September 13, 2018 / 6:39 AM / 9 days ago

U.S. private equity firm Black Mountain to buy Australia nickel project

MELBOURNE (Reuters) - U.S.-based private equity firm Black Mountain is set to buy a nickel project in Australia, pushing into a market expected to see a boom from electric vehicle demand.

A unit of the company, Black Mountain Metals LLP, will buy the Lanfranchi nickel project in the state of Western Australia for $15.1 million from Panoramic Resources (PAN.AX), Panoramic said on Thursday.

Although the deal is not large, it underscores the growing interest in Australia’s nickel sector, where the metal is mostly found in sulphide deposits that are cheaper to turn into battery-ready material than laterite deposits which account for most of the world’s resources of the commodity.

Battery makers have been boosting nickel in their products to cut down on expensive cobalt and as it helps keep a charge over longer distances.

The deal comes after Black Mountain’s offer last month for miner Poseidon Nickel (POS.AX) was rebuffed, although Poseidon said the two parties were still in talks.

In the meantime, Poseidon launched a A$74.6 million ($53.6 million) capital raising to restart its Black and Silver Swan mines in Western Australia. The offering closed on Wednesday.

Trading in Poseidon Nickel shares was halted on Thursday. The firm’s major shareholder, Squadron Resources, is led by Australian iron ore magnate Andrew Forrest.

If Black Mountain Metals’ bid for Poseidon is eventually successful, the Texas-based firm would secure access to a string of nickel mines as well as exploration rights and processing infrastructure. Poseidon’s assets include six mines and two concentrators.

Black Mountain also has a ready buyer in the form of BHP Billiton (BHP.AX) (BLT.L).

Its new Lanfranchi mine, which was put under so-called care and maintenance in 2015, is contracted until February to sell ore to BHP’s Nickel West operations, which are being retooled to supply nickel sulphate to the global battery market.

Black Mountain, founded in 2007 to invest in the commodity and energy sector, did not answer calls outside U.S. trading hours. It registered an Australian entity in July.

Panoramic said the sale would shore up its balance sheet as it restarts its own flagship Savannah nickel copper cobalt project which is due to ship concentrate early in March 2019.

The deal is awaiting regulatory approval and is expected to complete in the final quarter of the year.

Reporting by Melanie Burton; Editing by Joseph Radford

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