Pacific Nickel Mines is funded to complete its all-important feasibility study and begin mine development at its Kolosori nickel project in the Solomon Islands after a $5.275 million capital raising.

Conducted at 7c a share, a 21.3% discount to Pacific’s (ASX:PNM) last traded price, the deal was well-supported by existing and new institutional shareholders, and will put PNM on the path to selling DSO product from the high grade laterite mine.

Kolosori contains 7.96Mt of ore at 1.42% nickel, with the DSO route a low capex and straightforward method to get into production, expected to produce 1.3Mtpa of medium to high grade saprolite and transition ore from the third quarter of 2023.

It will cost around US$20 million to get into production with a one-year payback, and relatively low cash costs against global DSO producers with an expected operation margin of around US$20/t.

The Bridge Street Capital Partners and Bell Potter-led raising, which will include more skin in the game from directors who are after shareholder approval for a $275,000 placement, will be used to fund initial mine development at Kolosori including the development of a loading wharf.

It will also lead PNM to the finalisation of its feasibility study, fund a Mining Licence and landowner fees and provide general working capital.

“The company is delighted with the outstanding response from investors to the capital raising and in particular the participation from existing shareholders and new institutional

shareholders,” PNM CEO Geoff Hiller said.

“These funds enable the company to complete the final feasibility study work and commence mine development at the company’s Kolosori Project in the Solomon Islands in anticipation of production next year.

“Achieving production from the Kolosori Project at the earliest opportunity is the company’s highest priority.”

Glencore on board

The funding from shareholders is only part of the puzzle at Kolosori, but it will go a long way to getting other parts of the jigsaw in place.

Glencore, one of the world’s largest nickel miners and commodity traders, has committed to provide US$22 million in debt funding and be the Kolosori project’s offtake partner.

That commitment will close on satisfactory completion of the DFS, which can be completed with today’s capital raise, and final due diligence, with a site visit expected in early November.

PNM owns 80% of each of the Kolosori and Jejevo projects, with the other 20% held by local landowners.

Initial drilling has been completed at Jejevo, which already bears many of the hallmarks of Kolosori, with a mineral resource of 7.82Mt at 1.46% Ni. A mining lease application is expected to be lodged in late 2022 or early 2023.

There remains much more to find at both, with exploration targets to be tested at Kolosori and Jejevo next year.

Consultants Mining One have estimated targets of 1.94-3.19Mt at 1.2-1.6% Ni outside of the current resource at Kolosori, and 3-5Mt at 1.2-1.6% Ni at Jejevo.




This article was developed in collaboration with Pacific Nickel Mines, a Stockhead advertiser at the time of publishing.


This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.