Australian battery metals explorer Pure Minerals Ltd [ASX:PM1] has watched its share price soar today, after announcing an offtake agreement for metals produced at its TECH (Townsville Energy Chemicals Hub) Project.
Shares in the microcap explorer have risen sharply since the end of September despite the absence of news from PM1.
At the time of writing, the PM1 share price is up 50%, or 1.5 cents, to trade at 4.5 cents per share.
A big deal with a big partner
PM1 announced this morning it has entered into a non-binding Memorandum of Understanding (MOU) with LG Chem Ltd. To supply nickel and cobalt from the TECH Project in Queensland.
LG Chem is South Korea’s largest diversified chemical company.
The company develops technology used in lithium-ion batteries, industrial and automotive materials, and drugs and vaccines.
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According to PM1, LG Chem is seeking to purchase up to 10,000t of contained nickel and approximately 1,000t of contained cobalt.
Great news for PM1.
Though there is one small problem, however it could be a good problem to have…
LG Chem’s demand exceeds the plant size currently planned in the Pre-Feasibility Study at the TECH Project.
The original PFS considered a project that would produce ~6,000t contained nickel and ~650t contained cobalt.
PM1 CEO, Stephen Grocott commented:
‘We are delighted at the opportunity to work with a world class company such as LG Chem to become a potential customer and partner of the TECH Project. When originally sizing the TECH Project, our aim was to deliver the smallest commercially sized project that would be economically viable and fundable.
‘With LG Chem’s involvement, there is now potential to scale up the size of the TECH Project to one which offers even more attractive capital efficiency.’
Supply solution could boost the Pure Minerals share price
As part of the MOU, PM1 and LG Chem have agreed to work together to evaluate the potential to increase the scale of the TECH Project to meet LG Chem’s demands.
Meaning we are now looking at a potentially scaled up project.
According to PM1, with the support of LG Chem, a larger scale TECH Project would offer a number of significant benefits.
Such as a reduction in capital intensity for nickel production and more favourable project economics due to lower unit costs.
But most importantly, increased revenue.
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For Money Morning