Global Ferronickel Holdings Corp., the country’s third largest nickel miner, expects volume production to increase by 11 percent this year amid ongoing expansion plans to be financed by a planned share sale either in March or April this year.
Dante Bravo, Global Ferronickel executive vice president and corporate secretary, said in a briefing on Friday that the nickel mining firm forecasts ore production to rise to 7 million metric tons (MT) this year from 6.3 million MT in 2014.
“We target 6- to 7-million MT production. That is only in the Surigao mine. This will be due to the expansion efforts this year,” Bravo said.
The increase in target output will come mostly from improvements in the Surigao del Norte mine operations and still excludes the expected production from the acquisition of mines in Palawan and Zambales within the year.
Bravo said the Palawan mine is projected to produce 2- to 3-million MT in the next two to three years, which should boost the company’s overall output to about 10 million MT by that time.
Global Ferronickel exports its ores mostly to China (90 percent) and to Australia (10 percent).
The company is planning a $170-million (P7.5 billion) follow-on offering in March or April this year to raise funds for its expansion plans.
The share offer will involve 6.1 billion primary and secondary shares priced at “about P4 each.”
UBS will be the international bookrunner and lead manager, while Maybank, Religare and SB Capital & Investment Corp. will also be involved in the offer.
The company will have a public float of 30- to 40-percent after the share sale from the current 20 percent.
The follow-on offer is still subject to regulatory approvals by the Securities and Exchange Commission and the Philippine Stock Exchange.
According to Bravo and the company’s preliminary prospectus, the $170 million proceeds of the planned share offer will go to the acquisition of the INC Palawan and FRI Zambales mines ($80 million), development and capital expenditure (capex) of CAGA Surigao del Norte nickel mine site ($15 million), INC Palawan mine capex ($30 million), FRI Zambales mine capex ($20 million), research and development ($5 million), as well as working capital ($20 million).
With the expansion efforts in line, Bravo said the company’s 2015 net income is seen to grow by “single to double digits” this year from a year ago. He noted that net income is expected to reach $130 million for full year 2014, taking into account the $100 million profits recorded in the nine months last year.
Global Ferronickel has a total of 4,376 hectares of mine reserves in its CASA Surigao site, of which only 217 hectares have been exploited to date.
Besides Global Ferronickel, other market debuts expected in 2015 include the IPOs of Company of Friends Inc. (P7.7 billion), Gweilo Corp. (P75 million), two small cap clients of First Metro Investment Corp., as well as the backdoor listings of National Book Store Inc. via Vulcan Industrial Mining Corp., and JDVC Resources Corp. through Island Information and Technology Inc.
The PSE sees nine to 10 companies listing on the exchange this year.