Here’s why the Nickel Mines (ASX:NIC) share price is soaring 15% so far this week

Here’s what has sent the nickel producer’s stock soaring this week.

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This week so far has been a big one for Nickel Mines Ltd (ASX: NIC) and its share price.

The company’s stock has been gaining since it announced it had signed a memorandum of understanding with Shanghai Decent Investment Group on Monday. The agreement will see the pair creating a framework for their future collaborations.

At the time of writing, the Nickel Mines share price is $1.37, 4.18% higher than its previous close. It has also soared 15.2% so far this week.

For context, the S&P/ASX 200 Index (ASX: XJO) is currently up 0.1% today and 0.5% in the past week.

Let’s take a closer look at this week’s news from the nickel producer.

Nickel Mines share price soars on partnership news

The Nickel Mines share price is roaring upwards this week after it agreed to expand its partnership with Shanghai Decent over the coming years.

The understanding is multifaceted and will see Nickel Mines acquiring a 70% interest in Shanghai Decent’s Oracle Nickel Project.

The project comprises 4 next-generation rotary kiln electric furnace lines, currently under construction in the Indonesia Morowali Industrial Park.

The Oracle Nickel Project company will separately undertake the construction of a 380-megawatt captive power plant. The plant will support the project’s rotary kiln electric furnace lines and the Indonesia Morowali Industrial Park’s overall power requirements.

Nickel Mines will pay US$371 million for the acquisition. It will also provide US$154 million of construction funding through 3 shareholder loans.

The acquisition is subject to shareholder approval.

The companies will also establish a ‘future energy’ collaboration framework. The framework will optimise Nickel Mines’ operations’ transition to renewable energy.

The collaboration could see the companies both contributing to fund a solar power plant at the Indonesia Morowali Industrial Park, or a combined-cycle gas turbine power plant.

Finally, under the agreement, the companies will look into the feasibility of jointly developing and funding future high-pressure acid leach projects.

The projects could use Nickel Mines’ current and prospective resources across Indonesia to produce battery grade nickel for the electric vehicle market, further diversifying the company’s operations.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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