Kolosori Sale Puts Pacific Nickel’s ASX Listing at Risk Amid Financial Restructuring
Pacific Nickel Mines Limited has agreed to sell its entire interest in the Kolosori Nickel Project to Green Rock Limited for a nominal $1, while securing a royalty agreement tied to future nickel ore shipments.
- Sale of 100% interest in Kolosori Nickel Project for A$1
- Royalty agreement entitles PNM to 1% of nickel ore FOB price if conditions met
- Release from US$22 million Glencore loan facility liability upon completion
- Transaction subject to shareholder and regulatory approvals
- Completion targeted for late January 2026
Background and Transaction Overview
Pacific Nickel Mines Limited (ASX – PNM) has announced a significant strategic move, entering into a Share Sale and Purchase Agreement (SPA) to divest its entire stake in the Kolosori Nickel Project located in the Solomon Islands. The buyer, Green Rock Limited, will acquire 100% of Pacific Nickel Mines (SI) Ltd, the holding company for the project, for a nominal consideration of A$1.00. This transaction marks a pivotal shift for PNM, as Kolosori represents its main operational asset.
The sale is contingent on several conditions, including shareholder approval at PNM's upcoming annual general meeting in November 2025, and various regulatory consents within the Solomon Islands. Completion is anticipated by late January 2026, subject to these approvals and other contractual conditions.
Financial and Legal Implications
Alongside the sale, PNM has secured a royalty agreement entitling it to 1% of the free on board (FOB) price of nickel ore shipped from Kolosori, provided that the Shanghai Metals Market nickel price exceeds US$72 per tonne and a minimum shipment volume of 170,000 tonnes per month is met. This arrangement offers PNM a potential ongoing revenue stream despite divesting the asset.
Importantly, the transaction includes a deed of release with Glencore International AG, the financier behind a US$22 million secured loan facility for Kolosori. Upon completion, PNM will be released from any liability under this facility, which currently carries approximately US$8.6 million in accrued interest. This release alleviates a significant financial burden from PNM’s balance sheet.
Strategic Rationale and Market Context
PNM’s board, after a comprehensive review and consultation with Glencore, concluded that ceasing operations and divesting Kolosori was the prudent course given operational challenges and a subdued nickel price outlook. The sale allows PNM to refocus on new mining and exploration opportunities without the encumbrance of Kolosori’s operational and financial risks.
However, the disposal triggers ASX Listing Rule 11.2, requiring shareholder approval due to the sale of the company’s main undertaking. Additionally, PNM remains suspended from quotation under ASX Listing Rules 12.1 and 12.2, reflecting ongoing concerns about the company’s operational scale and financial condition post-sale. This suspension underscores the challenges ahead for PNM in maintaining its ASX listing status.
Next Steps and Outlook
PNM will seek shareholder approval at its November 2025 AGM, with detailed explanatory materials to be provided to investors. Should approvals and conditions be met, completion is expected by late January 2026. The company has indicated no immediate changes to its board or senior management as a result of the sale.
Looking forward, PNM’s ability to capitalize on the royalty stream and successfully pivot to new ventures will be critical to its recovery and future growth. The market will be watching closely how the company navigates post-sale restructuring and regulatory compliance.
Bottom Line?
PNM’s divestment of Kolosori closes a challenging chapter but opens a new, uncertain path focused on royalties and fresh opportunities.
Questions in the middle?
- Will the royalty conditions be met consistently to generate meaningful revenue for PNM?
- How will PNM restructure its operations and financials post-Kolosori sale to regain ASX compliance?
- What new mining or exploration projects is PNM pursuing to replace its main undertaking?
