Big players to plunge $55m into Blackstone

Blackstone Minerals has attracted $55 million in fresh funding, courtesy of a seriously oversubscribed placement to help realise its dreams of establishing an integrated “green” nickel project in Vietnam.  The placement was backed by Shaw & Partners, Evolution Capital & PAC Partners, all of whom acted as joint lead managers to the placement.

Blackstone is looking to put the money towards the construction and commissioning of its phase 2 pilot plant in Vietnam.  Funds from the capital raise will also be used to complete feasibility studies, advance exploration within the Ta Khoa district and fund other regional opportunities such as Chim Van in addition to being used for general working capital purposes.

The company has received firm commitments to raise up to a total of $55m before costs through the placement of 94,827,587 fully paid ordinary shares at an issue price of $0.58 per share.

The placement was heavily oversubscribed and although the investors involved were undisclosed, Blackstone says the placement was backed by some of the world's “leading investment managers".

The $0.58 per share placement represents a 16.5 per cent discount to the last traded price of $0.695 and is split into two tranches, with 44 per cent of the new shares covered in the first tranche. Blackstone plans to follow the placement with a shareholder purchase plan worth up to $5 million.

The company says it will spend $30 million of the raise on its pilot plant phase 2, $10 million on feasibility studies and $5 million each on exploration and “strategic investments”.

The $212 million Blackstone’s stock has doubled over the past four months and Blackstone ended the September quarter with a healthy A$13.5 million cash.  

The bulk of the new cash will be put towards the construction and commissioning of the company’s pilot refinery plant in Vietnam which aims to produce nickel and cobalt in the chemical form required by lithium-ion battery manufacturers. A prefeasibility study on the project completed earlier this year pointed towards an upfront capital requirement of US$491 million for the full scale operation.

Blackstone Managing Director, Scott Williamson said: “The Company is delighted to have attracted high quality Australian and International investment managers to its register. Blackstone’s vertically integrated nickel sulphide project in Vietnam is a rare growth opportunity that received overwhelming interest during the book building process. In the coming months the Company will deliver updated and maiden resources for its key development targets at Ta Khoa. These targets are the basis of the soon to be completed Pre-Feasibility Study for the Upstream Business Unit.”

The Ta Khoa nickel-copper-platinum group element project is located 160 kilometres west of Hanoi in the Son La Province of Vietnam and already houses a modern, internationally designed, 450,000 tonne per annum mining plant that successfully processed nickel from 2013 to 2016.

Whilst Blackstone is looking to restart mining at the project, it is also looking to build a downstream processing plant or “refinery” that is capable of processing ore from the proposed mine and also from third party nickel miners.

The company recently locked in Tier 1 engineering, mineral processing and metallurgical consultants Wood and ALS to perform critical roles in the delivery of a definitive feasibility study at its Ta Khoa nickel Refinery in Vietnam. The consultants will aim to provide project management, engineering, cost estimation, execution planning services and hydrometallurgical testing for the refinery.

Based on the recent pre-feasibility study undertaken earlier in the year, the Ta Khao nickel refinery is expected to have a 10-year minimum project life and will produce US$14 billion in revenue over the 10-year period. Free cash flows per year are estimated to be US$365 million.

The refinery will produce precursor products needed to make lithium batteries and Blackstone has partnered with the largest cathode manufacturer in the world, Echo Probe, who will buy the downstream refined nickel product.

Blackstone has an extensive existing mineral inventory within its Ban Phuc disseminated nickel sulphide deposit nearby and it also holds the exploration rights at the Ban Chang, King Snake, Ta Cuong and Ban Khoa nickel prospects. Through the amalgamation of these projects in conjunction with receiving additional third-party concentrates, Blackstone looks to be in a good position to feed its Ta Khao refinery for some years to come.

Williamson added “The successful completion of the Capital Raising provides shareholders with the highest leverage and exposure to future value accretive events. The Company is well capitalised to independently de-risk the Ta Khoa Project and thereby organically elevate its status as a supplier of choice into lithium-ion battery and electric vehicle supply chains. Blackstone is cognisant of its first mover advantage and the current injection of capital catalyses the Company’s development pathway which in turn will ensure strategic competitiveness. Blackstone is on an accelerated pathway towards completing feasibility studies, progressing pilot plant testing and advancing partnership negotiations.”

Blackstone says it has the support of the Vietnam government as the country hopes to become a regional electric vehicle battery hub. The company’s novel, vertically integrated business model, from mining at Ta Khoa to the manufacturing of precursor lithium battery products in a downstream facility, may well be a company-making opportunity for Blackstone just as the nickel market starts to hit its straps courtesy of the electric vehicle revolution.

Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au