Glencore backed and ready to hit production status: Pacific Nickel Mines

Tue 25 Jul 23, 1:49pm (AEDT)
Source: iStock

Key Points

  • Pacific Nickel Mines has drawn the full US$22 million loan from Glencore to help develop its Kolosori Nickel Project
  • The project is expected to commence mining operations in October 2023
  • The project has attractive economics, with a base case post-tax net present value of US$64 million and a mine life of 3 years

Pacific Nickel Mines (ASX: PNM) has submitted a notice for the final US$19 million of a US$22 million loan from mining giant Glencore to help develop its Kolosori Nickel Project in the Solomon Islands. 

“These funds will be applied to ongoing completion of project infrastructure including the haul road, earthworks for stockpile pads, completion of the DSO loadout wharf, construction of project access roads, construction of a 200 man to scale up for full production, and project working capital,” commented CEO Geoff Hiller.

“It is currently anticipated that mining operations will commence in October 2023.”

The company has drawn the full US$22 million facility and expects this to meet all pre-production funding requirements for Kolosori.

Advancing Kolosori into production

Kolosori’s Definitive Feasibility Study was completed earlier this year and outlined ‘attractive’ base case economic returns including:

  • Post-tax net present value of US$64 million

  • Capital backpack period of 6 months

  • Mine life of 3 years

  • Capex of US$21.3 million

Drilling is currently underway to improve the project’s mine life and economics. The company has an exploration target of 2.5Mt to 4.0Mt at nickel grades of 1.2% to 1.6%. Under an expanded case, Kolosori’s returns improve to:

  • Post-tax net present value of US$83 million

  • Capital payback period of 6 months

  • Mine life of 5.8 years

  • Capex of US$21.3 million

A ‘Straightforward DSO Operation’

Kolosori is hailed as a ‘simple barging and trans-shipping operation’ – A shallow open pit mining project that’s located less than 1 km away from local ports.

The Glencore loan facility also comes with its benefits, including a six-year offtake for 100% of Kolosori’s production.

The price received will be linked to agreed 1.5% DSO Nickel benchmarks and adjusted for nickel and moisture bonus and penalty payments.

DSO prices have eased in recent months due to a faster-than-expected ramp up of nickel pig iron production in Indonesia and broader macroeconomic headwinds, according to Pacific Nickel.

Nevertheless, the company expects nickel demand to “accelerate in the next two years as battery demand expands.”

2023-07-25 13 44 36-Window
Philippine 1.5% & 1.8% Ni Fob Price Jan 2013 to Jul 2023 (Source: Pacific Nickel Mines)
DISCLAIMER: Market Index helps small-cap ASX listed companies connect with Australian investors through clear and concise articles on key developments. Pacific Nickel Mines was a client at the time of publishing. All coverage contains factual information only and should not be interpreted as an opinion or financial advice.


Written By

Kerry Sun

Content Strategist

Kerry holds a Bachelor of Commerce from Monash University. He is an avid swing trader, focused on technical set ups and breakouts. Outside of writing and trading, Kerry is a big UFC fan, loves poker and training Muay Thai. Connect via LinkedIn or email.

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