Market’s Appetite for Risk Unabated

By Glenn Dyer | More Articles by Glenn Dyer

Fund raisings for two small to medium Australian companies – one a telco, the other a miner – have gone well this week, indicating the continuing appetite among investors for a good story based on solid performance.

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Meanwhile nickel miner Mincor continues to find a new standing with investors as the shares hold up well in the wake of the company’s first fund raising for a while.

Mincor raised $60 million this week in a placement to fund an exploration ramp-up, accommodation construction and to update its credit facility – all of which will give it the resources to fund infrastructure for the Cassini nickel mine and other operations in the same area.

The placement was oversubscribed at $1.28 a share, an 11.1% discount to the last closing price. A $5 million share purchase plan for small shareholders is due to start soon.

The shares withstood the usual post issue selling and closed yesterday at $1.31, down just 0.7% on the day.

As a result of the issue, Mincor’s cash reserves now total $109 million which the company has already found homes for

CEO David Southam said in a statement announcing the successful raising that “$15 million has been earmarked for exploration, particularly in light of the success we have enjoyed recently with underground drilling at the Golden Mile (north of Cassini), where we have two rigs operating, and surface drilling at location one where a diamond rig is operating.”

“The additional funding will give us increased optionality to increase exploration at these locations, while also having the ability to fund out other regional exploration efforts.”

A further $15 million will go towards a new, purpose-built Mincor-owned accommodation facility just 10 kilometres from Cassini.

“This is consistent with our view that Cassini will be a long-term operation that requires appropriate long-term infrastructure,” Southam said.

“It will also eliminate the need for us to continue to use a third-party operated camp in Kambalda for Cassini operations, reduce commute times, and provide important health and safety benefits for our workforce – ensuring we can continue to attract the best people to work for us.”

He said the new accommodation facility for Cassini with replace the need for staff to travel the 70 kilometres to and from Kambalda.

The remaining capital raised through the placement will go into a $30 million revolving credit facility (RCF) provided by BNP Paribas.

“Finally, a further $25 million will be allocated to replacing the current $55 million syndicated project finance facility (SPFF) with the new $30 million revolving credit facility,” Southam said.

Andrew Forrest’s Wyloo metals owns 15% of Mincor with rival nickel and lithium miner IGO sitting on 8%.

IGO is stalking Western Areas, another nickel miner in WA, and Forrest is also building a stake.

Mincor’s major customer is BHP which has agreements to take nickel concentrate from the company’s mines in the Kambalda area as well as Cassini in the new year.

He said Mincor was returning to the discovery phase again “similar to Bellevue” and was looking to explore more of what was dubbed “the Golden Mile of nickel”.

The company confirmed a third high-grade massive sulphide nickel intersection in the 1.1-kilometre zone between its Long and Durkin North mines near Kambalda, but stopped short of labelling it a discovery.