Why is this ASX 200 mining share halted today?

All eyes are on Nickel Industries today after the company released a barrage of battery-related news.

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Key points
  • The Nickel Industries share price is frozen as the company kicks off a $673 million capital raise to help fund notable acquisitions
  • The company also revealed it's signed an EV battery supply chain agreement with major shareholder Shanghai Decent
  • Meanwhile, it announced its maiden battery-suitable nickel matte production and the deaths of two construction workers at the Oracle Project

The share price of S&P/ASX 200 Index (ASX: XJO) miner Nickel Industries Ltd (ASX: NIC) isn't going anywhere today.

The nickel pig iron turned nickel matte producer has kicked off a $673 million capital raise to help fund two major acquisitions.

Additionally, the stock may have caught the market's attention with the miner's quarterly report. It was also released today, along with details of the unfortunate deaths of two construction contractors working at the company's Oracle Nickel Project in Indonesia.

The Nickel Industries share price has been halted at its previous close of $1.12. And that's where it's expected to stay until the market opens tomorrow morning.

Let's take a closer look at the avalanche of news from the ASX 200 mining share today.

a man in a hard hat, high visibility vest and gloves holds a stop sign and holds up a hand in a halt gesture on a road.

Image source: Getty Images

ASX 200 nickel share halted amid EV battery agreement

The Nickel Industries share price is halted amid news the company has executed an electric vehicle battery supply chain strategic framework agreement with its major shareholder, Shanghai Decent.

It has also made agreements with the investment company to buy a 10% interest in two nickel-producing assets.

The first will be an indirect stake in PT Huayue Nickel Cobalt (HNC), to be purchased from Shanghai Decent's affiliate Newstride for $386 million. HNC is a high-pressure acid leach project in the Indonesia Morowali Industrial Park.

Nickel Industries also plans to buy another 10% stake in Oracle, bringing its interest to 80%. It will pay $107 million to Shanghai Decent for the extra hold.

As part of the strategic agreement, Nickel Industries has also forked out $57 million for options to collaborate with the investment company.

That could see the ASX 200 nickel miner participating in the development of a nickel sulphate and electrolytic nickel plant using the HPAL process, dubbed the DAWN HPAL+ Project.

It would also give it the option to invest in and construct a low-grade to high-grade nickel matte converter at Oracle for US$40 million.

$673 million capital raise kicks off

To fund the acquisitions, the ASX 200 nickel miner is currently undergoing a $264 million institutional placement.

New shares are being offered for $1.02 apiece under the raise – an 8.9% discount to the stock's previous close.

Another conditional placement would see Newstride snap up around $386 million worth of shares at the same price. Meanwhile, approximately $21 million would be bought by Shanghai Wanlu Investment Co and around $2 million will go to non-executive director Mark Lochtenberg.

The latter placement is subject to shareholder approval and, in the case of Newstride, the Foreign Investment Review Board's approval.

Finally, a share purchase plan is expected to raise up to $29 million.

Quarterly report

But preceding the major news from the ASX 200 nickel miner today was its quarterly report.

Nickel Industries achieved record nickel metal production in the December quarter, coming in at 23,072 tonnes – a 13.8% quarter-on-quarter jump.

It also produced its maiden nickel matte, which is suitable for use in batteries.

It posted earnings before interest, tax, depreciation, and amortisation (EBITDA) of US$106.1 million from operations last quarter.

Its EBITDA margins also improved from US$2,261 a tonne in the September quarter to US$4,146 a tonne in the December quarter on the back of improved contract pricing and lower cash operating costs.

However, the company also announced the deaths of two construction workers at Oracle. An investigation into the deaths is ongoing, as well as a review into how the site's safety measures can be improved.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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