Mirabela Nickel Ltd. (MRBAF)

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Just another failed bought deal from Dundee.

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Nickel to outperform in global recovery
Friday, July 04, 2014 by Proactive Investors


Nickel prices have risen to their highest level in six weeks on strong U.S. jobs data that signalled that an economic recovery would spur demand in industrial metals.

U.S. employers had added 288,000 jobs in June, taking the unemployment rate to 6.1%, the lowest level since September 2008.

Nickel for delivery in three months rose 1.2% to US$19,875 a tonne after reaching a high of US$19,990. It had reached a high of US$21,625 in May.

Prices have risen more than 40% since Indonesia clamped down on exports of unprocessed ores in a bid to push domestic processing.

While Macquarie Group (ASX:MQG) has estimated that the ban would remove about 450,000 tonnes of Indonesian nickel from the market, no shortages have emerged yet due to high levels of stock.

However, some analysts have estimated that refined inventories in China, the largest importer of nickel, could be depleted by the end of this year.

Adding to this likely supply crunch is the growth in nickel use of about 4% per year.

ASX Nickel Plays

As the nickel supply and demand story continues to improve, companies with a nickel focus or exposure to nickel projects would no doubt be on investor radars.

Here are some companies on the Australian Securities Exchange that may be worth a look.

Poseidon Nickel (ASX: POS) is taking steps to enable its Mt Windarra Nickel Mine in Western Australia to begin production later this year by restarting mine refurbishment activities and employing new personnel.

The company is confident that negotiations with one or more third parties on ore processing and offtake agreements would be successful.

It had in May raised $3.7 million for pre-production activities through the placement of approximately 46,708,000 shares priced at $0.08 each.

Poseidon had in 2013 completed a Definitive Feasibility Study into commencing production at Mt Windarra and processing the ore through a concentrator to be built at the site.

Approximately 61%, or 440,000tpa, of the annual nickel ore production for the project is planned to be mined from the existing underground mine at Mt Windarra.

The balance of the ore feed will come from the Cerberus underground mine that was discovered by Poseidon in 2008.

Cerberus has a total Indicated and Inferred resource of 4.55Mt at 1.51% for 68,600 tonnes of nickel including a Probable reserve of 1.22Mt at 1.3% for 15,880 tonnes of nickel. The mining cost had been estimated at $76 per tonne in the DFS.

Mining Projects Group (ASX: MPJ) has released preliminary results from the first stage Moving Loop Electro Magnetic Survey at its Fraser Range East and Dingo Range projects in Western Australia.

This recorded a broad anomaly in the mid-time response of the three westernmost lines over a strike-length of 800 metres, and is open in both directions.

Consultant geologists Newexco noted that more geological information could improve and constrain the interpretation, and assay results and interpretation of the MMI (Mobile Metal Ion) soil samples over the area are in progress.

The results also warrant follow up drilling at the project.

The company has received backing from renowned nickel prospectors Bill Amann and Adrian Black who have virtually written the "playbook" on making large nickel discoveries in Western Australia including being instrumental in Sirius' Nova nickel deposit in the Fraser Range.

Amann is overseeing the exploration work in conjunction with the company’s new director Neil Hutchison.

White Cliff Minerals (ASX: WCN) has identified a number of anomalies including a new high tenor 1.5 kilometre by 500 metre nickel in soil anomaly at its Merolia Nickel and Copper project in Western Australia’s Laverton region.

The company is now carrying out additional geochemical soil sampling program over the large anomaly as well as further infill geochemical sampling around other defined anomalies. Results are expected to be available in the coming weeks.

Merolia covers 771 square kilometres in the Merolia Greenstone belt, a region prospective for magmatic nickel and copper sulphides and orogenic gold deposits.

It has also intersected nickel mineralisation within the regolith profile at its Lake Johnston Project
Copper sulphides and quartz veining were also intersected at Conductor 2 with the results supporting further exploration for nickel and copper sulphides in the area.

Lake Johnston is 100% owned and covers 650 square kilometres in the Lake Johnston Greenstone Belt.

The belt includes nickel resources of 140,000 tonnes at the Emily Ann and Maggie Hayes nickel sulphide mines operated by Norlisk.

