UPDATE 1-European Nickel to issue shares to raise $6 mln

*Placing will raise share capital by 19 pct *Needs bridge finance until gets planned investment *Investment from Chinese partners finalised in 3 mths (Adds details, background)

LONDON, March 11 (Reuters) - European Nickel Plc (ENK.L) plans to issue 72.5 million shares to raise about $6 million to cover expenses before it receives financing from two Chinese partners to develop its flagship mine project in Turkey, the firm said on Wednesday.

Shares will be issued at 6 pence each, a slight discount to the closing price on Tuesday of 6.35 pence, and the placing will increase issued share capital by 19 percent, a statement said.

The placing will be carried out through an accelerated book-building process run by Canaccord.

On Feb. 19, European Nickel said it had signed a $350 million debt facility with two Chinese partners to fund its Caldag mine in Turkey, enabling the project to be funded through to production.

That announcement caused the shares to double to 11.5 pence, but since then they have lost most of the gains.

On Wednesday, the firm said it would take around three months for the deal with the Chinese partners to be finalised and it needed interim funds to continue to develop the project in the meantime.

"Whilst the recently announced financing framework agreement with our partners JXTC and TCC will, upon completion, fully fund the development of the Caldag project, the proposed placement will enable us to bridge some forthcoming expenditure prior to the anticipated receipt of the JXTC $20 million investment," Managing Director Simon Purkiss said.

One of the partners, state-owned Jiangxi Rare Earth and Rare Metals Tungsten Group Co Ltd (JXTC), will acquire a 20 percent stake in the Caldag project for $20 million and buy 50 percent of the mine's nickel production.

Nickel prices MNI3 have slumped over 80 percent to about $9,850 a tonne since reaching a record high of $51,800 in May 2007 as output cuts by miners have failed to keep pace with the drop in demand from stainless steel producers.

Construction on the project is expected to start this year with first output to begin 13 months later. The mine has a nickel production target of 20,000 tonnes a year. (Reporting by Eric Onstad; Editing by Erica Billingham)