QPM announced yesterday that the Queensland Government has given Significant Investment Project status for QPM's TECH Project at Lansdown. The SIF program has been established by the Queensland Government to support projects of economic significance to the State. The SIF aims to ensure such projects are provided with the necessary support from government to facilitate prospective investment in Queensland. With an election on the horizon in Queensland (2024), could the state government invest in the TECH project? This will be very interesting to watch play out.

As has been mentioned here previously by myself and @TEPCapital, a sticking point with QPM is their capticity to fund the TECH project. There's a long way to go, but QPM announced some good news on Monday, that after continued financing discussions with Export Development Canada, QPM has received an updated non-binding letter of interest in support of the TECH Project for the provision of debt funding for up to A$400m (previously $200m). EDC’s interest is in relation to potential equipment and services supply from Canadian companies for the construction of the TECH Project. The provision of financing by EDC is subject to the successful completion of its due diligence process and typical project finance conditions such as security, debt servicability and equity financing.

QPM’s Managing Director and Chief Executive Officer, Dr Stephen Grocott, commented, “We are delighted at the response received to date from financiers, in particular Export Development Canada, and their willingness to consider debt funding for the TECH Project. Our strategy has been to target government backed lending agencies and we greatly appreciate the indicative support received to date. We look forward to advancing through due dilligence and through to credit approvals.

QPM has been granted a Development Permit under the Planning Act 2016 and an Environmental Authority for the TECH Project under the Environmental Protection Act 1994. 

The Development Permit for the TECH Project was granted following assessment of QPM’s Material Change of Use Development Application. The Assessment Manager of the MCU DA was Townsville City Council, with State referral triggers administered by the State Assessment Referral Agency, including the Department of Environment and Science on EA matters and the Department of Transport and Main Roads on State-controlled road matters.  

The Development Permit and EA allow QPM to operate Stage 1 of the TECH Project, notionally processing ~1.6m wet metric tonnes of ore per annum to produce approximately 16,000t of nickel metal and 1,750t of cobalt metal, both in sulfate form, as well as other valuable co-products. Most pleasing for QPM is that the conditions associated with the Development Permit and EA are in line with what would be expected for a project of this type and do not impose any onerous development or operating concerns. 

The award of the EA for QPM is a major milestone. Coupled with the approval received in November from the Australian Federal Government, QPM now has all primary approvals (Tier 1 approvals) required to begin construction of the TECH Project.  

QPM has today announced that Advanced Feasibility Study on Stage 1 TECH Project and the Scoping Study on Stage 2 TECH Project expansion are both complete. @TEPCapital has mentioned in past straws that he was worried about capex and Stage 1 development capex estimate has gone from the 2020 PFS estimate of $650m to A$1.9b +. Granted, this includes a 2.7x plant scale increase and global equipment cost inflation over the past two years. For a company with a market cap around $300m, that is a very high capex and has always been seen as a hurdle for QPM.

QPM mentioned that advice from key vendors is that they are seeing the cost of manufacturing reduce significantly, which will assist QPM when it is time to place formal orders. 

There is still ongoing work on some aspects of the TECH Project to improve estimate accuracy and value engineering initiatives to implement identify capex savings will take place over the next few months in parallel with the debt financing process. 

Debt financing due diligence process, lead by KPMG, will commence immediately and which will include: NAIF – Strategic Assessment Phase completed; Export Finance Australia – conditional commitment received of A$250m; K-Sure – formal expression of interest to participate on terms similar to Export Finance Australia; and other export credit agencies and commercial banks who have provided formal expressions of interest

Managing Director and CEO Dr Stephen Grocott commented, “We are pleased to present the results of the feasibility studies for the TECH Project. The outputs of these studies represent a moment in time and the culmination of hard work from the QPM team, Hatch Ltd and our other consultants. However, the work does not stop here and as we now continue to work on the project and advance towards a final investment decision in parallel with our funding initiatives.” 

Huge news for QPM, with General Motors agreeing to a Long Term Strategic Collaboration. Under the Investment Agreement, GM has agreed to invest up to US$69m in equity in QPM, comprised of the Initial Investment of up to US$25m and FID Investment of up to US$44m. At each opportunity, GM will invest the maximum amount possible under its commitment, subject to GM’s total shareholding in QPM being less than 10.0%

As part of the Initial Investment, GM has committed to subscribe for 174,634,791 shares in QPM at a subscription price of $0.18 per share for a total of US$20.1m (A$31.4m). The subscription price represents a premium of 20% to the last closing price of QPM and 22.8% to the 3-month volume weighted average price of QPM.  

QPM will also issue 46,833,661 unquoted options to GM with an exercise price of A$0.20 and a term of 3 years (from the date of issue) as part of the initial binding commitment.

QPM will issue 138,421,313 shares under its existing LR7.1A placement capacity and 20,131,969 shares under its existing LR7.1 placement capacity to GM upon receipt of funds. The remaining shares and options will be subject to shareholder approval at an Extraordinary General Meeting. 

A notice of meeting will be sent out to QPM shareholders in the near future. The balance of the Initial Investment can be called by QPM prior to FID to support other agreed funding initiatives in relation to the Tech Project. 

Subject to its satisfaction with the Definitive Feasibility Study and other customary conditions, GM will also participate in any equity raising undertaken by QPM as part of a Final Investment Decision 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 US$44m (plus the balance of the Initial Investment, if not called earlier) provides a material cornerstone position to support any fund raising. 

QPM Managing Director Dr Stephen Grocott commented:

“We are absolutely delighted to form this partnership collaboration with General Motors. 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. 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.”

Jeff Morrison, GM vice president, Global Purchasing and Supply Chain said:

"The collaboration with Queensland Pacific Metals will provide GM with a secure, cost-competitive and longterm supply of nickel and cobalt from a free-trade agreement partner to help support our fast-growing EV 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." 

QPM has entered a trading halt this morning, relating to a material investment and offtake agreement. There is some chatter that the material investment could actually be a dressed up capital raise, but it will be very interesting to see what the offtake agreement is. Potentially exciting news for QPM holders with the long awaited DFS just around the corner.

The trading halt should be until the release of the Announcement by QPM, expected to be no later than market pre-open on Wednesday, 12 October 2022.

QPM last traded at 15 cents.

QPM released their quarterly activities last Friday. The DFS has progressed well throughout the quarter and remains on track for completion late Q3 / early Q4 in the current calendar year. With lead engineers Hatch, QPM has awarded or is in the process of awarding basic engineering design work to key equipment suppliers, with the view of progressing towards supply agreements containing performance guarantees for construction. This early involvement of key suppliers is a major part of QPM’s funding strategy for the TECH Project.

During the quarter, QPM also made good progress on further testwork which is supporting the DFS and design work of the various equipment suppliers.

QPM continues to facilitate discussions and due diligence with potential customers for its uncontracted nickel and cobalt supply. There has been significant interest in QPM’s nickel and cobalt, particularly with respect to the TECH Project’s leading ESG credentials. The nature of counterparties actively engaged with QPM includes OEMs, battery manufacturers and trading houses.

QPM is aiming to enter into an offtake agreement for the balance of its supply prior to the end of the year.

I anticipate that QPM will hover around the mid-teens until next catalyst, which is the release of the DFS.

Highlights

• Definitive Feasibility Study (“DFS”) remains on track for completion by revised timing of late Q3 / early Q4 for the 2022 calendar year.
• Key equipment suppliers engaged and undertaking engineering design around their respective areas of the TECH project.
• Memorandum of Understanding (“MOU”) signed with global engineering company KBR, Inc regarding supply of technology and critical equipment associated with nitric acid processing and recycling.
• Good progress made on testwork including production of magnesia from thermal decomposition pilot activities, very high percentage iron hematite production from iron hydrolysis tests and successful residue testwork for use as engineered landfill.
• Ore supply agreement executed with Société des Mines de la Tontouta (“SMT”), securing QPM’s ore supply requirements for the first phase of the TECH Project
• Advancing through due diligence and discussions with various potential customers for remaining nickel and cobalt offtake for the first phase of the TECH Project 

The takeaway here for QPM entering into a non-binding MOU with KBR is the DFS being delayed from mid 2022 calendar year, to now looking at completion by late Q3 / early Q4 2022 calendar year. QPM is going with the motto that the benefits of this partnership with KBR outweigh the impacts of the delay of the DFS. A delay of the DFS for a project the scale of the TECH Project is not unexpected and the share price has held up relatively well this morning. You would now assume QPM will trade sideways until the announcement of the DFS, but it will be interesting to see what happens with the share price when this is released. As @TEPCapitalhas previously said: "DFS rarely surprise to the upside."

