The ASX’s next nickel producer secures major funding milestone from Glencore

Wed 19 Apr 23, 10:53am (AEST)
Yellow truck driving along a mine path
Source: iStock

Key Points

  • Glencore provides a US$22M loan facility to Pacific Nickel Mines for Kolosori Nickel Project
  • Funding and offtake are secured with an amended sales agreement with Glencore
  • The project is expected to start production by end 2023 with a production profile of up to 1.5 million wet metric tonnes of DSO per annum.

Pacific Nickel Mines (ASX: PNM) has the formal backing of mining giant Glencore for a loan facility of up to US$22 million to bring its Kolosori Nickel Project into production. This  follows an initial Letter of Commitment two weeks ago on Wednesday, 5 April.

CEO Geoff Hiller stated that the balance of the facility will be drawn down in due course to materially advance the current development works. This will include construction of:

  • a 200-person main camp, 

  • mining and port facilities, 

  • infrastructure to connect stockpiles to haul roads, and 

  • an on-site laboratory.

Funding and offtake secured

The project has received strong support from Glencore, which has also signed an amended sales agreement to purchase all of Kolosori’s nickel production over a six-year period. The key terms include a 6-year term, price received linked to agreed 1.5% DSO Nickel benchmarks, and a quantity to be 100% of mine production during the term.

The debt facility has a 3-year repayment term commencing after the first shipment, with a competitive margin above the US Secured Overnight Financing Rate. 

According to Kolosori's Definitive Feasibility Study completed in February, the project has a pre-production capital expenditure of US$18.6 million (A$27.6 million) and a post-tax NPV of US$64 million under a base case scenario. The project is expected to come online in by the end quarter of 2023 with a production profile of up to 1.5 million wet metric tonnes of direct shipping ore (DSO) per annum.

Pacific Nickel Mines is currently conducting drilling and further exploration activities to support an upgrade in mine life. The company aims to convert the current inferred resource of approximately 2 million tonnes into an indicated resource.

If successful, the additional tonnages will boost project NPV to US$83 million and mine life from three years to five years and 8 months. 

Pacific Nickel Mines Ltd (ASX PNM) Share Price - Market Index
Pacific Nickel Mines 1-year chart (Source: Market Index)
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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