Nickel miner Independence Group has been quick to take advantage of the surge in its share price following the metal's recent rise in value by launching a large placement while also turning to shareholders for funds.
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The shares have surged by more than 75 per cent since the Philippines signalled a crackdown on its local nickel mining sector a few weeks back which could slash production and exports. Its environmental crackdown has triggered a rally in the nickel price similar to the rally seen when Indonesia banned exports of nickel ore.
Independence Group suspended trading in its shares on Wednesday as it sought to raise $280 million at $3.75 a share – $250 million by placing shares with institutional investors and a further $30 million via a share purchase plan with existing shareholders.
"It was very unexpected," Duncan Hughes, an analyst with Somers and Partners, said. "It may tell you more about the equity market."
He recently valued shares in the company at $3.38, a discount to their present level, partly reflecting wariness about whether the price of nickel will remain elevated, given the continued high level of nickel stockpiled and the fact that the earlier nickel price surge on the Indonesia export ban was not sustained.
That ban in late 2014 pushed the nickel price up as much as 50 per cent, but subsequently weak economic growth in China pushed the price back to long term lows by the end of 2015.
Independence Group said it is raising the funds to give it the "greater financial flexibility to fund growth initiatives".
The raising follows the $1.8 billion purchase of Sirius Resources a year ago, which gave it control of the Nova-Bollinger nickel and copper project, where as much as $150 million needs to be spent to bring it into production. The project is 93 per cent complete, with the first concentrate due to be produced by the end of the year.
"Greater financial flexibility will also allow Independence Group to comfortably progress other growth prospects across the portfolio, including the mill expansion study and resources extension projects at Tropicana, resource extension at Jaguar and broader exploration initiatives surrounding the group's existing operational assets."
Of the funds raised, as much as $55 million is needed to complete the Sirius Resources purchase, mainly stamp duty payments, it said.
With the near-term focus on bringing the Nova mine into production, earlier this week the company disclosed further exploration success with the Tropicana gold mine, with analysts' optimism of continued further discoveries to help bolster production at the mine.
