GLOBAL Ferronickel Holdings, Inc. — the Philippines’ third largest nickel producer — has acquired a mine in Palawan under a $50-million deal, allowing it to produce output all year round, a company official said on Friday.
The transaction involves the sale of 500,000 common shares and 6.25 million preferred shares of SPNVI with a combined value of about $50 million.
The two groups earlier signed a memorandum of agreement last year.
“We are very pleased to announce this new acquisition as it forms part of our growth strategy to minimize production downtime throughout the year,” Mr. Bravo told a briefing in Makati City late Friday.
Global Ferronickel currently operates two open-pit deposit sites within its lateritic nickel mine in Cagdianao, Claver in Surigao del Norte.
But those Surigao mines operate between April and October. The newly acquired Palawan mine, the company said, is expected to produce output between the months of November and July.
“We are pushing through with the acquisition and will address the production constraint of Surigao mine,” Mr. Bravo said. “Basically, we will be operating on full year with the addition of the Palawan project.”
The project, Mr. Bravo said, is expected to account for 50% of annual production and for more than 50% of the company’s revenues.
Unlike the Surigao mine which produces medium-to-high grade ore, the newly acquired mine will produce only high-grade minerals.
“We intend to start operating the mine in the first half of next year,” Mr. Bravo said.
The purchase price of $50-million will be paid on a deferred payment basis, he said.
The company has enough cash to pay the initial installment. Asked on how it will fund the next tranches, Mr. Bravo said: “Either we can pay it through the planned follow-on offering or we can do another fund-raising.”
But given a weakening commodities market, Mr. Bravo said “we still have to see” if the share sale can be done this year without discounting chances of adjusting the offer size.
Last May, Mr. Bravo had said Global Ferronickel pushed back anew the timetable for its planned follow-on offering to the second half of the year as the miner has yet to secure the green light from regulators.
The miner cut the size of a planned follow-on share sale to a range of $300 million to $400 million from an initial target of $600 million, but kept the price guidance at a maximum of P4.38 per share, Reuters reported in March.
Global Ferronickel’s shipments mainly go to China and Australia but the company has also plans to export to Japan once the Palawan mine starts operations, said Mr. Bravo.
Global Ferronickel is projecting export volumes to hit another record this year, citing early orders and good weather conditions.
Last year, Platinum Group Metals Corp., a subsidiary of Global Ferronickel, shipped 6.3 million wet metric tons of nickel ore equivalent to 117 vessels to China and Australia.
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