Nickel and cobalt miner Queensland Pacific Metals [ASX:QPM] has signed an offtake deal with General Motors to help fund its Townsville Energy Chemicals Hub project (TECH).
QPM was one of the best-performing stocks on the ASX on Wednesday (12/10/2022), rising 20% in late afternoon trade.
That said, QPM shares are down 30% over the past 12 months:
Source: Tradingview.com
Queensland Pacific and General Motors enter a long-term agreement
The cobalt and nickel developer has announced an offtake agreement with American automotive giant General Motors (GM).
The agreement comes in the form of a long-term (initial 15 years for Phase 1) offtake cemented by a conditional binding commitment of up to US$69 million.
Under the agreement, GM agreed to invest up to US$69 million in QPM equity.
The equity investment breaks down into an initial investment of up to US$25 million and an FID investment of up to US$44 million.
As part of the initial investment, GM will subscribe for 174.6 million QPM shares at a subscription price of 18 cents per share, representing a 20% premium to QPM’s last closing price.
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.’
The funds raised by GM’s equity will be used to construct and develop QPM’s TECH project, leading to the pre-planned offtake arrangements.
While offtake arrangements bode well for the minerals developer, the remainder of the decision relies upon certain customary conditions which enable an FID investment to take place.
GM will first be awaiting the results of QPM’s DFS.
Dr Stephen Grocott stated:
‘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.’
Battery tech metals and their future
Now, as it so happens, cobalt and nickel are two key commodities we recently covered in our battery tech metals report.
The report was put together by our resident energy expert Selva Freigedo.
She argued that commodities of the electrified future — like lithium, graphite, cobalt, copper, and nickel — are set for a supply crunch as supply will struggle to keep pace with demand.
So how best to play the emerging battery tech theme?
Read Selva’s free research report for more information and insights.
Regards,
Kiryll Prakapenka,
For Money Morning
