Nickel Mines makes ASX debut in recovering nickel market

Nickel Mines ASX NIC Hengjaya laterite Indonesia Shanghai Decent Investment nickel pig iron
Nickel Mines owns the Hengjaya Mineralindo nickel laterite mine in Indonesia and is developing a nearby rotary kiln electric furnace plant in collaboration with Shanghai Decent Investment (Group) Co.

At a time when the lithium-ion battery boom is driving the nickel market back up, Indonesia-focused producer Nickel Mines (ASX: NIC) has made its debut on the Australian Securities Exchange.

Nickel Mines raised A$200 million in an initial public offering at an issue price of A$0.35 per share, valuing the company at about A$485 million.

It is one of the biggest IPOs on the ASX in the past year, trailing behind Jupiter Mines’ (ASX: JMS) A$240 million IPO in April.

Nickel Mines’ float had been delayed for more than two weeks due to the securities regulator placing an interim stop-order on the IPO in July. The stop-order was removed after a replacement prospectus was issued on 7 August.

The company is aiming to become a globally significant, low-cost producer of nickel pig iron, which is a key component in the production of stainless steel.

It currently holds an 80% interest in the Hengjaya Mineralindo (HM) nickel mine in Central Sulawesi, Indonesia and intends to use its IPO funds to expand this mine as well as move to a controlling 60% stake in a nearby stainless steel plant, currently under construction.

Nickel market surge

Thanks to the innovations of battery technology, the nickel market is running hot at the moment with many companies trying to get in on the action.

Last week, US-based battery metals company Black Mountain Metals made an informal bid to acquire 100% of Western Australian junior Poseidon Nickel (ASX: POS) at a major premium to their share price.

Poseidon announced on Friday that Black Mountain had proposed a cash consideration of A$0.06 per share, which was 53.8% higher than the company’s current closing price (at the time) of A$0.039 per share.

Hoping to capitalise on the recovering nickel market, Poseidon had been trying to fast-track the restart of its wholly-owned Black Swan and Silver Swan nickel mines by engaging in funding talks with several parties.

Nickel Mines ASX NIC Nickel price climbs during 2018
The nickel price has climbed in the last 12 months – underpinned by tightening supply and increased demand.

Meanwhile, Australian junior Jervois Mining (ASX: JRV) today announced its bid to win control of the Kabanga nickel-cobalt project in Tanzania, which was shelved by mining giants Glencore and Barrick Gold in the mid-2000s due to falling nickel prices.

Jervois considers the Kabanga deposit to be the highest quality undeveloped nickel-cobalt deposit in the world, with the potential to produce more than 50 tonnes of nickel per annum, plus significant cobalt and copper co-products.

The Glencore-Barrick joint venture has also submitted a prospecting licence application over the area after their retention lease on the deposit was cancelled by the Tanzanian government at the start of this year.

Nickel Mines opened its first day of trade at A$0.30, before slipping to a A$0.26 low, then bounced back to close the day at A$0.28 – a 20% fall on the A$0.35 IPO price.

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