Mincor to raise AUD60m to reopen Western Australia nickel operation

Australian miner Mincor Resources plans to secure AUD60m ($41m) to resume operations at its Kambalda nickel mines, which it closed in 2016. The firm will raise AUD50m through a fully-underwritten share placement issued at AUD0.72 per share and AUD10m from a share purchase plan, which is not underwritten. The funding will push Mincor's cash reserve north of AUD100m, which will be used partially against the development costs of the Western Australia mines. The decision to reopen the facilities has been motivated by increased nickel prices, which recently stood at $12,547 per mt compared to $9,595 per mt in 2016.

Mincor Resources (ASX: MCR) will raise $60 million to revive its nickel operations at Kambalda in Western Australia, with $50 million to come through a placement and the balance from a share purchase plan (SPP).

Mincor closed its Kambalda nickel mines, located 60km from Kalgoorlie, in 2016 after a sustained downturn in prices for the metal.

That year the average price was US$9,595/t, compared to the closing three-month price on Wednesday in London of US$12.547/t.

Mincor’s placement is fully underwritten and strategic shareholder IGO (ASX: IGO) has committed to take $13 million in new shares. The $10 million SPP is not underwritten.

The placement issue price is $0.72 per share, a 12.2% discount to the last closing price.

Raising to strengthen Mincor’s balance sheet ahead of development

The raising will boost Mincor’s cash reserve to more than $100 million.

Mincor will use the money to move to the final investment decision and finance a portion of the development costs.

The cash will also allow Mincor to undertake resource extension and exploration programs centred around the Cassini Main and Cassini North deposits and at an untested 1.1km space, as well as negotiating debt funding “from a position of balance sheet strength”.

The peak funding is expected to be $97 million.

Mincor managing director David Southam said the capital raising marks another important milestone “in our journey to resume profitable and sustainable nickel sulphide mining at Kambalda”.

It has been a busy time for Mincor with the completion of the definitive feasibility study (DFS) in March along with the maiden ore reserve at Cassini.

“The past nine month has seen us complete an outstanding high-quality DFS, deliver four consecutive mineral resource upgrades and a maiden ore reserve at Cassini, while also securing all key final approvals, executing a mining contract and completing early surface works at Cassini,” Mr Southam said.

Mincor also appointed key senior people for the Cassini and Northern operations.

The money raised will give the company confidence to complete resource extension drilling during the development timeline at Cassini Main and test the untested 1.1km Durkin North to Long space from underground positions.

Regional exploration will continue at Cassini North, Bluebush, Juno and other targets.

The placement will result in the issuance of just over 69.4 million new shares. At present Mincor has 346 million shares on issue.