Pacific Nickel Mines (ASX:PNM) has arranged a placement of just over 75.357 million fully paid ordinary shares at $0.07 to raise $5.275 million to help further advance its Kolosori Nickel Project.
The placement will be undertaken with a first tranche raising $5 million, while the second tranche of 3,928,572 shares to raise a further $0.275 million in respect of directors participating, will be completed subject to shareholder approval.
The issue price of $0.07 represents a 21.3% discount to the last trade 12 October 2022 and a 21.6% discount to the 15-day VWAP up to 12 October.
Pacific Nickel Mines reports that the placement was well supported by existing shareholders, and a number of new shareholders, both institutional and sophisticated investors from Australia, the UK and Europe.
the placement was well supported by existing shareholders, and a number of new shareholders, both institutional and sophisticated investors from Australia, the UK and Europe
The joint lead managers to the placement were Bridge Street Capital Partners and Bell Potter Securities.
The funds raised will primarily be used for initial mine development works on the Kolosori Nickel Project, including the construction of a loading wharf. Capital will also be deployed to finalise the Feasibility Study project, for mining licence and landowner fees, and for working capital and general corporate purposes.
Addressing the equity raise, Pacific Nickel CEO Geoff Hiller commented: “The Company is delighted with the outstanding response from investors to the capital raising and in particular the participation from existing shareholders and new institutional shareholders.
These funds enable the Company to complete the final feasibility study work and commence mine development at the Company’s Kolosori Project in the Solomon Islands in anticipation of production next year. Achieving production from the Kolosori Project at the earliest opportunity is the Company’s highest priority.”
Pacific Nickel holds an 80% interest in the Kolosori Nickel Project (ML 02/22) and an 80% interest in the Jejevo Nickel Project (PL 01/18), both of which are located on Santa Isabel Island in the Solomon Islands.
The remaining 20% interest is owned by local landowners.
Pacific Nickel reports the projects are Direct Shipping Ore (DSO) projects, with low capital expenditure in the development, production and shipping stages due to the straightforward mining operation and with no processing requirements.
The Kolosori mineral resource is estimated at 7.96mt at 1.42% nickel (dry basis, 1% cut off grade). Kolosori’s project economics are believed to be ‘highly attractive’, driven by a low capex pathway to development and production – approximately US$20m (1 year payback); and relatively low cash costs against global DSO producers with operating margin around US$20/t.
Global minerals trader Glencore (LSE:GLEN) is to provide debt financing of US$22m and will be the project’s offtake partner, subject to satisfactory completion of the DFS and final due diligence. To this end, a site visit is planned for early November 2022.
Jejevo initial stage drilling has been completed and delivered a Mineral Resource of 7.82Mt at 1.46% Ni. A Mining Lease application is expected to be lodged in late 2022/early 2023.
Exploration targets (in additional to the current Resource) at both projects are to be tested in 2023. Consultants Mining One have estimated an exploration target of 1.94 to 3.19Mt at 1.2-1.6% nickel at Kolosori and 3.0 to 5.0 million tonnes at 1.2 to 1.6% nickel at Jejevo.
Write to Adam Orlando at Mining.com.au
Images: Pacific Nickel Mines Ltd