Lunnon Metals adds two historical nickel mines to Kambalda project
Lunnon Metals is raising up to $30 million to fund exploration programs including on the newly acquired Silver Lake and Fisher nickel mines.
Lunnon Metals (ASX: LM8) is expanding the footprint of its Kambalda nickel project in Western Australia with the acquisition of two historical nickel mines owned by South African major miner Gold Fields.
In an announcement today, Lunnon confirmed it will acquire the rights to the Silver Lake and Fisher projects from Gold Fields’ wholly-owned subsidiary St Ives Gold Mining Co (SIGMC) in exchange for $20 million in Lunnon shares. SIGMC is already a current major shareholder of Lunnon.
In conjunction with the acquisition, Lunnon has offered a single tranche placement of about 32.3 million shares to professional and institutional investors at $0.93 per share to raise up to $30 million. This price represents a 10.6% discount to the last closing price on Monday and a 4.3% discount to the 10-day volume weighted average price.
The placement shares account for 22.84% of Lunnon’s issued capital.
Following the acquisition and the raising (assuming full placement is taken up), SIGMC would effectively increase its stake in Lunnon from 31.7% to 34%.
Funds raised from the placement, together with existing cash, will be used for exploration programs at Lunnon’s Foster, Baker and Warren gold discoveries in Kambalda as well as Silver Lake and Fisher once the acquisition settles.
Last two nickel mines historically owned by WMC
The acquisition entails exclusive rights to nickel on 19 mining leases covering the historical Fisher and Silver Lake nickel mines, which produced more than 161,000 tonnes of nickel metal during their operational lives under the earlier ownership of WMC Resources, now called BHP Nickel West and owned by parent company BHP Group (ASX: BHP).
Both mines ceased operations in the late 1980s with the assets sold by WMC in the late 1990s and early 2000s.
The projects are the last two historical WMC nickel mines in Kambalda to be acquired by a nickel-focused company and will add to the Foster and Jan nickel mines already owned by Lunnon.
Lunnon managing director Ed Ainscough said acquiring these last two historical WMC nickel mines represents a doubling of the company’s footprint, cementing its place in one of the world’s most renowned nickel belts.
“We also view SIGMC’s confidence in Lunnon Metals as reflecting the success of our discovery program and the growth of the company since its IPO in June 2021.”
“The plan now is to fast track all activities at Kambalda – discovery, resource growth, permitting, underground re-entry and development studies, to achieve our mission statement and become a key player in the heart of the Kambalda nickel district,” he said.
Exploration programs
Lunnon’s current work programs are aimed at delineating JORC 2012 compliant mineral resources from historical remnant areas at its Foster and Jan nickel mines.
The company planned to use the raised funds and existing cash to permit and commence the de-watering and re-entry of Foster, expedite the Baker discovery towards a development decision, fast-track the assessment of the Warren down-plunge and the potential addition of resources, as well as for exploration on the Silver Lake and Fisher leases.