Recently British AIM listed Corcel PLC have acquired the entire debt of RMI, the significance of this is relevant, Corcel have a large stake in the Mambare Nickel project in PNG, the aim is to work with RMI management to merge the Wo Wo Gap Nickel project in PNG into Corcel, this would equate to significant economies of scale, Corcel have applied for a mining right for Mambare, the aim being to bring into play early stage low cost mining in country, this will be a major shareholder value event when the licence is granted.
This news has come from a webcast carried out by Corcel in the last week, the key driver is Andy Zhang who has financed RMI and has taken Corcel shares as part consideration for the debt acquired, he now holds material stakes in both companies.
The A$4.7m of RMI debt bought by Corcel will be a lever for negotiations between the two companies, one thing shareholders in both companies have in common is exceptionally poor share price performance, in the case of Corcel (formally known as Regency Mines) most investors are down 90% over the last 5 years.
It is obvious that if the two projects can be amalgamated and some form of early stage mining can occur, or the two projects can be packaged together and sold to a major then significant value will be generated. Wo Wo Gap was valued at US$160m and Mambare in a similar range, the current combined market value of the two companies is a mere circa US$5m.
It seems Mr Zhang vehicle Sinom Group will drive the project moving forward or assist in the financing and/or seek offtake partners or even introduce prospective buyers from China.
It will be interesting to see how this plays out, how RMI will retire their debt and how the deal concludes, clearly it makes sense to have one large Nickel project in country as opposed to two, there could be very significant upside ahead for both groups of investors. Exciting times ahead.
No advice intended
RMI Price at posting:
1.0¢ Sentiment: None Disclosure: Not Held
