Queensland Pacific Metals Ltd (ASX:QPM) has received conditional finance support from Export Finance Australia (EFA) to secure up to A$250 million in debt funding for the Townsville Energy Chemicals Hub (TECH) Project planned to be developed in North Queensland.
The EFA will now begin detailed due diligence on the TECH Project in line with its mandate to provide financial expertise and solutions to support Australian businesses across a variety of industries, including critical minerals.
EFA also administers the Australian Government’s A$2 billion Critical Minerals Facility, which helps critical minerals projects to get them off the ground.
This marks the second expression of interest from an Australian Government entity, following the Northern Australian Infrastructure Facility (NAIF) informing QPM that its TECH Project has progressed through the NAIF’s strategic assessment phase.
Both NAIF advice and this letter of support from the EFA highlights that the TECH Project is broadly aligned with the objectives of the Australian Government’s Critical Minerals Strategy – to diversify global critical mineral supply and capture more value from the critical minerals value chain.
“Increasing level of confidence”
“I am delighted by the support for the TECH Project being shown by the Australian Government, both through the EFA and through NAIF,” Queensland Pacific Metals managing director Dr Stephen Grocott said.
“When combined with the strong interest shown from commercial financiers, we have an increasing level of confidence in securing the appropriate debt funding package for the project.
“In particular, the conditional support offered by EFA shows how the TECH Project broadly aligns with the objectives of the Australian Government’s Critical Minerals Strategy and the Critical Minerals Facility.
“We continue to create the path to a commercially attractive battery materials production facility – one that has elite sustainability credentials.
“Demand for critical battery materials which will be produced from the TECH Project is anticipated to show significant growth over the next two decades as the world's car fleet transitions to electric vehicles.”
$30 million placement
In a further boost for QPM, the company has received binding commitments to raise A$30 million (before costs) via a share placement of 187.5 million fully paid ordinary shares at an issue price of A$0.16 per share.
The placement was strongly supported by new and existing institutional and sophisticated investors, with a number of new offshore investors introduced to the register.
Funds raised will primarily be used to fund completion of the TECH Project DFS, test-work and detailed engineering, ESG initiatives, owner’s team and working capital.
Grocott said: “We are delighted with the support for the placement and welcome a number of highly credentialed Australian and offshore institutional investors to the register.
"On behalf of the board, I would also like to thank our existing shareholders for their ongoing support.
"The funds from this placement support the next stage in our development, completion of the DFS, test-work & engineering and ESG initiatives.
”We look forward to putting investors’ funds to work creating a path towards the development of a battery materials production facility that boasts global leading ESG credentials, a vital ingredient for the western EV sector.”
The placement price of A$0.16 per share represents an 8.6% discount to the last traded price and a 7.5% discount to the 5 traded day VWAP of the company’s shares to December 10, 2021.
Conditions of EFA support
The EFA’s financial support is conditional on a number of factors that will be assessed during the agency’s assessment and due diligence process. These include making satisfactory progress toward completion of the TECH Project’s feasibility study:
- An acceptable engineering contracting strategy for the engineering, construction and commissioning of the project;
- The project’s funding plan including the raising of equity and securing funding from other lenders;
- Meeting eligibility criteria, credit and risk requirements, including, but not limited to, EFA’s 'know your customer' and anti-bribery requirements and checks; and
- The project complying with EFA’s environmental and social risk policies, including receiving the required regulatory and environmental approvals.
EFA is Australia’s export credit agency and is wholly owned by the Australian Government. It provides financial solutions to support Australian exporters through loans, guarantees, bonds and insurance.
QPM’s debt financing strategy continues to be focused on securing a Project Finance Syndicate consisting of leading Australian and Global financiers, global Export Credit Agencies (ECA) as well as Development Finance Institutions (DFI).
Conditional financing support has now been received from EFA, NAIF, global ECAs and DFIs and from nine Australian and International Commercial Banks.
QPM says a key benefit of having this diversification strategy is to provide greater flexibility in loan structuring, greater access to low-cost lending (both direct and indirect) and to ensure the financing is aligned with QPM’s key development and offtake partners
The TECH Project
The TECH Project is a sustainable green nickel and cobalt producer with the recently updated Life Cycle Assessment from Minviro highlighting that the project will be net Carbon Emissions Negative.
QPM believes its ESG credentials will be the strongest in the world compared with other nickel projects.
According to the company, not only will the project have net-negative carbon nickel production, but there will also be minimal environmental footprint, no tailings dam or zero process liquids discharge and compared with other projects, complies with Western world labour standards and mining laws for sustainable mining practice across its full supply and production chain.
About QPM
Queensland Pacific Metals’ focus is the Townsville Energy Chemicals Hub (TECH) Project, which is envisaged to become a sustainable producer of critical chemicals for the lithium-ion battery and electric vehicle sectors, particularly nickel.
The project aims to import high-grade nickel laterite ore from New Caledonia for unloading at the Port of Townsville and then to be transported by road or rail to the TECH Project site at Lansdown.
The site allocated for the project in the Townsville Industrial Precinct has all the necessary infrastructure including, water and gas pipelines, electric transmission lines, fibre optic communications, existing Ross River and edify solar arrays, road train access to Townsville Port and rail line.