Amongst the companies with exposure to nickel projects is Legend Mining (ASX: LEG), which has been granted the 356 square kilometre E28/2342 exploration licence within the highly prospective Fraser Range Belt in Western Australia.

E28/2342 is considered to be prospective for Nova-style nickel-copper and Tropicana-style structurally controlled gold mineralisation.

Results of an aeromagnetic survey are now being analysed along with a review of successful exploration methodologies in the Fraser Range to enable considered exploration strategies for this project.

Coburn mineral sands developer Gunson Resources (ASX: GUN) holds the Fowlers Bay Nickel Project in South Australia where it had completed a gravity geophysical survey during the half year ended 31 December 2013.

Kibaran Resources (ASX: KNL), which is primarily focused on its Mahenge Graphite Project in Tanzania, also holds the underexplored Kagera Nickel Project that is located along strike of Xstrata's Kabanga nickel deposit.

Work is underway to better understand the true nickel-sulphide potential and financial value of the project, which covers an area of 864 square kilometres.

Pioneer Resources (ASX: PIO) had last year defined an initial Resource of 222,710 tonnes grading 2.92% nickel for the closed Blair Nickel Mine within its wholly-owned Golden Ridge Project in Western Australia’s Eastern Goldfields.

It also holds a 75% interest in the Fairwater Project in the Albany Fraser that is 105 kilometres southwest of the Nova-Bollinger nickel discoveries.

Axiom Mining (ASX:AVQ) is waiting on a Solomon Islands High Court decision on its case against multi-billion dollar refining giant Sumitomo Metal Mining Company over the Isabel Nickel Project.

A judgement is expected to be delivered before the end of September 2014.

The Isabel Nickel Project is 80% owned by Axiom via local subsidiary Axiom KB Limited that includes the Kolosori and Bungusule tenements, which contain the largest nickel laterite deposits in the Pacific.

Previous operator Kaiser Engineering had concluded that the historic and non-JORC resources of159 million tonnes at 1.045% nickel and 0.07% cobalt were sufficient to operate a heap leach mine for 15 years at a process rate of 2,800 tonnes per day.

Axiom has previously indicated that they intend to evaluate the entire tenement at Kolosori to a depth of 20 to 30 metres and define a JORC resource.
http://www.proactiveinvestors.com.au/companies/news/56069/nickel-to-outperform-in-global-recovery-56069.html

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NICKEL ETF's JJN,,,,,,NINI

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1 year chart Nickel


Nickel Price 8.98 USD/lb (19,795 USD/t | 14,561 EUR/t) 03 Jul 2014 - 52 Week Low 5.97 USD/lb 52 Week High 9.62 USD/lb



LME Nickel Prices 5 Years

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Nickel Rally

Nickel has advanced about 40 percent this year in London after Indonesia, the biggest producer of the metal, banned raw-ore exports in January to encourage local refining. BHP Chief Executive Officer Andrew Mackenzie has said he wants to run a smaller collection of assets with long lifespans.

X2 Resources, led by former Xstrata Plc CEO Mick Davis, had its bid for BHP’s Australian nickel business rejected as too low, the Globe & Mail reported last month. Glencore said in March it was assessing a bid for the assets.

BHP booked impairment charges on the Nickel West assets of almost $1.6 billion in the past two financial years after prices for the metal fell. The operations produced 103,300 metric tons in financial 2013. The unit includes the Mt Keith, Cliffs and Leinster mines and concentrators, the Kalgoorlie smelter, Kambalda concentrator and the Kwinana refinery.

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Trafigura Among Sixto Enter BHP Nickel Sale, Review Says
By Ben Sharples Jul 6, 2014 1:20 AM ET

Trafigura Beheer BV and Sherritt International Corp. (S) are among six companies to enter the sale process for BHP Billiton Ltd.’s Australian nickel unit, according to a report from the Australian Financial Review.

Glencore Plc, X2 Resources, Jinchuan Group Co. and MMG Ltd., a unit of China Minmetals Corp., are also among bidders that have started due diligence on BHP’s Nickel West business, the newspaper reported today, without saying where it got the information. Emily Perry, a Melbourne-based spokeswoman for BHP, declined to comment in an e-mailed response.

BHP said in May it’s considering selling all or part of its Australian nickel unit as prices surge amid an Indonesian export ban on the steel hardening agent. The due diligence process may take months and BHP is keen to finalize a deal by the end of the year, the newspaper said. The business may be worth more than A$800 million ($749 million), according to the newspaper.

Michael Oke, a spokesman for London-based X2 Resources, Francis de Rosa, a Sydney-based spokesman for Glencore, and Kathleen Kawecki, a Melbourne-based spokeswoman for MMG, didn’t immediately respond to e-mails sent outside of normal business hours seeking comment on the sale process. Three calls to Gao Tianpeng, the general manager of Jinchuan’s asset operation department, went unanswered.

Amsterdam-based Trafigura and Toronto-based Sherritt didn’t immediately respond to e-mails seeking comment.

http://www.bloomberg.com/news/2014-07-06/trafigura-among-six-groups-to-enter-bhp-nickel-sale-review-says.html

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Mirabela Nickel starts its second life

Amanda Saunders
Published: June 25, 2014 - 1:00AM

Mirabela Nickel will be handed back to its directors on Wednesday and is poised to relist on the ASX after a stunning comeback that has the country's distressed debt scene frothing.

Brought to its knees in October after losing half its customer base and facing the forced closure of its nickel mine in Brazil, Mirabela was reduced to a one-cent stock that owed $US400 million. The nickel price was languishing and it appeared Mirabela was fated for financial ruin.

But a series of ''firsts'' for the distressed debt industry in Australia saw Mirabela put into administration in February with the highly unusual agenda of recapitalisation.

It is the first local restructure of a listed company through loan-to-own without shareholder approval. The loan-to-own strategy, made famous by hedge funds, sees investors buy debt to use as leverage to achieve a change of control.

Voluntary administration as well as the courts were used to bypass Mirabela shareholders.

Mirabela's turnaround was closed on Tuesday, a week after the Supreme Court of NSW allowed the transfer of the vast majority (98.2 per cent) of the miner's shares to its US noteholders. Administrator Martin Madden, of KordaMentha, argued that the value of the company lay with its noteholders, not its shareholders.

Gilbert + Tobin partner Dominic Emmett, who advised Mirabela's new US owners, tips the deal will ''change the dynamic of the restructuring sector. ASX-listed companies should not necessarily fear using administration as part of a recapitalisation,'' he says.

''There is a stigma around administration but this shows it can be used as a mechanism to deliver control to noteholders. It has shown US funds another way to do loan-to-own for a listed company here.''

The Mirabela deal was struck under a deed of company arrangement, an option only available to companies under voluntary administration.

In the case of Mirabela, an ad-hoc group of US noteholders banded together to waive the $US395 million they were collectively owed, plus interest, in exchange for 98.2 per cent of the company. Former major shareholder Resource Capital Funds was shunted to the sidelines, with a share of the outstanding 1.8 per cent.

Well-known loan-to-own moves on companies such as Nine and Centro have required 75 per cent of creditors and shareholders to agree to a restructure. Those approvals cost debt holders millions.

Mirabela needed 50 per cent of creditors on board for the noteholders to pull off the debt-to-equity swap as well as court approval. The US funds faced some early opposition from large individual shareholders but they did not object at the court hearing.

Mirabela's nickel mine remained viable through the restructure. No employees or suppliers lost out.

A recent surge in the nickel price also helped the case but the rebound alone would not have been enough to create value for equity, Mr Emmett said.

The US noteholders closed the deal on Tuesday after injecting $US115 million via a 144A\Reg S raising in the US, backed by an Australian prospectus.

Mirabela will begin its second life on the ASX with $65 million cash in the bank. The ASX and ASIC smoothed the path for the deal by granting relief where needed.

The new owners are Guggenheim, Pioneer Investment Management, ID Sparinvest, Lord Abbett & Co, Capital Research and Management and Deans Knight Capital Management.

Mr Emmett says the deal has set a new precedent for the restructuring sector and is likely to be a more cost-effective alternative to a scheme of arrangement.

It is rare for a scheme of arrangement to fail but a recent example is Nexus.

Nexus' administrators could be looking to the Mirabela success story for inspiration.

This story was found at: http://www.watoday.com.au/business/mirabela-nickel-starts-its-second-life-20140624-3ar7c.html

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Mirabela Nickel Ltd

Gilbert + Tobin
Dominic Emmett, David Clee , Nicholas Edwards, Colleen Platford, Sarah Turner and Sabrina Ng
Australia
July 1 2014

Key points

First occasion where a deed administrator has sought leave under section 444GA of the Corporations Act 2001 (Cth) (theAct) in respect of a publicly listed company. The Court granted leave for 98.2% of each shareholders’ holding in Mirabela Nickel Limited (Mirabela) to be transferred to certain unsecured creditors as part of a broader recapitalisation, under a deed of company arrangement (DOCA), without shareholder approval.

A robust valuation indicating where the value of the Company breaks is critical in convincing a Court that no unfair prejudice will result to shareholders from the transfer.
Section 444GA applications will provide an alternate, and likely quicker and cheaper, avenue to schemes of arrangement for creditors to pursue debt for equity transactions.
First occasion a deed administrator has raised capital backed by a prospectus.
Mirabela’s securities requoted on the ASX and all non-noteholder unsecured creditors (including employees) kept whole.
Gilbert + Tobin acted for the deed administrators.

Background

Mirabela is an Australian listed company with a substantial mining asset and business in Brazil. During 2013, the Mirabela Group experienced a number of financial setbacks, including operational issues, declining nickel prices and, most significantly, the loss of a major customer representing approximately 50% of Mirabela’s nickel concentrate production. On 15 October 2013 Mirabela failed to make an interest payment due on the outstanding US$395 million unsecured notes (Unsecured Notes).

During the course of the following months, standstill arrangements were put in place with each of Mirabela’s major creditors (both in Australia and Brazil) and negotiations were undertaken with a group of holders representing approximately 65% of the Unsecured Notes (Ad-hoc Group). In February 2014 the Ad-hoc Group entered into a plan support agreement relating to a proposed restructure of the Mirabela Group, including a debt for equity swap at the head company level and also an issuance of convertible notes to raise capital. On 25 February 2014 the board of Mirabela appointed voluntary administrators.

On 13 May 2014 at the second meeting of Mirabela’s creditors a resolution was passed by a majority of creditors for Mirabela to enter into a DOCA to give effect to certain elements of the proposed restructure. One of the conditions for effectuation of the DOCA was that leave be granted pursuant to section 444GA of the Act to transfer approximately 98.2% of the shares in Mirabela to the holders of Unsecured Notes in exchange for the extinguishment and compromise of all the outstanding US$395 million principal plus interest owing to those holders.

On 16 June 2014 in the matter of Mirabela Nickel Limited (subject to deed of company arrangement) (ACN 1081 161 593) [2014] NSWSC 836, the Supreme Court of New South Wales granted leave under section 444GA of the Act for the deed administrators of Mirabela Nickel Limited (subject to deed of company arrangement) to transfer approximately 98.2% of the existing ordinary shares to certain of its unsecured creditors. This decision facilitated a capital reconstruction, preventing Mirabela from going into liquidation.

The Power to Transfer

Section 444GA of the Act provides that a deed administrator may transfer shares in a company with consent of the owner of the shares or with leave of the Court. The Court can grant leave only if “it is satisfied that the transfer would not unfairly prejudice the interests of members of the company.” This provision ensures that existing shareholders are afforded a level of protection and consideration, through the Court process, while allowing creditors, or others, to acquire the equity interests when it is fair to do so.

In Weaver v Noble Resources Ltd (2010) 41 WAR 301, the leading case on this section, Martin CJ concluded that the notion of unfairness only arises if prejudice is established. He further observed that, in situations where the company has no residual value to the members, “it is difficult to see how members could in those circumstances suffer any prejudice, let alone prejudice that could be described as unfair.”

In considering ‘unfair prejudice’, a comparison between the position of the affected party under the proposed transfer and their position under a winding up is paramount. In Lewis, in the matter of Diverse Barrel Solutions Pty Ltd (Subject to a Deed of Company Arrangement) [2014] FCA 53, White J highlighted that, in making this assessment, it was key to consider the value of the shares as they currently exist, any potential value they may have in the future, and what it would take to attain that potential value. Ultimately, is a question of where the value in the company resides.

