Queensland Pacific Metals Ltd (ASX:QPM) laid the foundations during a busy FY21 to deliver a definitive feasibility study (DFS) and progress offtake agreements for a new kind of battery material plant in FY22.
The future battery chemical producer spent the financial year developing the Townsvillle Energy Chemicals Hub (TECH), a processing plant that will take ore from New Caledonia to generate nickel sulphate, cobalt sulphate, high purity alumina and other by-products – leaving, for the first time ever in the world, almost zero waste products.
FY21 also saw QPM appoint a key leader to the business: Dr Stephen Grocott joined the team as CEO in July 2020 and managing director in April 2021.
QPM ended the period with $17 million in the bank to support its operations in FY22.
Pilot plant pilgrimage
One of FY21’s key highlights involved constructing a pilot plant for the Townsville’ TECH project.
The hub came to life in last year’s December quarter and generated its first round of battery specification nickel sulphate in April this year.
At the time, Dr Grocott said: “We have now completed the full process from a raw ore source to a final battery chemical product.
“The Australian Government is trying to develop the nation’s capability for advanced manufacturing and the TECH Project is the perfect example of a project that would fit this bill.”
The results of its piloting pilgrimage gave QPM confidence to proceed with a definitive feasibility study, which will become a key part of the new financial year’s activities.
Global engineering firm Hatch was appointed as lead engineer to the DFS and work officially kicked off in the March 2021 quarter.
Location of the TECH hub.
DFS considerations
As part of the early DFS activities, QPM settled on a process design base case and formally instructed Hatch to design the TECH Project with a 1.5 million wet-metric-tonnes-per-annum capacity.
The expanded plant size — which is roughly 2.5 times the scale of the plant contemplated in the pre-feasibility study — reflects the level of interest QPM has received regarding offtake from the project.
In conjunction with Hatch, Queensland Pacific identified key engineering packages, commenced engagement with target vendors and completed an Australian Industry Participation plan over FY21.
It’s hoped these activities will best involve local suppliers and contractors in bringing the TECH project into production.
The asset’s DFS remains on schedule for completion in February 2022.
Full steam ahead on offtake deals
As work continues to develop the TECH project and its production capabilities, QPM has started making headway on a series of offtake deals.
In June, the ASX-lister signed the dotted line on an investment and offtake deal with LG Energy Solution (LGES) and POSCO GEM 1ST FUND.
Under the deal, the investors took up a combined US$15 million investment and entered a binding offtake agreement to purchase 10,000 tonnes of contained nickel and 1,000 tonnes contained cobalt from the TECH hub.
Dr Grocott said: “We warmly welcome LG Energy Solution and POSCO as shareholders to Queensland Pacific Metals and look forward to the day where the TECH Project becomes a significant supplier of nickel and cobalt to each company.”
Under the agreement, QPM will initially deliver nickel and cobalt in an MHP concentrate before moving to nickel and cobalt sulphate products when it secures commercial certification this financial year.
The future battery chemicals producer continues discussions with other potential offtake customers, including Samsung SDI, with which it signed a memorandum of understanding in November 2020.
Together with the proceeds from other capital raising activities conducted during the year, the investment from LGES and POSCO has ensured QPM is adequately funded to bring forward detailed engineering work for the TECH Project as part of the DFS.
Key terms from the offtake agreements.
Financials
QPM recorded a jump in cash and cash equivalents over the 2021 financial year. The company went from having $1.6 million in the bank to $17.7 million to continue its DFS activities.
A $15 million capital raise, completed in late March, was behind the sharp increase in cash reserves.
Net assets also increased from $900,000 to $15.8 million by the end of June.
At the end of FY20, QPM had generated around $400,000 in revenue and other income but recorded a $2.7 million result just 12 months later.
As the project accelerates towards production, development costs have contributed to a deeper net loss: $11.5 million over FY21 compares to just under $5 million the financial year prior.
Company appointments
As part of its growth strategy, QPM made several key appointments during the financial year, starting with recruiting mineral processing expert Dr Stephen Grocott as chief executive in July 2020.
He was promoted to managing director at the start of April 2021, and upon his elevation to the board, QPM founder and incumbent managing director John Downie moved to the role of executive director.
In his new role, however, Downie remains invested in the progress of the TECH Project.
At the end of April, QPM added more operational experience to the board and appointed mining engineer and former Aurelia Metals managing director Jim Simpson as a non-executive director.
The company also bolstered its executive ranks by adding Barry Sanders as project manager, who will lead the DFS.
Sanders brings more than 30 years’ experience in delivering industrial, mining, power and oil and gas projects throughout the Asia Pacific.
With its bolstered board expertise and work on the DFS in full swing, Queensland Pacific is preparing to bring a new kind of battery chemicals plant to life.