Pacific Nickel picks Glencore for Kolosori funding, offtake

Pacific Nickel is another step closer to developing its Kolosori project after reaching a non-binding term sheet with a Glencore subsidiary for a US$22m debt facility and nickel offtake.

The indicative term sheet covers a three-year US$22m Pre-Export Finance Facility that comprises a US$17m construction tranche and a US$5m reserve tranche along with a four-year offtake for all of Kolosori’s nickel laterite production, which can be extended by a further two years by mutual agreement.

Pricing for the offtake will be linked to market prices and subject to standard commercial adjustments for product quality.

The company recently received several proposals from prospective offtakers and project financiers, and the selection of Glencore’s offer is the result of this competitive process.

While the facilities remain subject to due diligence, approval of the mining licence, credit approval and full documentation, they are a clear sign of the strong interest in Pacific Nickel Mines’ (ASX:PNM) direct shipping ore project in the Solomon Islands.

“We have been very pleased with the level of interest shown in the Kolosori Project. Finalising debt finance and product offtake facilities represents a significant milestone for the company,” chief executive officer Geoff Hiller said.

“Moving forward with Glencore is another important key to the success of this project.

“This supports the company’s overall strategy of working with the Solomon Islands government to develop the Kolosori Nickel Project for the benefit of local communities and all stakeholders.”

Quick development

Kolosori has an easily accessible resource of 5.89 million tonnes grading 1.55% nickel which requires no processing in a DSO model.

It is currently expected to produce 93,450t of contained nickel grading 1.5% nickel, with the option to mine higher grades in excess of 1.6% nickel early in the mine schedule.

Work is currently underway by the Solomon Islands’ Mines Department to ensure that land boundaries have been appropriately addressed in the Mining Lease application with the company noting that the landowners and their boundaries are unchanged from what was previously known.

The company has also submitted an application for a third 99.2sqkm prospecting licence – the Bugao Hograno tenement that is located between Kolosori and its Jejevo nickel project.

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.