WA nickel miner Mincor
(ASX:MCR) is after $55 to $60 million to further boost its underground development at its Northern nickel operations in WA.
The company revealed the issue on Monday when it announced an issue at $1.39 a share in a fully underwritten placement to certain eligible institutional, sophisticated, and professional investors to raise $55 million and a non-underwritten share purchase plan targeting an extra $5 million.
Besides funding the stepped-up pace of underground development at its Northern Operations, the money will also help and fund more underground exploration and resource definition diamond drilling at its new Cassini nickel mine in Western Australia.
The remaining proceeds will be used to strengthen the company’s balance sheet as it continues to ramp-up its Kambalda nickel operations over the remainder of FY2023, ahead of full-scale production.
Mincor intends to allocate up to $20 million of the proceeds from the offer towards advancing development activities around the recently announced Golden Mile zone.
That will see Mincor bring this development forward, fast tracking grade control drilling and development access works (capital works, ore drive development and additional drilling), as well as continuing the existing extensional drilling program across the Northern Operations.
Under this scenario, the company would expect preparatory development works to commence in January 2023, with first ore development expected during the in the June quarter of next year.
The money will be spent looking for and proving up additional nickel reserves in this area.
Mincor reckons there is outstanding potential to discover additional nickel mineralisation within the Golden Mile, with the potential to significantly extend the mine life of its Kambalda Nickel Operations.
Another $15 million of the proceeds from the raising will be used to accelerate the underground exploration and resource definition drilling program at the Cassini mine that was due to begin towards June next year but will now start in January.
Mincor is supply nickel concentrate to BHP’s NickelWest for processing and in June received a payment of $25.3 million for the first batch of material from its Kambalda mine.
That mine has produced from 2001 to 2016 when it was put on a care and maintenance basis because of low metal prices.
Mincor restarted work on re-opening the Kambalda mine in September 2020, before sending the first parcel of Kambalda ore to BHP’s nearby concentrator in February of this year.
Mincor has the right to process up to 600,000 tonnes a year of nickel sulphide ore at BHP’s Kambalda nickel concentrator once the Kambalda operations were up and running.
Mincor shares were halted on Monday to allow the issue to happen. They ended at $1.585 on Friday.
Mincor re-opened Kambalda a $98 million cost which was cheaper than the $107 million estimate.
The company expects Kambalda nickel production to peak at over 16,000 tonnes this financial year and is looking to output from Cassini and the new areas to bolster that around current levels in future years, hence the haste in calendar 2023.
