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PERTH (miningweekly.com) – The share price of ASX-listed Queensland Pacific Metals (QPM) climbed more than 18% on Wednesday on news of a long-term strategic collaboration agreement with General Motors (GM).
QPM has entered into a binding equity subscription and offtake agreement with GM, under which GM would invest up to $69-million, comprising an initial $25-million investment and a final investment decision (FID) of up to $44-million.
As part of the initial investment, GM has committed to subscribe for more than 174.6-million shares in QPM at a subscription price of $0.18 a share for a total of $20.1-million, or A$31.4-million. The subscription price represents a premium of 20% to the last closing price of QPM and 22.8% to the three-month volume weighted average price of QPM.
QPM will also issue more than 46.8-million unquoted options to GM with an exercise price of A$0.20 and a term of three years as part of the initial binding commitment.
Some 138.4-million of these shares would be issued under QPM’s existing placement capacity, with the remainder subject to shareholder approval at the company’s planned extraordinary general meeting.
Additionally, and subject to its satisfaction with the definitive feasibility study at the Townsville Energy Chemicals Hub (TECH) project, and other customary conditions, GM will also participate in any equity raising undertaken by QPM as part of an FID to construct the TECH project.
The investment price will be on the same basis as offered to other investors participating in the equity raising. GM’s commitment of up to $44-million, plus the balance of the initial investment, if not called earlier, provides a material cornerstone position to support any fund raising, QPM said on Wednesday.
With this investment, GM’s offtake rights for Phase 1 of the project have been extended to the life of the project, and GM has been granted the right to purchase all of the nickel and cobalt sulphate produced under the Phase 2 expansion of the TECH project.
The initial investment offtake will span the 15-year mine life of Phase 1, with GM having the right to purchase all of the nickel and cobalt metal not covered by existing offtake agreements with LG and POSCO. This will include 6 000 t/y of nickel metal, ramping up to 16 000 t/y when commitments to LG and POSCO are met, and 800 t/y of cobalt metal, ramping up to 1 800 t/y when offtake commitments have been met.
Upon an FID, an additional 16 000 t/y of nickel metal, in the form of nickel sulfate, and 1 800 t/y of cobalt metal, in the form of cobalt sulfate will become available, assuming the Phase 2 expansion is built at the same capacity.
A previously completed prefeasibility study into the TECH project estimated that it could produce 565 714 t/y of ore containing 26 398 t of nickel sulphate, 3 097 t of cobalt sulphate, 4 007 t of high purity alumina, 327 665 t of hematite and 20 079 t of magnesia over a 30-year mine life.
“We are absolutely delighted to form this partnership collaboration with GM. GM’s strategic direction, company values and focus on sustainability in its pursuit of making electric vehicles for all is a perfect fit for Queensland Pacific Metals and our TECH project,” said QPM MD Dr Stepehn Grocott.
“GM’s investment in our company and the associated offtake brings us one step closer towards construction of the TECH project where we will one day aim to deliver the world’s cleanest produced nickel and cobalt. We thank GM for their support of our TECH project and look forward to becoming part of the GM sustainably sourced raw material supply chain.”
GM VP for global purchasing and supply chain Jeff Morrison said that the collaboration with QPM will provide the company with a secure, cost-competitive and long-term supply of nickel and cobalt from a free-trade agreement partner to help support its fast-growing electric vehicle production needs.
“Importantly, the agreement demonstrates our commitment to building strong supplier relationships and is aligned with our approach to responsible sourcing and supply chain management."