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Nickel Industries enters into $943 million deal with Danusa Tambang Nusantara

  • Monday, June 12, 2023
  • Source:ferro-alloys.com

  • Keywords:Nickel Industries
[Fellow]Nickel Industries enters into $943 million deal with Danusa Tambang Nusantara

Nickel Industries (ASX:NIC) has entered into a conditional share subscription agreement for a $943 million placement of shares in the company to PT United Tractors’ subsidiary, PT Danusa Tambang Nusantara (DTN). 

DTN is a wholly owned subsidiary of UT and has a focus to expand its business in gold and nickel commodities. The DTN investment provides Nickel Industries with an immediate capital injection of $943 million, alongside strengthening the company’s balance sheet. 

The placement consists of the issuance of 857 million new fully paid ordinary shares at $1.10 per new share, representing a 27.2% premium to the last traded price of $0.87 on 8 June 2023. 

The collaboration agreement is subject to certain conditions, including the completion of a feasibility study and Nickel Industries making a final investment decision (FID) to proceed with its ENC Project. 

Nickel Industries says if the conditions precedent are not satisfied by 29 September 2023, either party may terminate the agreement. 

Following the completion of the placement, the new shares will represent about 19.99% of the company’s total ordinary shares. 

Nickel Industries says the proceeds from the placement, combined with the potential reduction in the company’s capital expenditure commitment for the ENC Project, position it strongly for growth. 

The company adds that assuming that DTN invests in the ENC Project, it will reduce Nickel Industries’ capital commitment for the project, and bring the project closer to realisation. 

If Nickel Industries decides to proceed with an investment in the ENC Project, it will explore various options to raise third party debt to partly fund the ENC project. 

Additionally, no further issuance is anticipated to be required by the company to fund stage one or two of the project. 

Commenting on the investment by UT in Nickel Industries and the announcement of future collaboration between UT, Nickel Industries, and Shanghai Decent, United Tractors President Director, Frans Kesuma says: “The acquisition of a strategic minority stake in Nickel Industries is another important step in the diversification of our business. It builds on our integrated nickel strategy and our broader group’s continued expansion in the electric vehicle supply chain.”

Commenting on the conditional placement and the execution of the collaboration agreement with DTN, Nickel Industries Managing Director Justin Werner says: “We are delighted to welcome DTN and the wider UT Group as a strategic shareholder of the company.

We believe that the benefits of collaboration with UT are significant for Nickel Industries and will enable us to partner with a large and influential Indonesian mining company to jointly pursue growth opportunities in Indonesian Nickel, of which we believe there are many. 

UT with its significant mining, power, and infrastructure development and operating experience in Indonesia, substantial financial resources, and long-term return focus, will add substantial value to us in helping to achieve the board’s vision to build Nickel Industries into the leading global diversified nickel company.”

The company adds that UT will have the right to appoint a director to the Nickel Industries Board on completion of the subscription agreement. 

Additionally, the conditional placement is conditional on the company’s shareholder approval, and completion of the HNC placement on or before 29 September 2023. 

Nickel Industries says it will shortly seek shareholder approval for the issuance of new shares to DTN and the investment in the ENC Project with a notice of meeting expected to be issued shortly. 

Nickel Industries is an ASX-listed company, which has become a globally ‘significant’, low-cost producer of nickel pig iron, a key ingredient in the production of stainless steel, alongside recently moving into the production of nickel matte for the electric vehicle battery market. 

UT is known as the ‘largest’ heavy equipment distributor in Indonesia and has been established since 1972. The company has 5 business pillars, Construction Machinery, Mining Contracting, Mining, Construction Industry, and Energy. 

UT is a 59.5% subsidiary of PT Astra International Tbk, which is a large business group in Indonesia, with experience of serving several industries and sectors. 

  • [Editor:倪駿豪]

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