Queensland Pacific Metals Ltd (ASX:QPM) (FRA:4EA) has entered into a non-binding memorandum of understanding (MoU) with Societe Le Nickel (SLN), a subsidiary of Eramet SA (EPA:ERA) (FRA:ER7) (OTCMKTS:ERMAY) group, for the supply of nickel laterite ore from New Caledonia for the TECH Project.
Both companies have agreed to negotiate in good faith for an ore supply agreement for about 800,000 wet metric tonnes (wmt) per annum commencing in 2023.
"Underpin ore supply"
QPM chief executive officer Stephen Grocott said: “We look forward to working with SLN to consummate an ore supply agreement which will underpin the ore supply required to support the TECH project at the 1.2-1.5 million tonnes per annum scale.”
The key terms of the MoU are:
SLN will seek to obtain the necessary regulatory approvals it requires to make the sales;
QPM and SLN agree to negotiate in good faith a binding ore supply agreement for about 800,000 wmt of ore from New Caledonia per annum;
Supply to start in 2023; and
QPM and SLN will work together to evaluate a nickel ore specification that is beneficial to both parties, but indicatively will be in the range of 1.45 – 1.7% nickel and 0.15 – 0.25% cobalt.
Targeting limonite and transition zone ore
The majority of global nickel ore trade is for saprolite ore, which sits in the lower section of a nickel laterite ore body.
Saprolite ore is relatively low in iron and high in magnesium, making it suitable for ferronickel plants that produce nickel pig iron for the stainless steel industry.
QPM is targeting limonite and transition zone ore, which sits above the saprolite zone and must be mined to access the saprolite.
As there is a limited market for limonite ore, it is often stockpiled or returned to the ground as waste, both of which are costly exercises.
SLN is the world’s top producer of ferronickel and has multiple mine sites in New Caledonia, with operations dating back to 1880.
Its mining techniques have been devised to protect the environment, which fits with the sustainability principles of QPM and the TECH Project.
SLN’s parent company Eramet is listed on the Euronext Paris Exchange.
Queensland Pacific Metals also announced a series of key appointments that will lead the company through its definitive feasibility study (DFS) and beyond.
Dr Grocott has been appointed as managing director of QPM, effective immediately and Barry Sanders will take on the executive management role of project director.
Executive director John Downie said: “QPM is currently in an excellent position, being well-funded, having excellent traction with major global offtakers and having a project in an exciting sector.
“I am excited to see Stephen and Barry lead such an innovative and fast-paced team on its way to becoming a major producer of battery chemicals in Australia.
“I look forward to my ongoing significant involvement with the company as it continues to grow and evolve.”
Dr Grocott will take over from incumbent managing director John Downie, who will transition to an executive director role and remain heavily involved with the company.
Since joining as chief executive officer, Dr Grocott has led QPM through a period of significant growth and advancement for the TECH Project.
QPM's board looks forward to his continued leadership as the company progresses towards achieving its goal of becoming a significant supplier of critical battery chemicals to the EV sector.
The board recognises the contribution made by Downie and notes that his industry and New Caledonian relationships, wealth of knowledge and experience and passion for the TECH Project are invaluable and critical to the success of the company.
Sanders has more than 30 years’ experience, including 20-plus years in leadership and strategy roles involving the delivery of complex industrial, power, mining and oil and gas projects throughout the Asia Pacific region.
He has had roles at GE, John Holland, Thiess, Jacobs and Clough.
Sanders will lead initially lead the DFS for the TECH Project, transitioning to project construction and commissioning, subject to a final investment decision.
Lead engineer appointment
QPM has also appointed global engineering group Hatch to provide engineering services for the DFS.
QPM is confident that, alongside Hatch, it can deliver a quality DFS that will meet the requirements of potential financiers of the TECH Project.