Pure Minerals Ltd (ASX:PM1) (FRA:4EA) subsidiary Queensland Pacific Metals Pty Ltd (QPM) has entered an MOU with Sun Metals Corporation Pty Ltd to investigate the potential to produce a joint iron oxide product in Townsville, Queensland.
The two parties will establish a project team which will assess the potential to deliver benefits for both, such as increased scale and market presence and any cost synergies.
While the primary objective of QPM’s TECH Project in Townsville is to produce battery metals, hematite will be produced as a co-product and the MOU may lead to this adding financial benefit to the project and company.
Sun Metals, the Australian subsidiary of Korea Zinc Company Limited, owns and operates the Sun Metals zinc refinery in Townsville and is undertaking an expansion and upgrade of its refinery that will also see it produce an iron oxide (hematite) project.
Based on QPM’s pre-feasibility study (PFS), the TECH Project will annually produce 327,000 tonnes of high-grade hematite.
The MOU will assess the potential of combining the two iron oxide projects to produce a single saleable product.
Working with others
Pure Minerals’ managing director John Downie said: “The Sun Metals zinc refinery is one of the true success stories for Townsville.
“One of the QPM’s goals is to see how we can work with other companies in the region to promote regional growth, create synergies and build upon the benefits of the TECH Project.
"Whilst our primary focus is battery chemicals, the iron co-product generated by the TECH Project delivers considerable financial benefit.
“We are pleased to be able to work with Sun Metals to investigate how we could increase the value of each companies’ respective iron product.”
The potential benefits of combining the two hematite products include:
- Increased scale and market presence; and
- Greater economic returns resulting from cost-saving synergies such as logistics, marketing and product agglomeration.
Project team tasks
The project team to be formed as part of the MOU will undertake:
- An assessment into the marketability of a joint iron oxide product with consideration given to grade, physical properties, impurities and other factors that would influence pricing and appeal to potential offtakers;
- Test-work to verify the ability to produce a combined product;
- A scoping study to determine preliminary economic results of producing a combined product; and
- An investigation of any other opportunities and benefits that may arise from this project.
The initial term of the MOU is for 12 months and costs will be shared equally amongst the respective parties.
If the project studies are successful, QPM and Sun Metals have agreed to negotiate in good faith a commercial arrangement that is mutually beneficial.
This may include joint venture, offtake for each parties’ respective product or some other commercial structure.