Source: Nickel Mines
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  • ASX 200-listed Nickel Mines (NIC) cans a share purchase plan (SPP) after shares suffer a major sell-off over the past week
  • China-based Tsingshan, a joint venture partner of and major investor in Nickel Mines, had taken a short position on nickel, but fell victim to a nasty squeeze this week
  • Nickel prices soared to over US$100,000 (A$136,000) per tonne on Wednesday, and Tsingshan’s exposure to ballooning margin calls bled into Nickel Mines’ shares
  • With Nickel Mines share price falling below the SPP offer price of $1.37, the company cancelled the purchase plan and says it will refund all applications
  • Shares in Nickel Mines are up 4.92 per cent on Friday morning to trade at $1.28 each at 12:20 pm AEDT

ASX 200-listed Nickel Mines (NIC) has canned a share purchase plan (SPP) after shares suffered a major sell-off over the past week.

The nickel giant was planning to raise around $18 million but had already received applications for over three times this amount from subscribers.

However, after shares abruptly plunged below the offer price of the purchase plan, Nickel Mines made the call to refund all applications and cancel this portion of its US$225 million (A$306 million) capital raise.

The price fall was seemingly driven by a short position on nickel held by major China-based NIC investor Tsingshan. Nickel Mines on Wednesday acknowledged the speculation around the Tsingshan short position in a response to an ASX query as nickel prices skyrocketed to over US$100,000 (A$136,000) per tonne.

Tsingshan was among several investors who fell victim to a short squeeze as they struggled to meet ballooning margin calls

Tsingshan’s exposure to the squeeze bled into Nickel Mines’ share price given the relationship between the two companies, and NIC shares lost a quarter of their value in less than a week.

“Given market volatility and the retraction in the company’s share price in recent days the Board of Directors have agreed that it is in the best interests of shareholders to cancel the SPP effective immediately and return all applications in full,” Nickel Mines Managing Director Justin Werner said on Friday morning.

“The proceeds of the SPP are not required for the acquisition of the 70 per cent equity interest in the Oracle Nickel Project.”

Nickel Mines has already completed a major portion of its US$225 million capital raise to fund its interest in the Oracle Nickel Project, but the raise will no longer be supplemented by the share purchase plan.

Shares offered under the purchase plan were priced at $1.37, meaning any shareholders still wanting to increase their position in Nickel Mines can do so on-market for cheaper than they could have via the SPP.

Nickel Mines reassured investors that despite Tsingshan’s exposure to margin calls on nickel derivative losses, the Chinese entity had confirmed it had no intention of selling any of its interest in NIC and it remained obligated to purchase all of the nickel pig iron produced by NIC’s RKEF project in Indonesia.

Tsangshin owns 18.7 per cent of Nickel Mines stock through subsidiary Shanghai Decent Investment, according to NIC’s latest annual report.

Shares in Nickel Mines were up 4.92 per cent on Friday morning to trade at $1.28 each at 12:20 pm AEDT. For reference, NIC shares closed at $1.65 on Monday afternoon this week.

NIC by the numbers
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