NickelSearch (ASX:NIS) has entered into agreements with an unlisted company, Capella Metals, and the privately held Bacchus Resources to acquire several tenements and permits that make up the Mt Isa North Project in Queensland.
The project is considered prospective for copper and uranium, covering 2,003km2 in the Mt Isa region.
Under the binding share purchase agreement with Capella Metals, NickelSearch will acquire all shares in Capella via the issue of 88.41 million shares to vendors on a pro-rata basis, and 15.82 options to acquire shares exercisable at $0.030 per option.
Completion of the agreement is subject to NickelSearch satisfying several conditions, including raising $2 million under a capital raising, completing due diligence, securing shareholder approval, and obtaining all necessary documents.
Capella Metals currently holds one granted exploration permit and three exploration permit applications in the Mt Isa region.
Under the binding option acquisition deed with Bacchus Resources, NickelSearch has agreed to pay Bacchus an option fee of $1 within one business day of satisfying the operation condition.
In consideration for the payment of the option fee, Bacchus irrevocably grants the company the right to acquire all rights, titles, and interest in the Bacchus tenements.
NickelSearch will also issue 27.13 million shares, 27.13 million options exercisable at $0.030 per option, as well as 13.11 million performance rights to Bacchus.
Bacchus currently holds five granted exploration permits in the Mt Isa region.
The company has secured binding commitments to raise $560,000 through a placement of 37.17 million shares at $0.015 per share.
The issue price represents a 25% discount to the last closing price on 22 August 2024 of $0.020.
NickelSearch will also issue one free attaching option for every two shares issued. The placement options will be exercisable at $0.030 per share, each expiring on 30 June 2027.
In conjunction with cash reserves of $2 million, the capital raising ensures NickelSearch is well funded to conduct copper and uranium exploration, including targeting work and drilling on the Mt Isa Project.
Funds will also be used to continue target generation and lithium exploration at the Carlingup Lithium Project, as well as funding and executing the Capella transaction.
Discovery Capital Partners and Cumulus Wealth will act as joint lead managers to the placement.
NickelSearch is also conducting a non-renounceable entitlement offer on the basis of two new shares for every three shares held, at an issue price of $0.015 per share to raise $2.14 million.
The entitlement offer is fully underwritten by Discovery Capital Partners.
NickelSearch will also issue under the prospectus one free attaching option for every two new shares issued. The entitlement options will be issued on the same terms as the placement options.
Due to the rapid expansion of Indonesia’s nickel industry leading to an oversupply, nickel prices have dropped significantly in comparison to 2022 and 2023.
On 12 July 2024, mining giant BHP (ASX:BHP) announced it was suspending its Western Australian nickel operations, following the oversupply in the nickel market.
Australian Resources Minister Madeleine King said “global nickel prices averaged more than US$25,000 a tonne in the 18 months from the start of 2022.”
“It is now US$16,725 a tonne. This has put a substantial pressure on BHP’s Nickel West operations.”
On 23 August 2024, the nickel price retreated 2.6% over the course of that week to US$16,586 per tonne, as previously reported.
According to Trading Economics, the nickel price is sitting at US$17,153 per tonne, which is a slight increase after experiencing a six-month low.
Write to Aaliyah Rogan at Mining.com.au
Images: NickelSearch
