QCG Resources will announce today plans to list on the Australian market to raise up to $60 million to complete the acquisition of the Avebury nickel mine.
Funds from the initial public offering are also needed to get the mine, in northwest Tasmania, back into production.
QCG purchased the mine last month from China-backed MMG in a $40m deal that saw a $1.75m deposit paid within 15 days of signing the agreement.
The agreement also included a $33.25m closing payment and $2.5m payable on production of the first 10,000 tonnes of nickel in concentrate. There will also be $2.5m payable on production of the second 10,000 tonnes.
Privately owned resources company QCG Resources, headed by Goldfields identities Chris and Doug Daws, will change its name to Avebury Nickel Mines as part of the IPO process. “We are excited to be starting the process of listing Avebury Nickel Mines and the board is optimistic about raising the required funds via an IPO,” QCG’s managing director, Chris Daws, said.
QCG said it has held advanced discussions with cornerstone investors, and talks with financial institutions were progressing, with several parties expressing interest in participating in the IPO process.
The Avebury Nickel mine, which was opened in July 2008, closed in February 2009 after a combination of the effects of the global financial crisis and falling nickel prices meant that the operation had become uneconomic. The mine went into care and maintenance.
QCG said replanning has started to determine the optimum method to bring the mine and infrastructure back into operation at a time of sustained, rising nickel prices. “Nickel prices have experienced strong growth in recent months and are expected to continue rising in at least the short to medium term,”
Mr Daws said: “Avebury is a great acquisition. For a mine that has been on care-and-maintenance for five years, it is in excellent condition and we do not anticipate any problems getting it back into production.”
The mine has previously produced Australia’s highest-grade nickel concentrate and is capable of more than 7000 tonnes a year.