The Nickel Mines Ltd (ASX: NIC) share price is back in focus today after the company announced it is withdrawing its share purchase plan.
In early trade, shares in the mining company are up 3.69% to $1.26. However, this is still a considerable distance away from its recent $1.60 level — a price that Nickel Mines was hovering around prior to the nickel mania.
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Handing back $57 million to shareholders
To set the scene, back in February Nickel Mines revealed its intentions to raise capital to fund its stake in the Oracle Nickel Project (ONI). The plan was to raise US$225 million to put towards an initial 30% position in the project.
As part of the capital raise, a share purchase plan was launched to allow ASX shareholders to participate. Importantly, the plan outlined an issue price of A$1.37 per share. This was roughly in line with the Nickel Mines share price at the time.
Initially, around A$18 million was targeted for this portion of the funding. However, Nickel Mines has said the applications received reached A$57 million.
Since then, the nickel company has suffered a hefty blow despite nickel futures flying to record highs of more than US$100,000 per tonne. Unfortunately, one of Nickel Mines' largest shareholders held a sizeable short position during this time.
The outcome was widespread concern among shareholders over what the implications could be for the Nickel Mines share price. As a result, the market swiftly sold off the ASX mining giant over the past two days of trading.
Now, shares are below $1.30, putting any share purchase plan participants at an immediate 7% deficit from the raising price. As such, the board has made the decision to return the A$57 million to shareholders and cancel the plan.
Nickel Mines managing director Justin Werner stated:
[…] given market volatility and the retraction in the Company's share price in recent days the Board of Directors have agreed that it is in the best interests of shareholders to cancel the SPP effective immediately and return all applications in full. The proceeds of the SPP are not required for the acquisition of the 70% equity interest in the Oracle Nickel Project.
Nickel Mines on the ASX recap
The Nickel Mines share price gained ongoing traction in October last year as ASX investors began tuning in to rising commodity prices.
Between October 2021 and January 2022, shares in the nickel producer rallied a solid 83%. However, the recent tarnishing has taken the Nickel Mines share price into the negative on a year-to-date basis. Since the beginning of the year, it has retreated 13.5%.
The company is currently trading on a price-to-earnings (P/E) ratio of around 15 times.