KBR MOU De-risks Technical Scale-Up & Feasibility Study Update

QPM has entered into a non-binding MOU with global leading technology, science and engineering firm KBR. QPM’s strategy has been to deliver a Feasibility Study that is bankable and de-risks the TECH Project in the eyes of financiers. Working with globally recognised vendors for key equipment is a key component of this strategy.

Successful nitric acid recycling at nameplate rates (>98%), is part of the strong project economics for the TECH Project. KBR is the global leader in supplying this technology and equipment through its Plinke and Weatherly brands. The key terms of the MOU are as follows:

• KBR and QPM agree to form a project team that will ensure that technology and equipment is designed and constructed to meet the requirements of the TECH Project;
• The Parties agree to work together to identify the shortest pathway to commercial operation;
• Subject to successful testwork, engineering and negotiation, the Parties will enter into a commercial agreement where QPM will purchase equipment from KBR and KBR will provide Performance Guarantees over its technology and equipment; QPM will sole-source this technology and equipment from KBR and will not undertake competitive tender;
• KBR acknowledges that being a major supplier to QPM and the TECH Project is of strategic benefit, given the anticipated demand growth for nickel and the successful commercialisation of the DNi Process being a game changer for successful and sustainable nickel laterite processing; and

As part of its ongoing discussions with financiers, QPM understands that obtaining Performance Guarantees on major equipment will assist obtaining credit approval. A testwork program is being undertaken in conjunction with KBR which further enables the optimization of the flow sheet of the TECH project.

Allowing time for this testwork to be undertaken has unfortunately resulted in a delay to the expected completion of the Feasibility Study. Whilst QPM was originally targeting mid 2022 calendar year, it is now anticipating completion by late Q3 / early Q4 2022 calendar year. However, the benefits of this partnership with KBR outweigh the impacts of the delay.

Managing Director and CEO Stephen Grocott commented,

“To attract this level of engagement from globally recognised vendors such as KBR demonstrates QPM is on the right track with the TECH Project. Whilst we want to advance to a Final Investment Decision as quickly as possible, exchanging a modest delay for a partnership which delivers such a high level of derisking is a win. It enhances our ability to deliver a Feasibility Study and commercial arrangements that can attract funding. QPM has been working closely with KBR for some time now and we welcome the partnership approach to delivering this critical nitric acid recycling equipment for the TECH Project.”

Ore Supply Agreement Executed with SMT

• Binding ore supply agreement entered into with Société des Mines de la Tontouta (“SMT”), a significant New Caledonian mining company, for up to 600,000 wmt per annum.
• Targeting a typical limonite ore specification of 1.6% Ni and 0.18% Co.
• Ten year ore supply term.
• Agreement between QPM and SMT to explore further opportunities for mutual investment and commercial arrangements.
• In combination with the Société Le Nickel ore supply agreement, QPM has now secured up to 1,600,000 wmt nickel ore per annum under binding contracts.

Queensland Pacific Metals is pleased to announce that it has entered into a binding ore supply agreement with Société des Mines de la Tontouta.

SMT was one of the original supporters of QPM and the TECH Project and QPM is delighted to have formalised this agreement with SMT. In combination with the ore supply agreement executed with Société Le Nickel, QPM has now contracted its ore supply requirements for the TECH Project.

As part of the Agreement, SMT and QPM have also agreed to explore further opportunities that are mutually beneificial including investment and other commercial arrangements.

QPM Managing Director Dr Stephen Grocott commented,

“I am delighted to enter into this agreement with SMT who have impressive mining operations in New Caledonia that meet the requirements of western automobile manufacturers who are concerned with sustainability and responsible mining.

SMT has been a strong supporter of the TECH Project for a long time and we look forward to having a long term partnership that delivers value to both companies.”

SMT General Manager Arnaud Bondoux commented,

“Signing a nickel ore supply contract with QPM means renewing relations with Australia, which has always been a historical partner of SMT and New Caledonia. Indeed, exports between SMT and Australia have taken place over a period of more than 25 years, from 1989 until recently in 2015.

SMT was involved in QPM's innovative project from the outset by actively participating in the pilot tests. In fact, QPM and SMT have been in contact for four years now and have formed a partnership that led to the signing of a first MOU in 2017.

SMT would like to make a long-term commitment to QPM, beyond its role as a supplier, in order to propose a new model for the valorization of New Caledonian ore.”

March 2022 Quarterly Report 

K-SURE Funding

Ever since the investment and binding offtake agreement signed with LG Energy Solution and POSCO, QPM has targeted Korean export credit agencies as potential financiers of the project. QPM commenced discussions with K-SURE in 2021, culminating in the provision of a formal Expression of Interest letter from K-SURE to QPM.

The Expression of Interest from K-SURE is a significant milestone in their internal consideration for the provision of debt funding. K-SURE has indicated that its participation in the debt syndicate will be in line with the terms and conditions of Export Finance Australia (“EFA”), which has previously provided a letter outlining $250m of conditional financing support. The letter received from K-SURE does not constitute a commitment or an offer and any provision of debt funding will be subject to due diligence and typical terms and conditions.

The Korean and Australian governments have recently focused on formal cooperation regarding critical minerals. In December 2021, the Australian and Korean governments entered into a Memorandum of Understanding (“MOU”) regarding cooperation in Critical Minerals Supply Chains. Following this, both countries’ Export Credit Agencies (K-SURE and EFA) entered into an MOU to strengthen their capacity to work together and undertake joint financings. 

QPM’s strong ties to Korea have positioned it well to access financing from both Australian and Korean export credit agencies and strong progress has been made. As the project progresses towards financial close, QPM is confident that these strong Korean-Australian ties will assist in obtaining credit approval for debt funding from these parties.

Ore Supply 

QPM and SLN have been in discussions and negotiating terms for ore supply since the execution of an MOU in April 2021. In parallel, SLN had been working with the New Caledonia government to obtain the requisite approvals it required to export ore to QPM.

In February 2022, a press conference was held by the President of New Caledonia, Louis Mapou, and SLN. At the press conference, it was announced that the Government of New Caledonia had approved an increase in the annual nickel ore export quota of SLN. This increase includes the supply of up to 1,000,000 wet metric tonnes (“wmt”) of nickel ore per annum to QPM. The approval is valid through to 2029, in line with SLN’s existing export approvals that are currently in place. 

Shortly after receiving government approval, QPM and SLN executed a binding contract for up to 1,000,000 wmt of nickel ore per annum.

The execution of this contract is a major de-risking milestone for QPM with regards to its ore supply and demonstrates the support of the project from New Caledonia and SLN. 

QPM is in active discussions with other ore suppliers for the balance of its ore required at full production.

Definitive Feasibility Study

As part of QPM’s ongoing discussions with potential financiers of the project, the scale up of the DNi ProcessTM technology will be a particular focus of financial due diligence. Therefore, QPM’s strategy has been to demonstrate low process risk by working closely only with key vendors provide commercial scale equipment for various parts of the flowsheet.

As an extension to its pilot plant operations, QPM has a substantial testwork program to ensure that debt financiers will be satisfied with regards to equipment choice and supply. This testwork remains ongoing, and significant progress was made during the quarter.

QPM has been undertaking testwork in conjunction with its HPA partners Lava Blue. The testwork is being undertaken at speciality labs at Queensland University of Technology (“QUT”). During the quarter, the testwork was successful in producing 4N HPA from aluminium hydroxide feedstock produced by QPM as part of its piloting. This represents the first HPA made from New Caledonia laterite ore. The purity of the product was 99.996%.

Project Approvals

During the quarter, strong progress was made on both Federal and State approvals required for the TECH Project.

Pathway to Zero Solids Waste for the TECH Project

Significant progress has been made on QPM’s ability to utilise residue from the TECH Project in commercial application as engineered fill. 

In the TECH Project, all valuable metals will be leached into solution and then recovered and refined into saleable products. The remnant residue is only ~25% of the dry ore feed and it is typically comprised of silicates including quartzsand. The ability to utilise this residue as an engineered fill would mean that 100% of the ore processed by the TECH Project reports to a commercial application, effectively positioning the TECH Project as zero solids waste. Such a feat would be an industry first in the resources sector, particularly in nickel laterite processing which typically requires large tailings dams that leave significant environmental footprint. Such tailings dams usually have to hold more than 1.2 tonnes of tailings per tonne of feed ore.

James Cook University Residue Testwork

Residue from the TECH Project is neutralised, filtered prior to storage or alternative use. QPM is working with JCU to undertake testwork on the TECH Project residue. The testwork conducted had two main areas of focus:

• Mixing varying levels of simple binding agents with the residue and testing structural properties to determine suitability as engineered fill; and
• Undertaking leaching chemical content tests of the residue to ensure it met regulatory guidelines.

