT.