Kagara moves fast on Forrestania nickel

COPPER and zinc miner Kagara will add nickel to its base metals production portfolio with its Lounge Lizard project set to produce first nickel within the next couple of months.

The lightening pace development of the Forrestania located project, which Kagara bought in 2006 for $25 million, was spurred by a deal with neighbour and now joint venture partner, nickel miner Western Areas.

The multi-million dollar deal between the companies consists of Kagara paying an initial $20 million to Western Areas, which will manage the operation and market the ore from Lounge Lizard.

While the issue of accessing Lounge Lizard had been resolved, the matter of payment had arisen with Kagara holding substantial debt and only $2.7 million in cash at the end of the March quarter.

As a result, Kagara tapped the market for fresh equity for up to $200 million, the largest capital raising announced by a Western Australian listed company for the June quarter.

As a result, chairman Kim Robinson rearranged shareholdings in Kagara and another company he chairs, Carbon Energy, in order to participate in the retail entitlement offer.

Mr Robinson sold all of his ordinary shares in Carbon Energy for just over $1.8 million, but retains 2 million unlisted options that are exercisable at 15 cents each.

He told WA Business News he will convert the options closer to the expiry date later this year and intended to buy more shares.

Meanwhile, Mr Robinson pocketed nearly $4.7 million from the sale of just over 6.8 million Kagara shares for an average price of 68 cents a share.

In a notice to the stock market, Kagara said the sale was made so that Mr Robinson could participate in the retail entitlement offer and intended to apply for between 12 million and 17 million new shares.

Mr Robinson said he applied for nearly 17 million shares in the one-for-one retail offer that raised just over $40 million.

Shares in the offer were priced at 60 cents apiece. All up, Kagara raised just over $150 million, which included $91 million raised from the institutional entitlement offer and a $23 million private placement.

At the same time, another company that Mr Robinson chairs, Apex Minerals, also wrapped up its $14 million rights issue.

Mr Robinson subscribed to $50,000 worth of new shares.