From JCU’s testwork, it has been determined that, with a simple binder, the residue from the TECH Project demonstrated the requisite structural properties and can be used as engineered fill. The chemical leaching tests undertaken by JCU involved:

• Toxicity Characteristic Leaching Procedure (“TCLP”);
• Inductively coupled plasma mass spectrometry (“ICP-MS”); and
• X-Ray powder diffraction

This testwork demonstrated that under the Townsville City Council (TCC) guidelines, QPM comfortably met the threshold for all elements of potential concern except nickel. QPM and JCU are confident that nickel levels will also be reduced to below the threshold with additional washing.

End of Waste Code Approval

QPM recently held a pre-lodgement meeting with the Queensland Department of Environment and Science to discuss the JCU test work, potential commercial applications, and the next steps required to finalise an End of Waste Code. An EOW Code allows a previously characterised waste stream (e.g. the residue) to be re-classified as a resource (e.g. engineered fill).

Typically, as part of an EOW Code approval, a large scale field trial is required to use a waste stream in a commercial application prior to final approval being granted. However, given the positive results from JCU’s testwork and the planned future work program, DES indicated that QPM probably will not be required to undertake a field trial as part of the approval process. This would eliminate a hurdle and fast track QPM’s ability to obtain the EOW Code approval and to immediately utilise the residue in commercial applications.

The next step for QPM and JCU will be to undertake further geotechnical testwork on the residue and also environmental leaching testwork to confirm compliance with regulations. QPM will also start the approvals process to obtain the EOW Code. There are no statutory timeframes tied to developing an EOW Code; however, it is expected that the code will be finalised during the construction phase, pending confirmation of assessment requirements by DES.

Initial Commercial Application of Residue

Encouraging discussions have occurred between QPM and the Office of Coordinator-General, one of the owners of the Townsville State Development Area ("TSDA"), for using this engineered fill at the TSDA. One of the major benefits of the TSDA is that the location is directly on the backloaded route from the TECH site to the Port of Townsville. QPM will continue to advance these discussions and is working closely with the Office of Coordinator-General as a Queensland Prescribed Project.

Managing Director and CEO Stephen Grocott commented,

“Potential offtakers and financiers have been forthright in their communications to QPM regarding the importance of ESG credentials when evaluating battery metal projects. They are already delighted that QPM are already world-leading through our zero process liquid discharge, very small residue proportion and negative greenhouse gas intensity. However, we are now going even further than this to stamp the the TECH Project as a global benchmark. Achieving zero solids waste lifts the ESG bar to a level not even under consideration in the battery material sector. Having been in the resources industry for over four decades, it is refreshing to see mindsets of organisations and people change to ensure the environmental impact is not just minimised but turned into greater environmental value. I am excited at the potential to make the TECH Project the first zero solids waste project in the world and to exceed the expectations of the companies who will be purchasing our products.”

K-SURE issues Expression of Interest Letter for support of the TECH Project

QPM has announced conditional finance support from K-SURE for the provision of debt funding for QPM’s wholly owned TECH Project.

In December 2021, a MOU was entered into between the governments of the Republic of Korea and Australia regarding cooperation in Critical Minerals Supply Chains. Following this, the reciprocal Export Credit Agencies of both countries (K-SURE and EFA) entered into an MOU to strengthen their capacity to work together and undertake joint financings.

With Korean offtakers and shareholders, LG Energy Solution and POSCO, K-SURE is a logical target for QPM as part of its debt financing syndicate for the TECH Project. The formal receipt of an Expression of Interest Letter from K-SURE demonstrates their strong interest in providing debt funding for the TECH Project.

K-SURE has indicated that its partication in the debt funding of the TECH Project will be in line with the terms and conditions of EFA’s participation. The letter received from K-SURE does not constitute a commitment or an offer and any provision of debt funding will be subject to due diligence and typical terms and conditions.

QPM has also appointed ANZ as ECA Co-ordinator, working closely with existing debt advisor KPMG. ANZ has an excellent relationship with K-SURE and other ECAs around the world, in particular those which QPM are targeting and have received eligibility letters from. ANZ has also previously provided QPM with a letter of interest for the provision of debt funding.

QPM Managing Director Dr Stephen Grocott commented, “The increasing recognition from governments around the world, in particular the Korean and Australian governments, regarding the importance of critical minerals supply chains will be an important factor in QPM achieving its goal of becoming a sustainable producer of battery metals. The support we have received from government backed lenders to date has been tremendous.

I would like to express my sincere gratitude to Mr Baek Seung Dal and Mr Steve Kang for their formal expression of interest in the TECH Project and look forward to strengthening our relationship with K-SURE.” 

Ore Supply Agreement Executed with SLN

Queensland Pacific Metals Ltd has entered into a binding ore supply agreement with Société Le Nickel (“SLN”),

On Tuesday 15 February 2022, a press conference in New Caledonia was held by the President of New Caledonia, Louis Mapou, and SLN. At the press conference, it was announced that the Government of New Caledonia had approved an increase in the annual nickel ore export quota of SLN. This increase includes the supply of up to 1,000,000 wet metric tonnes (“wmt”) of nickel ore per annum to QPM. The approval is valid through to 2029, in line with SLN’s existing export approvals that are currently in place.

The execution of the Agreement and New Caledonian Government approval follows on from the Memorandum of Understanding (“MOU”) entered into between SLN and QPM in April 2021. That MOU contemplated ore supply of 800,000 wmt per annum. QPM is delighted to achieve an outcome that secures a greater level of tonnage.

As part of the Agreement, SLN and QPM have also agreed to explore other partnership opportunities regarding additional ore supply and potential TECH Project participation.

Whilst the DNi Process can treat the entire laterite ore profile, QPM is targeting the purchase of limonite ore. The global seaborne nickel ore trade is almost exclusively saprolite ore, which sits below the limonite ore body layer. The saprolite is used to produce nickel pig iron and ferronickel operations and can’t be easily, cheaply or sustainably converted into battery grade nickel and cobalt sulfate for lithium-ion batteries. Saprolite ore miners either avoid areas with a high proportion of limonite, or have to mine through the limonite and either stockpile or treat it as overburden, creating significant inefficiencies. By exclusively purchasing limonite ore, QPM delivers a strategic benefit to any counterparty it deals with.

QPM Managing Director Dr Stephen Grocott commented,

“I am delighted to enter into this agreement with SLN who operate world class mines in New Caledonia. I believe this is just the start of a long term relationship that will be very beneficial to both companies. This milestone is a further significant de-risking event for QPM and the TECH project.

I would also like to thank the Government of New Caledonia for their support of the TECH Project in granting this export approval to SLN. New Caledonia, and the world, is awash with limonite resources that remain undeveloped – the successful commercialisation of the TECH Project will be a game changer for these deposits and their ability to form part of global, sustainable nickel production.”

I really like this part from today's report: "With domestic and international borders opening, QPM expects COVID related inefficiencies to reduce. In person meetings with key international vendors are also now possible, which will be of significant benefit to the project." QPM is in for a big year, as we await announcements on Debt Funding, which the company has made strong progress with 9 letters of interest from commercial lenders and 4 letters of eligibility from ECAs/DFIs already having being received. The DFS is scheduled to be completed mid 2022, with a focus on value engineering, critical vendor engagement and process optimisation.

December 2021 Quarterly Report

Highlights

• Attendance of Australia-Korea Business Council meeting with His Excellency the Republic of Korea President Moon Jae-In and Minister for Trade, Investment and Energy Moon Sung-Wook to discuss QPM’s potential to become a supplier of critical battery metals to Korea.
• Completion of Life Cycle Analysis by Minviro confirming that the TECH Project is carbon negative, which would make QPM a global leader in sustainable nickel and cobalt production.
• Strong progress made on debt funding with conditional finance support of $250m received from Export Finance Australia, letters of interest from nine leading commercial banks and eligibility letters from three offshore Export Credit Agencies / Develop Finance Institutions.
• Advancing through Definitive Feasibility Study, with focus on value engineering, critical vendor engagement and process optimisation.
• Execution of Heads of Agreement for license on HPA technology with Lava Blue and first production of 4N HPA from New Caledonia ore.
• Excellent progress on project approvals and completion of cultural heritage clearance activities at Lansdown site.
• Completion of $30m equity raising and receipt of R&D FY June 2021 tax return of $2.2m. Cash balance at quarter end was $47.1m

First 4N HPA Production for QPM from New Caledonian Ore

QPM has announced this morning that lab scale testwork done by Lava Blue has successfully produced 4N High Purity Alumina (99.996% purity) using New Caledonian ore. This means that QPM has now successfully produced the four key materials from New Caledonian laterite ore: nickel, cobalt, hematite & HPA. 

The next step for QPM in the HPA work program is to now prepare for further testwork including piloting at Lava Blue’s demonstration plant, which is nearing completion, and to commission DFS activities on HPA

This announcement is another tick from Dr Grocott and the team and will help in securing financing for the TECH Project, by showing that QPM will have a range of income streams. Fingers crossed that this can also lead to some binding offtake agreements for HPA.

QPM Managing Director Dr Stephen Grocott commented, “We have now successfully produced the four key materials from New Caledonian laterite ore – nickel, cobalt, hematite and HPA. Maximising the underlying value of the feedstock ore is a key focus of QPM and in line with its goal of being a global leader in sustainability. We are delighted with the progress Lava Blue have made to date and are excited at the long term future of our partnership.

I mentioned in my last straw on QPM: "I have no reason not to continue having faith in Dr Grocott and his team." They have shown again why it is so important to have a great management team at this end of the market. QPM have gained conditional finance support from Export Finance Australia to secure up to A$250 million of debt funding for the TECH Project.

EFA will commence detailed due diligence of the TECH Project, in line with the agency’s mandate to provide financial expertise and solutions to support Australian businesses across a variety of industries, including critical minerals. EFA also administers the Australian Government’s A$2 billion Critical Minerals Facility, which helps critical minerals projects to get them off the ground.

This conditional finance support, combined with the recently received advice from the Northern Australia Infrastructure Facility that the Project has progressed through their Strategic Assessment Phase, this further reinforces confidence in securing the required funding package.

Well done to Dr Grocott and his team on another box ticked.

Export Finance Australia issues letter of support for the TECH Project for A$250m

Highlights

• Conditional finance support received from Export Finance Australia to secure up to A$250 million of debt funding for the TECH Project
• This represents the second Australian Government Agency to support the project following notification from the Northern Australia Infrastructure Facility that QPM has completed the Strategic Assessment phase of the application process and has proceeded into the Due Diligence stage
• Debt funding for QPM's TECH Project is progressing well. In addition to EFA and NAIF, QPM has recently received Eligibility Letters or Expressions of Interest from nine Australian and International banks and three offshore Export Credit Agencies/Development Finance institutions.

According to AFR, QPM is raising $30M at 16 cents per share with the bulk of the funds raised to help complete the DFS ($15.1 million), working capital and other similar costs ($13.4 million), detailed engineering ($12 million), and capex and opex for test work ($7.5 million).

It is interesting timing, as management has said that we were fully funded through to completion of DFS. Management have been exceptional so far and delivered on everything they have said. I have no reason not to continue having faith in Dr Grocott and his team.

We will see how the market reacts to this raising.

Another tick from QPM, with an announcement that it has executed a binding Heads of Agreement with Lava Blue regarding the licensing of Lava Blue’s proprietary technology for HPA production and the joint development of a Definitive Feasibility Study for HPA production at the TECH Project. Lava Blue’s technology is built around the conventional hydrocloric acid leach. Based on due diligence, both QPM and Lava Blue believe that the process will be able to successfully refine TECH Project aluminium hydroxide feedstock into 99.99% (“4N”) high purity alumina. Whilst HPA is not a major focus for QPM, there is money to be made from it and having Lava Blue as a partner is a great idea.

HPA Technology License Heads of Agreement Executed with Lava Blue

Highlights

• Heads of Agreement executed with Lava Blue regarding use of their proprietary HPA technology in the TECH Project. ?
• Lava Blue will play an integral role in the HPA section of the TECH Project DFS including testwork, piloting and direct support to engineers.
• Engineering consultants Engenium to undertake HPA DFS – Engenium has worked with Lava Blue for several years and is involved with development and construction of Lava Blue’s demonstration plant
• Lava Blue is a mineral resources and material science company that is focussed on the science and engineering of HPA production. Lava Blue has successful produced 4N+ HPA from a variety of feedstocks and is working closely with Queensland University of Technology on de-risking controls and scale up of its proprietary process.
• The partnership with Lava Blue will significantly advance QPM’s progress on HPA, leveraging off the knowledge and expertise of an industry expert, which will allow QPM to maintain its focus on the production of net negative carbon nickel and cobalt sulfate.

Another box ticked for QPM's management team this morning, with a Non-binding MOU has been executed with Edify Energy regarding the supply of hydrogen from Edify’s large scale, green hydrogen production facility at Lansdown. Edify Energy is an Australian renewable energy and storage company, that has a wide range and fast growing portfolio of assets. In December 2020, QPM and Edify executed a separate Heads of Agreement in relation to the potential supply of solar power from Edify’s proposed Majors Creek Solar Power Station to the TECH Project.

Hydrogen Supply MOU executed with Edify Energy

Highlights

• Non-binding MOU executed with Edify Energy regarding the supply of hydrogen from Edify’s large scale, green hydrogen production facility at Lansdown.
• Hydrogen purchased from Edify would supplement QPM’s gas supply.
• Hydrogen MOU is in addition to previously executed Heads of Agreement with Edify regarding supply of solar power from its proposed Majors Creek Solar Power Station.
• Such opportunities demonstrate QPM’s commitment to making the TECH Project a global leader in ESG credentials for critical battery metal production.

QPM has announced this morning that they have written expressions of interest have been received from 9 Australian and International Commercial Banks with Eligibility Letters or Letters of Interest having been received from 4 Export Credit Agencies/Development Finance Institutions closely aligned with anticipated equipment sourcing or mineral offtake agreements. We also know from previous updates that QPM is well engaged with both NAIF (Northern Australia Investment Fund) & Export Finance Australia (EFA) on being significant investors and debt advisors.

This announcement is another endorsement for the TECH Project. It shows confidence in both financial returns and the ESG credentials that it is going to have. The TECH Project is not only going to be net zero carbon - but significantly net Carbon Negative.

QPM Managing Director Dr Stephen Grocott commented,

“I am encouraged to see the interest and support being shown by these large commercial and Government financiers. They are attracted to the TECH Project not only by the potential financial returns but also because the Project will be a leader in sustainability with carbon net-negative nickel production, minimal environmental footprint and waste and developed world risk profile. There is significant work ahead of us to secure the debt funding package. However, I am confident that, with large, like-minded financiers working along-side the QPM team, it is the right strategy to ensure the Project will reach Final Investment Decision.”

Strong Expressions of Interest Received from Debt Financiers for the TECH Project

Highlights

• Debt funding for QPM's TECH Project is advancing well with the intention to secure a syndicated project finance facility including global Export Credit Agencies and Development Finance Institutions.
• Eligibility Letters or Letters of Interest have been received from 4 Export Credit Agencies/Development Finance Institutions closely aligned with anticipated equipment sourcing or mineral offtake agreements.
• Written expressions of interest have been received from 9 Australian and International Commercial Banks.
• This follows the support of the Northern Australia Infrastructure Facility where the TECH Project has completed the Strategic Assessment phase of the application process and has proceeded into the Due Diligence stage.
• The strong interest reflects not only the underlying project economics but also QPM being a sustainable green nickel producer with the recently updated Life Cycle Assessment from Minviro highlighting that the TECH Project will be net Carbon Emissions Negative.
• QPM's debt advisor KPMG Corporate Finance is co-ordinating the Export Credit Agencies/Development Finance Institutions and Commercial Banks to progress the debt syndicate structure in parallel with completion of the DFS.  

This is an excellent announcement from QPM, with the Life Cycle Assessment undertaken by Miniviro showing the TECH Project to be the first ever truly net carbon neutral or net carbon negative battery grade nickel manufacturing plant. The exciting piece here is the TECH Project is not only net zero carbon - but significantly net Carbon Negative. Based on the outcomes of the LCA report, QPM believes that the TECH Project boasts by far the best ESG credentials in the world for all nickel projects – existing and planned. Dr Stephen Grocott has mentioned previously that offtakers are actively seeking companies that have the kind of ESG credentials that QPM has. This is just another big tick of the box from Dr Stephen Grocott and the fantastic management team at QPM.

Highlights

• ISO-compliant Life Cycle Assessment undertaken by Minviro highlights QPM's TECH Project as not only net zero carbon - but significantly net Carbon Negative ? Based on planned waste gas sourcing strategy, production from the TECH project will far exceed the best environmental alternative for any nickel production globally.
• For every tonne of nickel in nickel sulfate produced, the TECH Project REDUCES greenhouse gas emissions by 14.9 kg CO2 eq. /kg nickel in nickel sulfate.
• Annual reduction in Australia's greenhouse gas emissions as a result of the TECH Project is estimated at 238,000 tonnes CO2-equivalent, the equivalent of ~52,000 typical passenger vehicles.
• TECH Project will utilise waste mine gas from the Bowen Basin which would be either flared or directly emitted to the atmosphere as a fugitive emission of methane which has a Global Warming Potential factor of 25 times that of CO2.
• Dual benefits of capturing and consuming gas that would otherwise contribute significantly to Global Warming and manufacturing battery grade minerals to support the ongoing electrification of the automobile industry.
• The TECH Project has now established itself as a leader in sustainable nickel production with net negative carbon nickel production combined with minimal environmental footprint given no tailings dam or zero process liquids discharge.  

QPM Managing Director Dr Stephen Grocott commented:

“For 20 years I have been working on mineral projects that attempt to minimise greenhouse gas emissions. Never have I been able to work on one which can, not just reduce, but reverse emissions. Offtakers are demanding strong ESG credentials for battery metal production and QPM ticks all the boxes. The TECH Project will be a global leader in sustainability with net carbon negative nickel production, minimal waste and environmental footprint and developed world labour laws. Our goal is to ensure that when our customers are buying our products, they will know that they are the cleanest and most environmentally attractive in the world.”

QPM requesting a trading halt is in regards to Minviro and the life cycle analysis for the TECH Project. As mentioned in a previous straw, Dr Stephen Grocott hopes and expects that QPM can show that the TECH Project is not just carbon net zero, but below zero.

Fingers crossed that QPM can demonstrate sub zero. We now have to wait and see the details of the announcement.

As mentioned the other day, the DFS has a slight overrun of a couple of months, we are looking at the middle of next year. QPM have noted that: Fiscal stimulus by governments around the world has seen a significant boom in construction and material, labour and shipping demands. The price of construction materials has increased significantly, particularly steel which was trading around 3,500 CNY/t in April 2020 but is now trading around 6,000 CNY/t (Shanghai Steel futures index). Global logistics costs are also increasing with increasing delays due to COVID, port congestion and not enough seaborne bulk carrier supply.

The DFS is based on a ~1.5Mtpa (wet) processing plant, a scale up of around 2.6-2.7 times of the plant size contemplated in the PFS. QPM notes that whilst it is confident that economies of scale will be delivered in the DFS compared with the PFS, some of these savings will need to be offset by:

• The rising price of raw materials, labour and logistics; and

• The increased demand on equipment with vendors

These extra costs can also be balanced out by the Nickel price, which is currently exceeds US$20,000/t with fundamentals for nickel strengthening and premium for nickel sulfate also remaining strong.

Some potentially exciting newsflow to come, with Minviro are currently engaged to perform a life cycle analysis on the TECH Project. As I have previously mentioned, QPM are well engaged with both NAIF (Northern Australia Investment Fund) & Export Finance Australia (EFA) on being significant investors and debt advisors.

QUARTER HIGHLIGHTS

• Prescribed Project Status - recognition of the TECH Project being a project of state significance by Queensland State Government
• QPM working collectively with Townsville City Council & Office of Co-ordinator General: To modify approvals to de-risk uncertainty
• Definitive Feasibility Study is progressing with key vendor engagement for critical equipment is being undertaken
• Memorandum of Understanding entered into regarding gas supply and transportation with Transition Energy Corporation and North Queensland Gas Pipeline
• Strategic Assessment Phase of Northern Australia Infrastructure Facility application process completed – QPM proceeding to due diligence phase
• Nickel price exceeds US$20,000/t with fundamentals for nickel strengthening and premium for nickel sulfate remaining strong

https://www.youtube.com/watch?v=2QfW_K-n9pU&ab_channel=NWRCommunications

Yesterday's presentation has now been posted online.

Some interesting points that were raised in the presentation:

14:00 minute mark: Minviro are currently engaged to do a life cycle analysis. Dr Stephen Grocott hopes and expects that in the next couple of weeks, QPM can demonstrate that the TECH Project is not just carbon net zero, but below zero.

23:30 minute mark: Everything in the DFS is increasing by 2.7x, except HPA, which was was around 30% of revenue in the PFS and now will be around 10-15%.

25:10 minute mark: KPMG who are acting as debt advisors are reaching out to the banks. QPM are well engaged with both NAIF (Northern Australia Investment Fund) & Export Finance Australia (EFA). Dr Grocott mentioned he expects both NAIF & EFA to be significant investors and debt advisors for the TECH Project, as it ticks a lot of their boxes - this is progressing very well. DFS has a slight overrun of a couple of months, we are looking at the middle of next year.

For those who are interested, Queensland Pacific Metals' managing director, Doctor Stephen Grocott will be presenting tomorrow at the Virtual NWR Resource Series – Mining’s Top Microcaps and Midcaps.

Date: Tuesday 26th October 2021

Time 11.15am AEDT | 8.15am WS

Please register for webinar at: https://us02web.zoom.us/webinar/register/WN_4Ga4lB0HSp2iyEs8Itvmiw

Investors are invited to submit questions prior to the webinar to: victoria@nwrcommunications.com.au

Further positive mainstream media exposure for QPM over the weekend, with this article appearing in newscorp publications around the country.

Townsville refinery to use world-first nickel processing technology

A proposed $650 million battery metals refinery in Townsville, creating a 1000 jobs, is set to pioneer new clean, green technology its makers believe will be world breakthrough.

Queensland Pacific Metals plans to start building the refinery at Lansdown Eco-Industrial Precinct next year to produce nickel and cobalt for batteries as well as other metals.

These include high purity hematite used in steel making, magnesia used in cement, fertilisers and as a neutralising agent and alumina trihydrate used in water purifying alum or further refined into high purity alumina used in batteries and LED lighting.

QPM project manager Stewart Hagan, speaking to a Climate Media Centre tour group this week, said the Direct Nickel Process was a breakthrough in refining technology.

No tailings dams were required and the large quantities of chemical reagents used in traditional High Pressure Acid Leach processes, such as those in the mothballed Yabulu nickel refinery, were instead recycled.

It also allowed the extraction of other metals which at Yabulu ended up in tailings dams.

Mr Hagan described the shift as moving from “horse and buggies to vehicles”.

“The Direct Nickel Process is a breakthrough and it’s because of the nitric acid it’s using to extract the nickel and cobalt and the ability to recycle that nitric acid,” Mr Hagan said.

“It isn’t being used anywhere else in the world and when we are up and running we will be the first. Once we get this plant commissioned, there’s absolutely no doubt that others will be climbing over themselves to use it.”

Mr Hagan said the process used significant amounts of water and gas to generate steam. Water would be sourced from the Burdekin Falls Dam, while waste gas, sourced from Bowen Basin coke mines, would provide carbon offsets.

He said the project would create up to 1000 construction jobs and 250 to 300 high-paying, highly skilled refinery jobs.

The company plans to finalise funding early next year to begin construction in April and produce its first metals by the end of 2023.

https://www.townsvillebulletin.com.au/news/townsville/townsville-refinery-to-use-worldfirst-nickel-processing-technology/news-story/cac5cf394731e8c074bc50ae1a21bfe7

Great news released yesterday, with the Morrison Government investing $12m for enabling infrastructure to support the Lansdown Eco-Industrial Precinct in Townsville. QPM has secured land in the precinct and Lansdown has been zoned heavy industrial, which will provide for an easier pathway for environmental approvals for the TECH Project.

Details on the announcement:

The Morrison Government has today announced funding for three new projects to be funded as part of the Townsville City Deal.

The investment includes:

• $12 million for enabling infrastructure to support the Lansdown Eco-Industrial Precinct – Northern Australia’s first environmentally sustainable, advanced manufacturing, processing and technology estate powered by locally generated renewable energy. This is in addition to a $12 million commitment from the Queensland Government and $4 million from the Townsville City Council;
• $2 million to fully fund a detailed business case for the proposed a concert hall, which will guide further funding investment for the project under the Deal.
• $2 million for a feasibility study into the supply of re-use water for the growing green hydrogen industry in Townsville.

Funding for these projects has been allocated from the Commonwealth’s $195 million commitment to the Haughton Pipeline Stage 2, which is now being delivered by the Queensland Government and Townsville City Council outside the Townsville City Deal.

A further $124 million in Commonwealth funding remains to be reallocated under the Townsville City Deal, with Deal partners in discussions on priorities for this funding.

The Townsville City Deal is a 15-year agreement between all three levels of government to support the development of community infrastructure that will help revitalise the city, enhance liveability and support the growth of industry and enterprise.

Further information on the Deal, including other projects being delivered, is available at: www.infrastructure.gov.au/cities/city-deals/townsville

Project of State Significance – TECH Project

Futher derisking of QPM, after the TECH Project was awarded Prescribed Project status by the Queensland Government. A Prescribed Project declaration grants the Coordinator-General the power, if necessary, to intervene in state and local government approval processes to ensure timely decision making. Having the Queensland Government recognise QPM & the TECH Project shows confidence in the company and is only going to assist the approval process, if any hurdles do arise.

The Northern Australia Infrastructure Facility (NAIF) funding decision will be made by an independent panel, but having the state government on board can only be a good thing as we progress towards funding.

I keep banging on about it, but Dr Stephen Grocott and the board of QPM just keep ticking the boxes and delivering what they say they will. QPM is my largest holding in both RL & SM and my belief in the company and TECH Project only increases as more and more risk continues to be removed.

Some comments from Dr Grocott regarding this announcement: 

“QPM greatly appreciates the support of the Queensland Government and all stakeholders who supported our application for Prescribed Project status. In the last 18 months, QPM has progressed the TECH Project in leaps and bounds and we continue our path of becoming a sustainable producer of critical battery metals. The TECH Project will generate 800+ jobs in construction and directly employ 300+ people in operation. We applaud the Queensland Government’s decision in recognising our project as one of state significance, in particular to Townsville and the surrounding region.”

Board and Management Appointments

Another massive tick for QPM, as the company continues to further derisk with these extremely high quality board and management appointments. 

I am very impressed that QPM has been able to add so much experience and knowledge to the board with these appointments. I'd like to highlight the appointment of Duane Woodbury as Chief Financial Officer, who was previously successful in procuring all funding required to construct the Bauxite Hills mine and also secured a loan from Northern Australia Infrastructure Facility (NAIF) to fund expansion initiatives. This prior experience with NAIF is very important, as QPM recently progressed to detailed due diligence of the Strategic Assessment Phase (SAP).

You can read in more detail on the appointments below:

John Abbott will be appointed as Independent Non-Executive Chair of QPM and combines extensive experience as a Company Director of both Australian and Asian companies with an executive background in operations, engineering, design, and project management of large complex projects. For the last five years, he has been the Chancellor of the Central Queensland University (and Chair of the University Council). The University is a $500 million pa organisation with over 2,500 staff. John is also Deputy Chairman of Regional Development Australia (C&WQ) and a Director of the Central Queensland Hospital and Health Services; both of which highlight his enthusiasm for regional development in Queensland. John was appointed as a Member of the Order of Australia in the 2020.

Prior to these roles, John was on the board of Fluor Australia (Fluor is a global engineering and construction firm) for eight years and was the Asia Pacific Regional Director for Fluor Global Services, and an executive director of six subsidiary companies all working in different industries, with different industrial and operational environments. John holds a double degree with a Bachelor of Engineering and Bachelor Law

Dr Sharna Glover will be appointed as an Independent Non-Executive Director. Sharna has over 25 years of experience in the Resources sector with her career focussing on Engineering, Technology and People. Her career has spanned over 20 years and ranged from working in the largest global mining and processing house (BHP) to being the co-founder of Imvelo.ai which provides capability in planning and leading innovation and business transformations through best technology partnerships and supporting commercial models. Sharna holds a first-class double degree in Chemical Engineering and Science, as well as a doctorate in Chemical Engineering.

Previously, Sharna was the Program Director with BHP and worked in a variety of roles in her twenty years with BHP. She was a key member within business strategy, mergers and acquisitions, business planning, major capital projects, technology commercialisation and Remote Operating Centres. Sharna was recently awarded the Technology Woman in Resources Awards for Queensland and has held an ambassador role in Opportunity International for 15 years.

As part of these appointments, outgoing Chair Eddie King will transition to Independent NonExecutive Director and Cameron McLean has notified QPM of his intention to resign from the Board, effective immediately.

Outgoing Chair Eddie King commented,

“After playing a major role in the acquisition of QPM and overseeing the exciting growth trajectory of the Company, I believe the time is right for me to step down as Chair and pass the baton on to John Abbott. QPM is entering its next chapter as it proceeds through project development to become a sustainable producer of critical battery metals and John has the ideal skillset to lead us through this phase.

I would like to also welcome Sharna Glover to the Board and acknowledge the contribution and efforts of Cameron McLean who has also been an important Board member throughout the duration of his appointment. I look forward to remaining actively involved with the company in my capacity as a NonExecutive Director.”

With the technical team largely in place, the Company identified two areas in which additional key staff were required:

Funding

Debt and equity financing initiatives are being undertaken in parallel with the DFS. Duane Woodbury has been appointed as Chief Financial Officer and will be responsible for securing the funding required for the TECH Project. Duane joins QPM with deep involvement in the Australasian mining and resources sector across a variety of financial, commercial, banking and treasury roles. He has had over 25 years’ experience in the listed equity markets both in Australia and overseas with a number of organisations including Macquarie Bank and as Chief Financial Officer to Kingsgate Consolidated Limited. His most recent role has been as Chief Financial Officer with Metro Mining Limited where he successfully procured all funding required to construct the Bauxite Hills mine and also secured a loan from Northern Australia Infrastructure Facility (NAIF) to fund expansion initiatives. During his career, he has managed large debt and equity raisings for both development and operating companies primarily in the resources sector.

New Caledonia Ore Supply

Long term security of ore supply is critical for QPM and with the restrictions relating to international travel due to COVID, it was important for QPM to establish a presence in New Caledonia. Corinne Buffnoir has been appointed as General Manager – New Caledonia. Corinne brings a unique blend of strong relationships within New Caledonia and a long operating track record in the nickel sector. Her most recent role has been as Counsellor to the President of the Government of New Caledonia for the mining, metallurgy, energy and geosciences sectors. She has worked extensively in the New Caledonian and international nickel industry for a range of organisations including a number of ore producers, Mine and Energy Department of New Caledonia (DIMENC), Transamine Trading SA, Goro Nickel S.A. and the country/branch manager for Queensland Nickel Pty Ltd.

QPM Managing Director Stephen Grocott commented, “These appointments reflect QPM’s progress towards being a profitable, sustainable battery materials producer. The new Board and Management personnel bring additional skills, experience and networks that will greatly improve our ability to deliver a successful outcome for shareholders. I look forward to working with all the new appointments and warmly welcome John and Sharna to the Board.”

More positive media exposure for QPM and the NQ battery metals industry, after yesterday's all-time high finish of 24.5 cents. QPM is now up approximately 514% year to date and continues to go from strength to strength.

NQ battery metals trade to provide thousands of jobs

Earlier this year, the proponents of the $650m Townsville Energy Chemicals Hub project, Queensland Pacific Metals, announced supply agreements and equity stakes worth about $20m with LG Energy Solutions and Korean steel producer POSCO.

QPM CEO Stephen Grocott said electrification and, particularly, investments from Korea were opening the way to well paid, highly skilled jobs in Townsville.

He said their project, if it proceeded next year, would require 300 jobs, almost all professional, highly skilled, degree-qualified positions.

One of the reasons Townsville was such a good site was the availability of a skilled workforce and the presence of good universities, Mr Grocott said.

One downside is risk aversion in Australia.

While QPM is hoping the federal government’s Northern Australia Infrastructure Facility and Export Finance Australia will provide loans, much of the funds needed for its project are expected to come from international banks and investors, particularly in Korea.

“To me the biggest issues are risk aversion in Australia and the speed at which things get done,” Mr Grocott said.

Korean companies are supplying EV batteries to car makers around the world and are keen to diversify their supply of critical minerals which at present are sourced mostly from China.

There is also concern about environmental damage in source countries like PNG and Indonesia.

The Australia-Korea Business Council has identified QPM’s TECH project among those which will broaden an already strong trading relationship with Korea.

You can read the full article here

It's great to see QPM getting some attention in the Townsville Bulletin. QPM closed at 19 cents (up 2.70%) on higher than usual volume, which I believe is because of the exposure from this article.

Townsville Bulletin - August 31, 2021 12:00am

Battery metals developer to submit funding proposal to NAIF

As a QPM shareholder, I am very grateful to have such a strong management team led by Dr Stephen Grocott. QPM ticked another box this morning, as they announced that their Strategic Assessment phase has been approved by the North Australian Infrastracture Facility, which means QPM can now proceed to the due deligence phase.

QPM outlined the benefits that their TECH Project will have on Townsville and the surrounding North Queensland regions. Some of the benefits include the employment opportunities, the flow on effect to supporting industries and the indigenous engagements  - that Aboriginal Cultural Heritage is identified and managed and encourage its contractors to also make commitments in providing Aboriginal employment opportunities.

QPM now intends to submit a formal Investment Proposal to NAIF. QPM will work with NAIF to provide the required information to complete its due diligence investigations regarding participation in the debt facilities that will (partially) fund the TECH project. NAIF has not made any decision to offer finance or made any commitment to provide any financial accommodation and there is no certainty that an agreement will be reached between the parties. QPM is actively working on securing its debt and equity financing solutions that are required to reach Final Investment Decision. NAIF’s decision to progress to Due Diligence stage is a significant step towards attracting other debt financiers and building the optimum debt syndicate.

