QCG Resources to raise $60m to purchase Avebury nickel mine in Tasmania

11 May 2014 (Last Updated May 11th, 2014 18:30)

QCG Resources is set to raise a $60m initial public offering (IPO) to complete the purchase of the Avebury nickel mine in Tasmania.

QCG Resources is set to raise a $60m initial public offering (IPO) to complete the purchase of the Avebury nickel mine in Tasmania.

In April, QCG reached an agreement with China-based MMG to purchase Avebury nickel mine for $40m, following which QCG paid a $1.75m deposit within 15 days of signing the deal.

QCG aims to generate between $50m to 60m from the IPO and use $33.25m of it to fund the purchase. The company will pay a further $2.5m to MMG on production of the first 10,000t of nickel, and another $2.5m on production of the second 10,000t.

The rest of the funds will be used by QCG to start production at Avebury under the new brand name Avebury Nickel Mines (ANML).

"We are excited to be starting the process of listing Avebury nickel mines and the board is optimistic about raising the required funds."

According to QCG, it is already searching for the best way to bring the mine and infrastructure back into operation, as nickel price is gaining momentum.

The Avebury nickel mine first opened in July 2008 and was closed in February 2009, due to the global financial crisis and falling nickel prices. Following closure, the mine went into care and maintenance.

QCG managing director Chris Daws was quoted by The Australian as saying that, for a mine that has been on care and maintenance for five years, it is in excellent condition and they do not anticipate any problems getting it back into production.

"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," Daws said.

The Avebury nickel mine, which had earlier produced Australia's highest-grade nickel concentrate, has the capacity to produce more than 7,000t of nickel a year.