Hengjaya Mines - Photo by Nickel Mines

JAKARTA (TheInsiderStories) – Indonesian miner, Nickel Mines Limited (ASX: NIC) launched AUS$200 million’s initial public offering (IPO) to fund the acquisition, exploring and developing nickel projects, the company announced on Friday (13/07).

The Company offers 571,428,572 shares at an Offer Price of $0.35 per share and is aiming to list on August 2 at the Australian Stock Exchange (ASX). Below the time schedule of the IPO:

Time Line of IPO

Based on the prospectus, the Sydney-based company stated funds raised in the IPO will be used to boost Hengjaya production, to acquire an additional 35 percent in the rotary kiln electric furnace (RKEF) project located at Morowali Industrial Park for $93.3 million, and for working capital. Nickel Mines’s owned 25 percent interest in the RKEF project, is comprised of a combination of equity and shareholder loans.

Currently, the miner owns 25 percent of Hengjaya Holdings shares, which holds 100 percent of the shares (directly and indirectly) of Hengjaya Nickel which will own and operate the RKEF project once completed. The remaining 75 percent of Hengjaya Holdings is currently held by Chinese Tsingshan company Shanghai Decent and Shanghai Wanlu Investment Co.

 In 2017, Nickel Mines has a collaboration and subscription agreements with  the two chinese’s firm. Shanghai Decent and Wanlu hold 20 percent and 18.5 percent respectively of Nickel Mines, which will dilute to 11.6 percent and 10.7 percent following the IPO.

The RKEF Project is a 2-line plant within the Morowali Industrial Park that Shanghai Decent has agreed will produce no less than 14,000 tonnes per annum of nickel contained in NPI. Similar RKEF plants are currently producing approximately 16,500 tonnes per annum of nickel in NPI.

The RKEF Project will facilitate the Company’s transition from being exclusively an upstream miner with the Hengjaya Mine to having the capability to produce NPI upon completion of the RKEF Project.

Construction of the RKEF Project is progressed with site excavation and earthworks completed, foundation works advanced and the plant being pre-fabricated in China ahead of being shipped to the IMIP for assembly.

Shareholders Structure

Hengjaya has been in production since late 2015, supplying up to 60,000 tonnes per annum of ore grading more than 1.8 percent of nickel. The project has a resource of 57.7 million wet tonnes at 1.81 percent nickel.

If the offer successful, will make Nickel Mines the second-largest IPO in ASX after Jupiter Mines raised $240 million in April. The company was formed in 2007 by Norm Seckold and Peter Nightingale. The Wijoyo family owns the other 20 percent of the project.

The Project

Shortly after the introduction of the Indonesian government’s ban on the exportation of unprocessed minerals in January 2014, production ceased at Hengjaya with Nickel Mines forced to explore in-country beneficiation options.

When Tsingshan committed to establishing a material downstream processing presence in Indonesia, is requiring a reliable supply of nickel ore, production recommence in October 2015 with the Hengjaya Mine securing an offtake contract to supply a Tsingshan subsidiary 30 kilo tonnes per month of +1.8 percent ore.

In October 2017 an updated off-take agreement was signed, with Tsingshan subsidiary PT Indonesia Tsingshan Stainless Steel guaranteeing to take supply of 50,000 wmt per month until Nov. 30, 2018, with a cut-off grade of 1.60 percent nickel. Under the terms of the agreement, its unit made an advance payment of $2 million to enable expansion of operations at the mine.

With Nickel Mines having now secured a long-term strategic partnership with Tsingshan, Hengjaya Mines will now be responsible for supplying 2 RKEF lines 1.5 metric tonnes per annum of 1.8 percent + ore.

In June 2013, Hengjaya obtained borrow and use license, in respect of approximately 851.22 hectares of the Hengjaya Project area within the production forest area. A permit is required for Hengjaya to conduct mining activities in the forest area in which the its mining concession area is in, as the forest area has been included as a Limited Production Forest Area by the Ministry of Forestry of Indonesia.
The license is issued for the Limited Production Forest Area of 851.22 hectares. It is valid until June 16, 2031 or shall automatically expire within two years from the date of issuance of the permit if there are no real activities at the site.

In August 2014, the Indonesian government approved the conversion of approximately 2,000 hectares of the Hengjaya Project’s concession area, previously classified as protected forest, to production forest, thereby significantly opening this expanded area to future mining and expanding the resources available to be mined.

In February 2018 the Group received confirmation that the permit for 994.32 hectares had been granted, enabling a significantly expanded resource area to be mined in closer proximity to the coast which will reduce current mining and hauling costs significantly.

Written by Staff Editor, Edited by Linda Silaen, Email: theinsiderstories@gmail.com