Engagement with shareholders

While there is no formal requirement in the Act for providing notice of the application to shareholders, the deed administrators provided the then existing shareholders with an explanatory statement (including an independent expert report focusing on valuation) so that all shareholders had notice of the application, the substance of the deed administrator’s proposal, and the steps they could take to appear at the hearing. This explanatory statement outlined the transaction, valuations of the company in an alternative scenario (liquidation) and the consequences for shareholders of the application being granted. Mirabela received some correspondence from shareholders following release of the explanatory statement. However no objectors appeared at the Court hearing.

The Mirabela Decision

As Mirabela had over 3,500 shareholders, it was obviously not feasible to obtain consent from such a large shareholder base and so the deed administrators applied to the court for leave under section 444GA of the Act; the first time such an application has been made in respect of a listed company. As noted the key elements to obtaining leave is the need to show that no unfair prejudice would result to shareholders from the transfer. The Court was ultimately satisfied by the evidence presented to it, and in particular that the value in Mirabela resided with the creditors, not the shareholders (i.e. the shares of Mirabela had no value). As noted in Weaver if the shares have no value then there can be no prejudice to shareholders. The successful application for leave to transfer shares was an important condition in the recapitalisation of Mirabela. The recapitalisation also involved the extinguishment of Mirabela’s secured interim financing, the issuance of convertible notes to raise required capital and the maintenance of all other unsecured creditors (including employees).

Gilbert + Tobin acted for the Ad-hoc Group of noteholders through the recapitalisation process.

Engagement with Regulators

As part of the proposed restructure the deed administrators engaged with both the Australian Securities Exchange (ASX) and the Australian Securities and Investments Commission (ASIC) to obtain certain relief in lieu of seeking shareholder approval. Give the structure of the transaction the following was required:

exemption from the requirements of section 606 of the Act in connection with the transfer of shares in Mirabela to the holders of Unsecured Notes (i.e. the debt for equity swap), the issuance of fee shares to certain creditors and any conversion of secured convertible notes into ordinary shares; and
a waiver of ASX Listing Rule 7.1 to facilitate the issuance of secured convertible notes (and the potential conversion to ordinary shares).
After significant engagement, both ASIC and ASX granted the required regulatory relief, conditional upon explanatory materials being made available to shareholders and the Court granting leave in relation to the share transfers.

Impact of the Recapitalisation

The Court decision paves the way for creditors to pursue debt for equity transactions without shareholder approval nor the need for the 75% in value threshold to be met for each class of creditors that a creditors scheme involves.

More generally the Mirabela recapitalisation paves the way for ASX companies not to be unnecessarily fearful of using administration as a step in a recapitalisation process. The Mirabela business operated normally through the administration process, trade creditors were kept whole and employees kept their jobs.

Mirabela demonstrated that the Courts, ASX and ASIC will work with listed companies to provide the appropriate relief to effect debt for equity swaps, to maintain a listing and, indeed, allow for capital raising to be effected after a company has gone into administration.
http://www.lexology.com/library/detail.aspx?g=ffc8473e-9b99-4fc4-960e-5412f4253a7f

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MRBAF

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Mirabela Nickel Limited - Corporate and Trading Update

PERTH, Australia, Jun 24, 2014 (Canada NewsWire via COMTEX) -- (Subject to Deed of Company Arrangement)
Mirabela Nickel Limited (Subject to Deed of Company Arrangement) (Mirabela or the Company) (ASX: MBN) confirms its prior advice that the issuance and transfer of securities contemplated by the prospectus lodged with the Australian Securities & Investments Commission (ASIC) on 26 May 2014 (as supplemented by the supplementary prospectus of the Company lodged with ASIC on 11 June 2014) (Prospectus) and the deed of company arrangement entered into on 13 May 2014 between the Deed Administrators of the Company, the Company and Mirabela Investments Pty Limited (Subject to Deed of Company Arrangement) (DOCA) (respectively) are expected to occur on 24 June 2014.