* Poseidon wants to raise capital to help pay for nickel
* Company reworking site of Australia's boom-bust nickel
* Sentiment for nickel turning as Indonesia export ban lifts
By James Regan
SYDNEY, Jan 28 Poseidon Nickel, the
reincarnation of the company behind one of the most spectacular
stock crashes in Australia, is in talks with investors to raise
capital to help finance the development of a long-dormant nickel
deposit as the outlook for the metal brightens.
People familiar with Poseidon's financing needs said the
minerals exploration firm, which has a market value of A$43
million ($37.61 million), could issue debt or convertible notes
to help foot the $197 million bill needed to get its outback
Mount Windarra deposit up and running.
Perth-based Poseidon was granted on Tuesday a trading halt
on the Australian Securities Exchange pending what it said was
an announcement in relation to a proposed capital raising or
other form of financing. It gave no further details.
Poseidon stock was last traded on Jan. 22, when it closed at
10.5 Australian cents, up 46 percent in a week.
The company, like Australian nickel miners, is set to
benefit from a blanket ban on raw nickel ore exports by
Indonesia which has raised concerns about supply.
London Metal Exchange nickel has climbed as much as
10 percent in the past three weeks and was last quoted at
$14,159 a tonne. Goldman Sachs forecasts a 13 percent rise in
nickel prices this year.
"This is a good chance for Australian nickel miners to shine
after a long time in the wilderness," said Sydney-based sector
analyst Gavin Wendt of consultants MineLife.
Nickel stocks have largely been ignored or sold off by
investors since prices of the metal dive-bombed in mid-2009 to
less than $9,000 a tonne from record highs of above $51,000 a
tonne in 2007.
Australia is the world's third biggest producer of nickel,
which is used in the manufacture of stainless steel. China is
the world's biggest buyer of the metal.
The Mount Windarra site, in Western Australia, was
originally developed by another company also called Poseidon in
That Poseidon became the biggest boom stock in the country's
history, galloping from A$1 a share in September 1969 to A$280
in February 1970. Investors made fortunes on the stock only to
lose it when the company went bust in 1976 after nickel prices
crashed. The event is known as the "Poseidon bubble."
The company's reincarnation, Poseidon Nickel, has been
painstakingly prospecting for more nickel over the past five
years at the Windarra deposit and last June announced a "large"
discovery. Managing Director David Singleton at the time said
the discovery showed the mine still held "significant upside".
Fortescue Metals Group Ltd founder and billionaire
Andrew Forrest holds 30 percent of Poseidon's stock, some of it
gained by underwriting an A$20 million rights issue in 2012.
Forrest stepped down as chairman of Poseidon in September.
A capital raising by Poseidon could help in repaying a A$9
million loan plus interest Forrest made to the company.
($1 = 1.1432 Australian dollars)
(Editing by Miral Fahmy)