Nickel Industries Ltd (ASX: NIC) shares are catching the eye on Monday.
In afternoon trade, the ASX nickel share is up 2% to 84.7 cents.
Image source: Getty Images
Why is this ASX nickel share rising?
Investors have been bidding Nickel Industries' shares higher today after the nickel miner announced a major acquisition.
According to the release, the company has signed a conditional share purchase agreement (CSPA) for the acquisition of the Sampala Project in Indonesia. This comprises three highly prospective, advanced, contiguous nickel IUPs (mining licenses) covering 6,654 hectares.
The Sampala Project is located only 36.9km from the Indonesia Morowali Industrial Park (IMIP), where the company's existing rotary kiln electric furnace (RKEF) and high-pressure acid leach (HPAL) operations are located.
It is also only 36.4km from the ASX nickel share's Hengjaya Mine (HM) operations and immediately North of the Sulawesi Cahaya Minerals (SCM) project, which is 49% owned by the company's largest shareholder, Shanghai Decent.
The latter could be very good news given that SCM has reported resources of 1,139 million dmt at 1.2% nickel for 13.9 million tonnes of contained nickel metal. This makes it one of the world's largest known nickel resources.
The initial JORC 2012 compliant mineral resource is 187 million dry metric tonnes (dmt) of 1.2% nickel and 0.09% cobalt. Importantly, this is from just 900 hectares of the prospective and mapped laterite area of 4,700 hectares. This provides significant scope for resource upgrades down the line.
'World class'
Commenting on the acquisition, the ASX nickel share's managing director, Justin Werner, said:
We are extremely pleased to announce the acquisition of the world class Sampala nickel project from our local Indonesian partner with whom we have had a long standing 15-year relationship and have worked closely with to secure these IUPs. With an initial resource of 2.285 million tonnes of contained nickel metal in just 900ha explored and over 4,700ha of mapped prospective laterite, the opportunity to increase this resource substantially is significant.
Werner also highlights that this acquisition comes at a time when competition for new nickel resources is heating up. He adds:
With significant competition for new nickel resources emerging, improved mine economics and security of ore supply increasingly becoming very important, we are delighted to announce the acquisition of the Sampala Project. With 1.6% saprolite ore currently being priced at US$37/wet metric tonne (wmt) CIF and 1.3% limonite at US$22/wmt CIF, as well as the excellent logistics being only 56km by haul road from IMIP, we expect the Sampala Project to deliver similar economics to our HM mine operation where we have seen EBITDA as high as US$42M for a quarter.