QPM Managing Director and CEO Stephen Grocott commented,

“I am delighted that NAIF has accepted the TECH Project to move into the Due Diligence stage. This is vindication of the opportunity we have to build a world-leading manufacturing facility of battery metals which will be a game changer for nickel laterite processing, whilst also delivering significant benefits to Townsville and Greater North Queensland. I would also like to express my appreciation to the NAIF team for their professionalism in understanding the TECH Project and its technical and commercial elements”.

QPM has announced this morning that it has signed a non-binding MOU with Transition Energy Corporation Pty Ltd  and North Queensland Gas Pipeline to develop a dedicated gas supply chain from the northern Bowen Basin to QPM’s TECH Project.

The keytake away for me is this line here:

"This is expected to result in a significant reduction in carbon emissions and has the potential to make the TECH Project a zero carbon nickel producer."

QPM is positioned to become Australia’s first producer of net zero carbon nickel, which is another big tick of the box from Dr Stephen Grocott and the management team.

Highlights

• QPM, Transition Energy Corporation Pty Ltd and North Queensland Gas Pipeline (collectively the “Parties”) have signed a non-binding Memorandum of Understanding (”MOU”) to work together to develop and deliver a gas field supply chain from the northern Bowen Basin to QPM’s TECH Project to be located at the Townsville City Council’s Lansdown Eco Industrial Park.
• The MOU outlines the framework for the Parties to negotiate gas supply and transportation agreements and work together to complete studies for the feasibility, design, approvals and construction of the initial gas supply chain, in order to seek to align the construction of thatinitial gas supply chain with the works being undertaken in relation to the TECH Project, which is due to be commissioned by end of 2023.
• Current development plans involve the draining and harvesting of gas (which would otherwise be flared or vented) from operating mines in the northern Bowen Basin for transportation to the Lansdown Eco Industrial Park via the North Queensland Gas Pipeline (NQGP).
• This is expected to result in a significant reduction in carbon emissions and has the potential to make the TECH Project a zero carbon nickel producer.

Investment Funds Received from LGES and POSCO

Queensland Pacific Metals Ltd (ASX:QPM) (“QPM” or “the Company”) is pleased to advise that it has received funds from LG Energy Solutions (“LGES”) and POSCO GEM 1ST FUND (“POSCO”) relating to their US$15m equity investment (refer to ASX announcement 8 June 2021).

QPM will now issue 99,235,889 shares to LGES and 42,529,667 shares to POSCO.

Dr Stephen Grocott and the excellent management team at QPM continue to tick all the boxes. Project approvals are advancing, the Definitive Feasibility Study is progressing well and is still on track to be completed in February 2022. 

Great news on the funding front: "In light of strong project progress and the LGES/POSCO transactions, QPM has started to receive an increase in inbound enquiry from potential debt and equity financiers. QPM is currently conducting a tender process to appoint a debt advisor and expects to do so imminently."

Receiving funding will massivley derisk QPM & their TECH project.

June 2021 Quarterly Report

Highlights

• US$15m share placement to LG Energy Solutions and POSCO GEM 1st FUND undertaken at a 16.8% premium to the 1 month VWAP at the time of the transaction
• Binding 7 year offtake agreement for 10,000tpa contained nickel and 1,000tpa contained cobalt with LG Energy Solutions and POSCO
• Progress made on Definitive Feasibility Study – remains on schedule for completion February 2022
• Project approvals advancing well at all levels of Government
• Cultural Heritage Management Agreement executed with the Bindal People
• QPM Corporate and Owner’s team established with hiring of personnel almost complete
• Pro-Forma cash balance 30 June 2021 of $37.7m (including funds to be received under the LGES/POSCO transaction)
• Ongoing engagement with debt and equity financiers

Today's annoucement is a significant tick of the box for QPM and the management team. LG Energy Solution and POSCO taking an equity position and signing binding offtake agreements is a big vote of confidence and significantly derisks the TECH project. 

LGES Global SCM Center Leader Dongsoo Kim commented,

“This is the most meaningful investment in our supply chain for LG Energy Solution since the company spun out from LG Chem. We believe the TECH Project will deliver sustainable nickel and cobalt production that is in line with LGES’ operating philosophy. And our proactive investments in the supply chain such as this will ultimately play a role in further satisfying our customers.”

Investment and Offtake Agreements Executed with LG Energy Solution and POSCO

Highlights

• US$15m combined equity investment from LG Energy Solution and POSCO GEM 1ST FUND
• Shares will be issued at a price of A$0.1364, a premium of 16.8% to the 1 month VWAP of QPM shares
• Binding offtake agreements signed for the sale of 10,000t contained nickel and 1,000t contained cobalt with LG Energy Solution and POSCO
• The commercial transaction is the culmination of extensive negotiation and due diligence undertaken on QPM and the TECH Project by LG Energy Solution and POSCO

Trading Halt Request

Dear Mr Logarajah,

Queensland Pacific Metals Ltd (ASX:QPM) (“QPM” or “the Company”) requests that its securities be placed in a trading halt as follows:

1. The trading halt has been requested pending the release of an announcement regarding QPM finalising an offtake and associated funding agreement (the, “Announcement”);

2. The trading halt should be until the release of the Announcement by the Company, expected to be no later than market pre-open on Tuesday, 8 June 2021; and

3. The Company is not aware of any reason why the trading halt should not be granted.

Authorised by the Board

Cultural Heritage Management Agreement Executed

Highlights

• The Bindal People are the Traditional Owners and Custodians of the Lansdown site, where the TECH Project will be constructed
• Cultural Heritage Management Agreement entered into between QPM and the Bindal People to ensure Aboriginal Cultural Heritage is identified and managed as part of the TECH Project
• QPM will commit into entering a Heads of Agreement with the Bindal People regarding indigenous employment policy, training, apprenticeships and other opportunities

March 2021 Quarterly Report

Highlights

• Successful pilot plant campaign confirms DNi Process™ flowsheet, generates MHP samples for offtakers and leads towards commencement of DFS for the TECH Project 
• Completion of capital raising ensuring QPM is fully funded to complete the DFS
• Appointed of Hatch as Lead Engineer for the DFS, with a formal instruction to design the TECH Project at a scale of 1.5m wmt ore per annum
• Confirmation of the TECH Project’s sustainability credentials with estimated CO2 emissions calculated significantly below the global industry average

JIM SIMPSON APPOINTED NON-EXECUTIVE DIRECTOR

Queensland Pacific Metals Ltd (ASX:QPM) (“QPM” or “the Company”) is pleased to announce the appointment of Mr James (Jim) Simpson as Non-Executive Director of the Company, effective 1 May 2021.

Mr Simpson is a highly respected and experienced Mining Engineer with significant public company board and management experience. Mr Simpson is currently Executive Director Mining at Peel Mining Limited (ASX: PEX), which is developing large-scale and high-grade base metal deposits in the Cobar Superbasin in western New South Wales.

Prior to this, Mr Simpson was Managing Director and Chief Executive Officer at Aurelia Metals Limited. During his time at Aurelia, the company market capitalisation increased from sub $20m to over $800m at its peak, along the way repaying more than $125m of debt and significantly increasing the production profile of the Company with the acquisition of Peak Gold Mines in 2017/18.

Mr Simpson has more than 30 years mining industry experience, specialising in underground metalliferous mining. His previous roles include Chief Operating Officer & Executive Vice President for Peak Gold Ltd; General Manager & Director at Goldcorp Asia Pacific, Peak Gold Mines; and General Manager Mining Lead Zinc at MIM Holdings, Mt Isa. Mr Simpson’s experience ranges from mine development and management through to corporate and equity market participation.

Mr Simpson holds a Bachelor of Engineering Mining (Hons) from University of NSW and a Diploma of Business (Frontline Management) and is a member of the Australasian Institute of Mining and Metallurgy.

The appointment of Mr Simpson to the Board reflects the Company moving into an exciting period of completing the Definitive Feasibility Study for the TECH Project following the recent $20m capital raising (placement and share purchase plan). His experience with bringing projects through their feasibility and development phases and into production will be important as QPM makes its transition into a producer of battery chemicals in Australia

Chairman Eddie King commented,

“I am delighted that someone of Jim’s calibre has chosen to join the Board of QPM. Jim brings with him a wealth of resources and corporate experience and has a detailed understanding of what is required when taking a resources project through its technical feasibility and funding/development phases and ultimately into production. I look forward to working with Jim during this period and beyond.”

Commenting on the appointment, Jim Simpson said,

“It is an exciting time to be joining the QPM team as they progress the TECH Project. I am looking forward to being involved in both the production of battery chemicals and building advanced manufacturing capacity here in Australia. Furthermore, QPM has built an innovative and fast paced technical and commercial team with all the required requisite skills to ultimately build the project.”

