Money for Mincor as nickel arms race escalates
With Australian upstart Mincor securing the sort of financial support rarely offered to pre-revenue companies at a time when Andrew Forrest and BHP continue to battle over a Canadian nickel explorer (reports The Australian Financial Review).
9th September 2021
Money continues to pour in for early-stage nickel stocks, with Australian upstart Mincor securing the sort of financial support rarely offered to pre-revenue companies at a time when Andrew Forrest and BHP continue to battle over a Canadian nickel explorer (reports The Australian Financial Review).
Tribeca Investment Partners is understood to be the unnamed “global resources fund” that acquired $30 million worth of Mincor stock prior to the launch of its oversubscribed $60 million equity raising, which was further complemented by an unusually supportive $30 million debt arrangement from BNP Paribas.
Rather than the sort of project finance that ties a loan to an individual mine and is often secured over the built infrastructure at the project, BNP has given Mincor the sort of revolving credit facility more commonly given to established producers with proven revenue streams.
The $30 million revolving credit facility will be cheaper and more flexible than the project finance facility Mincor previously had with the same bank and could have terms lasting up to four years.
Mincor has typically been viewed as a takeover target given it will be closely integrated with BHP’s Kambalda and Kalgoorlie nickel assets when it begins producing nickel concentrate sometime around March 2022.
The company already has an acquisitive nickel pair IGO Limited and Andrew Forrest’s Wyloo Metals on its share register with 8 per cent and 15 per cent respectively.
But some close observers believe the revolving credit facility could yet give Mincor the platform to take control of its destiny should a broader consolidation of the WA nickel sector come to fruition.
“We believe it is almost unprecedented for a company going through project development to be able to secure a flexible debt arrangement which is more akin to a mature production company,” Mincor managing director David Southam said.
IGO and Wyloo declined to say whether they would take up their rights under the Mincor equity raising, but it would be a surprise if they did not participate, given their acquisitive moods of late.
Both IGO and Wyloo have taken substantial shareholdings in another miner that feeds nickel into BHP’s Nickel West processing system: Western Areas.
Stainless steel manufacturers were once the major customer for nickel, but miners of the metal are increasingly focused on supplying battery and electric vehicle manufacturers.
The type of nickel produced in Western Australia and eastern Canada – nickel sulphides – is considered to be the most suitable and affordable for conversion into the formats required by battery and electric vehicle manufacturers.
BHP and Wyloo are hunting nickel assets in eastern Canada as well, with both companies offering to acquire all shares in early stage nickel explorer Noront Resources.
The Noront board of directors has recommended shareholders accept BHP’s offer despite Wyloo signalling it would be willing to pay close to 28 per cent more.
The board says Wyloo’s offer is subject to a number of uncertainties including due diligence, but Wyloo has refused to accede to a confidentiality agreement that would prevent it from talking directly to other shareholders while conducting due diligence.
Wyloo has vowed to replace Noront’s board if successful in taking control of the company and challenged its directors to clarify whether BHP’s offer would result in immediate vesting of options and other benefits to them.
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