FPX Nickel Corp (TSX-V:FPX, OTCQB:FPOCF) has announced that Sumitomo Metal Mining (SMM) will invest $14.45 million in the company to become a new cornerstone strategic investor.
Under the private placement, FPX will issue 30,104,488 shares to SMM subsidiary Sumitomo Metal Mining Canada (SMCL) at $0.48 each for a 9.9% stake. It will use the net proceeds for exploration and development at its Baptiste Nickel Project in British Columbia, including ongoing environmental baseline activities and feasibility study readiness.
"This strategic investment by Sumitomo Metal Mining represents another significant technical validation of FPX's Baptiste Nickel Project, and underscores our view that Baptiste is a class-leading asset," FPX president and CEO Martin Turenne commented in a statement.
"SMM is one of the world's largest nickel producers, with peer-leading expertise in mining, processing and refining products in the stainless steel and electric vehicle battery supply chains. FPX is pleased to be one of SMM's preferred partners as they look to expand their nickel production profile and diversify their supply chain to allied partners in North America.”
The private placement is expected to close on January 22, 2024, and is subject to certain customary conditions, including acceptance by the TSX Venture Exchange, as well as execution of an Investor Rights Agreement and a right of second offer (ROSO) agreement.
Under the ROSO agreement, as long as it continues to hold all the private placement shares, SMCL will have the right to negotiate, at market terms, one or more offtake agreements with FPX for up to an aggregate of 60,000 tonnes of nickel from the project. Its offtake right will rank secondary to an offtake right previously granted by FPX to Outokumpu Oyj.
“We expect that this investment will establish a strong relationship between SMM and FPX, with the aim to contribute to SMM's long-term production target of 150,000 tonnes of nickel per year,” SMM executive Eiichi Fukuda added.
“We have a long business history in Canada with a variety of partners, and we are excited to be working with FPX."