Pure Minerals to snap up battery minerals play Queensland Pacific Metals

Pure Minerals (ASX: PM1) has agreed to snap up 100% of battery metals focussed Queensland Pacific Metals Pty Ltd, which has locked in ore supply agreements and plans to develop a nickel and cobalt sulphate plant in Queensland.

Under the binding option agreement, Pure Minerals has paid a $75,000 deposit and has 45 days to carry out due diligence on Queensland Pacific and its assets.

If Pure Minerals elects to proceed with the acquisition after the due diligence period, it will immediately issue 66.68 million shares to the vendors, as well as $500,000 in cash.

A further 333.32 million shares will be issued to the vendors upon Pure Minerals reaching various development milestones.

Post acquisition Pure Minerals will have an enterprise value of $2.7 million.

Additionally, current Queensland Pacific director John Downie will join Pure Minerals’ board.

Pure Minerals chairman Jeremy King said the acquisition of Queensland Pacific complemented the company’s focus on emerging battery minerals.

“Through Queensland Pacific’s unique relationships, Pure Minerals obtains leverage to secure production from world-class nickel and cobalt deposits without the attendant geological, mining or engineering risks,” Mr King said.

Queensland Pacific plans to begin feasibility studies into developing the 600,000 wet metric tonne per annum nickel and cobalt processing plant in Townsville.

As part of the plan, Queensland Pacific has secured initial five-year ore supply agreements with New Caledonia-based Societe des Mines de la Tontouta and Societe Miniere Georges Montagnat SARL.

The agreements allow for Queensland Pacific to source 600,000tpa of nickel and cobalt ore from the companies’ operating mines in New Caledonia, with minimum ore grades of 1.4% nickel and 0.15% cobalt.

However, Queensland Pacific anticipates the grades will exceed the minimum levels and produce about 25,000tpa of nickel sulphate and 3,000tpa of cobalt sulphate.

According to Pure Minerals, Townsville is about 2,000km from New Caledonia and hosts necessary infrastructure, skilled labour and engineering support.

The region also has a “long history” of processing New Caledonian ore.

“Townsville has a deep heritage in nickel processing and is emerging as a potential battery manufacturing region in Australia,” Mr King added.

New Caledonia

Pure Minerals says New Caledonia possesses the highest-grade nickel-cobalt ore found in the Asia Pacific area.

Additionally, New Caledonia hosts the world’s largest laterite ore reserves of about 7 million tonnes of contained nickel, 700,000t of cobalt, 140Mt iron and 15Mt of magnesia.

Societe des Mines de la Tontouta and Societe Miniere Georges Montagnat control about 20% of the nickel permit areas in New Caledonia.

Around 6.5Mt of nickel ore was exported from New Caledonia in 2017 to companies in Australia, China, Korea and Japan.

As well as sourcing ore from the New Caledonia producers, Queensland Pacific holds a permit application for the Eden Garry Serpentinite Ridge nickel-cobalt project in Queensland’s Marlborough region.

A criticism of the Australian mining industry is that Australia often exports ore and isn’t able to capitalise on the value added from downstream processing.

Queensland Pacific plans to change the story here by processing the New Caledonian ore and extracting significant value by producing nickel sulphate and cobalt sulphate, two critical materials for the emerging battery industry.