Queensland Pacific Metals Ltd (ASX:QPM) (FRA:4EA) has soared after committing to increase the scale of the TECH Project in Townsville, Queensland, by at least two times from what was originally contemplated in the pre-feasibility study.
Initial consideration of increasing the scale of the TECH Project from the PFS size (600,000 wet tonnes per annum) was driven by discussions with potential offtakers and the respective Memorandums of Understanding signed with LG Chem and Samsung SDI.
From these discussions, it was evident to QPM that increasing production of key battery metals nickel and cobalt would increase the appeal of the TECH Project to offtakers.
The increase in size will also allow QPM to benefit from large economies of scale, which will improve the capital efficiency and project economics of the project.
At this stage, the project will be scaled up to annually process 1.2-1.5 million wet tonnes of ore, with the final sizing to be determined by the definitive feasibility study.
QPM has been as much as 71% higher to 15 cents, a new high of more than 12 years.
“Busy and exciting 2021”
Chief executive officer Stephen Grocott said: “We continue to clear obstacles and create value-add opportunities.
“The work over the last few months has created an even more attractive and optimal development path.
“We look forward to undertaking the DFS and putting together the required commercial arrangements that we need to make the TECH Project a reality.
“2021 is shaping up as a busy and exciting year for QPM and its shareholders.”
Key project considerations
When considering the size of the TECH Project, QPM wanted to ensure that the associated capital expenditure was still manageable from a financing perspective.
Other key project considerations included ore supply, the environmental approvals process, infrastructure and constraints, and the supply of consumables.
QPM currently has an ore supply agreement with Societe des Mines de la Tontouta (SMT) and Societe Miniere Georges Montagnat SARL (SMG) for 600,000 wet tonnes annually over a 10-year period with a 5-year option on agreement.
The company has been assessing additional ore supply opportunities, including from its own Sewa Bay project.
QPM is confident that it can secure the additional ore supply required to feed the larger scale TECH Project.
Environmental consultants EMM Consulting commenced approvals work in late 2020 based on the 1.2-1.5 million tonnes TECH Project size.
Following EMM’s advice and discussions with key regulatory bodies, there was no material difference with respect to timing for obtaining project approvals at this scale.
Environmental approvals remain on track for the December 2021 quarter.
Infrastructure capacity and constraints
QPM assessed key infrastructure required to support the project, with logistics playing an important role.
Port capacity for ore importation and product exports has been confirmed with the Port of Townsville Limited (POTL) and an MOU was recently executed.
Both road and rail remain viable transport options for the TECH Project linking the Port of Townsville to the Lansdown Eco-Industrial Precinct.
With the finalisation of the scale of the TECH Project and advancement in project approvals and technical work streams, QPM has prepared an updated project schedule as shown below.
The plant design remains a single leaching train flowsheet and so construction time is unaffected by the doubling of production capacity.
First production is targeted for 2023.
Finalisation of DNi Process™ Licence
QPM’s licence arrangement was previously governed by a Framework Agreement. As part of the Framework Agreement, QPM and Altilium Group were to execute a definitive agreement for licensing of the DNi Process™.
QPM and Altilium have now finalised the definitive agreement.
The key terms include:
- 30-year term;
- Exclusive rights to utilise the DNi Process™ within a 100 kilometre radius of the Port of Townsville; and
- Ongoing fees for the exclusivity rights and use of the DNi Process™ on terms that are commercial in confidence, but are in line with assumptions utilised in the PFS.