SPP Upscaled to $5M due to Strong Demand

Highlights

• $10.6 million received in valid subscriptions, despite closing SPP early
• Due to strong demand, the SPP has been scaled up from $3 million to $5 million to allow retail shareholders to meaningfully increase their holding
• Extra funds will be used for initiatives that will assist with acceleration and advancement of the TECH Project
• Allotment of shares will occur Friday, 23rd April 2021

"The assay results were better than QPM’s targets for all elements. Based on industry specifications received by QPM, the results satisfy the strictest battery specifications. This is an important milestone for QPM as the Company has now produced battery spec nickel sulfate from a bulk sample of representative nickel ore sourced from its New Caledonian ore supply partners."

Battery Spec Nickel Sulfate Produced from Pilot Plant MHP

Highlights

• Bench scale testwork complete producing battery chemical nickel sulfate from nickelcobalt MHP produced in pilot plant
• Conventional flowsheet used, the same that is currently utilised in the industry to produce nickel sulfate from MHP
• Assay results meet target specification of various spec sheets provided by potential offtakers

QPM’s SPP to close early as heavily oversubscribed

Queensland Pacific Metals Ltd (ASX:QPM) (“QPM” or “the Company”) is pleased to announce that the Company has been overwhelmed with acceptances in the Share Purchase Plan (SPP) that was announced on 22 March 2021 and opened on 31 March 2021.

The Company advises that it has already received subscriptions in excess of $5.7 million and as a result the Company will closed the SPP at the close of business on Wednesday, 14 April 2021.

The Company advises that any further applications received after 5.00pm (WST) tomorrow, Wednesday, 14 April 2021 will not be accepted under the SPP and application monies will be returned in full to the applicant.

The Company advises that the money raised under this SPP and from the recently completed $15 million share placement (announced 22 March 2021) (Placement) will be used for:

• Completion of a Definitive Feasibility Study (“DFS”) for the TECH Project;

•Completion of regulatory approvals; and

• Corporate costs and working capital. QPM’s Managing Director, Stephen Grocott commented:

“We are very pleased with the high level of participation from our shareholders and we thank shareholders for their continued support. The strong investor support for QPM is a very positive signal to external parties in all areas of the business including potential offtakers, equipment suppliers, major consumable suppliers and regulatory bodies.”

MOU for Additional Ore Supply

Highlights

• Memorandum of Understanding regarding ore supply executed with Societe Le Nickel – SLN (“SLN”), a subsidiary of Eramet group.
• QPM and SLN agree to negotiate in good faith for an ore supply agreement for approximately 800,000wmt per annum commencing 2023
• Ore specification in line with QPM’s requirements for the TECH Project (1.45 – 1.70% Ni and 0.15 – 0.25% Co)

Board, Management and DFS Appointments

Highlights

• Dr Stephen Grocott has been appointed as Managing Director
• John Downie (former MD) transitioning to Executive Director and will remain intimately involved with QPM
• Highly experienced Project Director, Barry Sanders, appointed to lead DFS
• Global engineering group Hatch appointed as lead engineer for DFS

$15M Placement Successfully Completed

Highlights

• Placement to raise $15M from institutional and sophisticated investors at $0.08 per share
• Share Purchase Plan to raise $3M will be available to all eligible shareholders
• Placement was significantly over-subscribed with significant institutional backing
• QPM is now fully funded to complete the Definitive Feasibility Study and regulatory approvals for the TECH Project

Queensland Pacific Metals Ltd (ASX:QPM) (“QPM” or “the Company”) is pleased to announce that it has received firm commitments from institutional and sophisticated investors to raise $15 million (before costs) via a share placement of 187,500,000 fully paid ordinary shares at an issue price of $0.08 per share (“Placement”). The Company will also open a Share Purchase Plan (“SPP”) which will allow eligible shareholders the opportunity to subscribe for shares at the same issue price as the Placement. Chairman Eddie King intends to participate in the SPP. The Placement was strongly supported with demand significantly in excess of funds sought by QPM and the bookbuild closing within a few hours of opening. The issue price represents a discount of 17.5% to the 15-day volume weighted average price. The Placement shares will be placed in accordance with the Company’s available capacity pursuant to Listing Rule 7.1 and 7.1A. The shares issued under the Placement and SPP will rank equally with existing shares. Foster Stockbroking Pty Ltd acted as Sole Lead Manager for the Placement.

Use of Funds The net proceeds raised from the Placement and SPP will be used for:

• Completion of a Definitive Feasibility Study (“DFS”) for the TECH Project;
• Completion of regulatory approvals; and
• Corporate costs and working capital.

Chief Executive Officer Stephen Grocott commented, “We are delighted to raise sufficient funding to complete the DFS for the TECH Project. This allows the QPM team to focus on delivering this key study that will underpin the viability of the project and also allow us to procure financing for the construction. We welcome all new shareholders to the Company and are delighted by the quality of institutional investors who have supported the Placement.

Trading Halt Request

Dear Mr Barcham,

Queensland Pacific Metals Ltd (ASX:QPM) (“QPM” or “the Company”) requests that its securities be placed in a trading halt as follows:

1. The trading halt has been requested pending the release of an announcement regarding a capital raising (the, “Announcement”);

2. The trading halt should be until the release of the Announcement by the Company, expected to be no later than market pre-open on Monday, 22 March 2021; and

3. The Company is not aware of any reason why the trading halt should not be granted.

MHP Assays Deliver Excellent Results

Highlights

• Nickel Cobalt Mixed Hydroxide Precipitate (“MHP”) assay results deliver excellent results
• Specifications of MHP from piloting work is in line with leading MHP products that are currently sold around the world

GHG Report Confirms TECH Project’s Low CO2 Emissions

Highlights

• TECH Project estimated CO2 emissions is 36% lower than industry average calculated by the Nickel Institute for nickel sulfate production
• Potential for CO2 emissions to be further reduced and to have net-negative CO2 emissions if gas supply is derived from vented/flared gas at existing Queensland coal mines
• Findings based on report prepared by Minviro
• QPM positioning the TECH Project to be a world leader in sustainable nickel production

Strong Offtake Interest Drives Major Expansion of TECH Project

Highlights

• QPM formally commits to increasing the scale of the TECH Project to at least 2x the PreFeasibility Study project size
• QPM decision based on assessment of key project considerations including market demand, ore supply, environmental approvals, infrastructure and supply of consumables
• A larger TECH project will have lower capital intensity and higher margins
• Final sizing to be determined by Definitive Feasibility Study. Process has commenced to appoint a lead Engineering company
• Targeting first production in 2023
• DNi Process™ License has been finalised with Altilium Group, facilitating TECH Project expansion

Successful Pilot Plant Campaign Provides Confidence to Proceed to DFS Highlights

• Successful pilot plant campaign confirmsflowsheet, providing QPM with the confidence to proceed towards DFS for the TECH Project
• 14 dry tonnes of representative New Caledonian ore processed, which has produced MHP product to send to potential offtakers and to facilitate nickel and cobalt sulfate refining testwork
• Nitric acid ore leach performance exceeded expectations with 98.7% nickel extraction, 96.0% cobalt extraction and 95.3% iron extraction
• Solid-liquid separation performance of leach residue exceeded design expectations confirming that the TECH Project will not require any tailings dam
• Iron precipitation yielded high-grade 61.6% Fe hematite product that will now be prepared for agglomeration and testing as blast furnace feed for steel making
• Successful recovery of nitric acid from iron hydrolysis circuit producing acid at the design concentration which was recycled directly back to the leach circuit

December 2020 Quarterly Report

Highlights

• Strong progress made on product marketing resulting in offtake MOUs signed with LG Chem and Samsung SDI
• Commencement of pilot plant activities with first MHP produced in preliminary pilot run
• TECH Project site within Lansdown Eco-Industrial Precinct formally secured by Reservation Deed with Townsville City Council

First MHP produced at TECH Project Pilot Plant

Queensland Pacific Metals Ltd (ASX:QPM) (“QPM” or “the Company”) is pleased to announce that the first batch of nickel-cobalt mixed hydroxide precipitate (“MHP”) has been produced from its pilot plant located at ALS Global.

Throughout the quarter, the pilot plant was constructed and commissioned. The first continuous pilot plant run recently commenced with representative ore sourced from New Caledonian ore supply partners being fed into the plant. This has culminated in the first batch of MHP being produced from the pilot plant.

The production of MHP is an important milestone, demonstrating the DNi ProcessTM flowsheet on New Caledonian ore. Potential offtakers for the TECH Project are most interested in this part of the flowsheet, as the process of converting MHP into nickel sulfate and cobalt sulfate is well understood and established at commercial scale.

Chief Executive Officer, Stephen Grocott commented,

“I would like to thank all parties involved who have worked tirelessly on the pilot plant including ALS Global, Altilium Group, CSIRO, Hatch and our Owner’s team. There remains plenty of work to do but the production of first MHP from New Caledonian ore is a satisfying achievement for the company.”