ORACLE NICKEL PROJECT – 30% INTEREST NICKEL INDUSTRIES

In November 2021 Nickel Industries announced the signing of a further MoU with Shanghai Decent to acquire a 70% interest in the Oracle Nickel Project (‘Oracle Nickel’), a development project currently under construction within the IMIP. This was followed by a Definitive Agreement (‘Agreement’) in December 2021.

The Oracle Nickel project will be a joint collaboration with Shanghai Decent, the Company’s largest shareholder, comprising:

  • four 54 KVA rotary kiln electric furnace (‘RKEF’) lines with an annual nameplate production capacity of 36,000 tonnes of nickel metal (in nickel pig iron); and
  • ancillary facilities required for the operation of each of the RKEF lines.

Oracle Nickel will also separately undertake the construction of a 380MW power plant that will support the Company’s RKEF lines and the IMIP’s overall grid power requirements. The Company will acquire its 70% interest in Oracle Nickel for a total consideration of US$371M (US$530M * 70%), together with the obligation to provide Oracle Nickel US$154M (US$220M * 70%) of funding by way of shareholder loans.

The following payment schedule was agreed.

Date Amount (US$M) Cumulative (US$M) % of ONI
Signing of MoU 10.0 10.0
Signing of Definitive Agreement 20.0 30.0
By 31 March 2022 23.0 53.0 10%
By 30 June 2022 106.0 159.0 30%
By 30 September 2022 46.2 205.0
By 31 December 2022 212.0 417.2 70%
46.2 463.4
By March 2023 61.6 525.0
Total 525.0

The terms of the Agreement provide for Shanghai Decent to take a lead role in the design and construction of Oracle Nickel with commissioning of the four Oracle RKEF lines to commence no later than 19 February 2023 and the power plant to commence commissioning no later than 19 July 2023 (subject to any force majeure event).

Actual construction costs for the Oracle Nickel Project together with the power plant shall not exceed US$750M with Shanghai Decent undertaking to indemnify Nickel Industries for any construction costs exceeding US$750M.

The Company’s investment in Oracle Nickel will be undertaken under a replica structure to its Hengjaya Nickel, Ranger Nickel and Angel Nickel investments, with Nickel Industries acquiring its interest in Oracle Nickel through two Singaporean incorporated holding companies that will wholly own an Indonesian incorporated PMA operating company, PT Oracle Nickel Industry (‘PT ONI’), that will wholly own Oracle Nickel’s four RKEF lines and its power plant.

In May 2022, following shareholder approval at an Extraordinary General Meeting of Shareholders, Nickel Industries completed the move to a 30% interest in Oracle Nickel following the issue of 108,122,223 Shares to Shanghai Decent’s nominee, Decent Resource Limited.