Technology Metals Australia Ltd (ASX:TMT) has entered a non-binding MOU with APA Group (ASX:APA) to investigate the provision of gas along a new pipeline to benefit the Gabanintha Vanadium Project (GVP).
TMT and APA have agreed a commercial framework to investigate the pipeline of about 152 kilometres to be developed by APA from the south to supply gas to the GVP.
In return, TMT would enter into a take or pay tariff over an agreed period linked to the life of the project.
Developing reliable energy solution
Managing director Ian Prentice said: “We are very pleased to have entered into this agreement with APA on the development of a proposed new gas pipeline, providing low-risk delivery of gas to the project, cost reductions compared to the DFS as well as the opportunity to source gas from the significantly closer emerging Perth basin gas fields.
“APA is a leading Australian energy infrastructure business with 20 years’ experience in building, owning and operating gas pipelines.
“We will be working together to develop a reliable energy solution for the GVP.
“This represents another key milestone as we progress the development of this lowest cost quartile, large-scale, long-life world-class vanadium project.”
The proposed new pipeline is shorter than the gas pipeline contemplated in the definitive feasibility study (DFS) on the development of the GVP and is, therefore, expected to deliver material operating cost savings from lower gas transportation charges than those included in the DFS.
Its location will also enhance the opportunity for TMT to secure cost-competitive gas supply from the rapidly emerging Perth Basin, with potential to further reduce gas transportation charges for the project.
TMT and APA have agreed to an exclusivity period on negotiation of the gas transportation services for the term of the MOU during which they will negotiate and endeavour to agree the transaction documents.
Technology Metals’ DFS for the GVP proposes to use natural gas as the heating energy in the roasting kiln and other parts of the process circuit and for electricity generation.
The GVP’s expected maximum and average daily consumption of natural gas is 10.67 and 6.28 terajoules respectively.
Key items of non-binding MOU
- Agree a commercial framework for provision of gas transportation services and an initial work plan to finalise and execute the transaction documents;
- A term of the earlier of two years or the parties entering into transaction documents;
- The transaction documents will include a Gas Transportation Agreement, a Development Agreement under which APA will design and construct the proposed new pipeline and any necessary access licences required for the route of the proposed new pipeline;
- Indicative tariffs based on maximum gas transportation of 10.7TJ/day and either a 15-year or 20-year term;
- An exclusivity period during the term of the MOU in which TMT must not negotiate or enter into an agreement with any third party in relation to the proposed gas transportation services; and
- Conditions precedent customary for an agreement of this nature including completion of due diligence into the proposed transaction, approval of respective board of directors and any third party consents.