Following Foreign Investment Review Board (FIRB) approval, Australian Securities Exchange-listed Nickel Industries has completed the acquisition of a 10% interest in the Huayue Nickel and Cobalt (HNC) project and an additional 10% interest in the Oracle Nickel Project.
Earlier this year, Nickel signed a strategic framework agreement with Shanghai Dingxin Investment (Group) Co., Ltd. to acquire a 10% interest in PT HNC High Pressure Acid Immersion (HPAL) project at Morowali Industrial Park (IMIP) in Indonesia for $270 million.
The company also agreed to acquire an additional 10% stake in the Oracle Nickel project for $75 million, bringing its stake in the project to 80%.
Following receipt of FIRB's no-objection and shareholder approval for the transaction, Nickel Industries has now issued more than 381.36 million shares of the Company to Shanghai Dingxin at an issue price of AU $1.02 per share as consideration for the HNC transaction and has paid $75 million in cash for the Oracle project equity stake.
The Company also completed payment obligations for two acquisition options, including a $40 million cash payment to Shanghai Dingxin, including a $25 million option to participate in the construction of the Excelsior Nickel-Cobalt (ENC) project, and a $15 million consideration for an option to invest in and build an ice-nickel converter at Oracle.
"We are very pleased to have now completed the various asset and option acquisitions outlined in our electric vehicle battery supply chain Strategic Framework Agreement," said Justin Werner, managing director of Nickel Industries.
"The completion of these transactions further strengthens our strong existing relationship with Aoyama and, importantly, represents important progress in our continued diversification into higher margin, low carbon forms of nickel production as we strive to become a significant global sustainable nickel producer."
The ENC project is expected to produce approximately 72,000 tonnes of nickel equivalent per year, with Shanghai Ding Xin providing a "capital expenditure guarantee" and the total cost of construction and commissioning will not exceed $2.3 billion. In addition to producing mixed hydroxide precipates, the project will also be able to produce Nickel sulfate and nickel cathodes, unlike the new generation of HPAL plants currently under construction in Indonesia, and provide Nickel Industries with significant operational flexibility throughout the cycle.
The two companies are currently working together to complete the feasibility study for ENC before making a final investment decision, with construction expected to commence in the December 2023 or March 2024 quarter or earlier agreed upon by both parties, and commissioning to commence no later than 24 months thereafter.
