Pure Minerals has revealed plans to acquire a private company that has secured ore agreements with New Caledonian miners. It is also in talks to build a nickel-cobalt refinery in the Northern Queensland city of Townsville.
A Northern Queensland city could soon be home to a second nickel refinery after Pure Minerals (ASX:PM1) announced plans to take over a private company that was already in talks to develop a processing plant.
In a release this week, Pure Minerals said it has entered into a binding option agreement with Queensland Pacific Metals (QPM) to acquire 100 percent of the private company after paying AU$75,000 to secure exclusivity rights over a 45-day due diligence period.
If Pure Minerals chooses to follow through with the option agreement, it would pay AU$870,000 in Pure Minerals shares, AU$500,000 in cash and 333 million deferred consideration shares subject to four performance milestones.
For the money it’s paying, the company would secure QPM’s 600,000-tonne-per-annum nickel-cobalt ore supplies from New Caledonia, and would also inherit its plans to develop a nickel-cobalt processing plant to take advantage of the current battery metals boom.
The ore would be sourced from three operating mines owned by two established New Caledonian mining companies in a deal secured by QPM in May 2018. First ore delivery will take place after June 2020 and for five years thereafter.
While QPM’s plant plans are in the feasibility study stage, in its release, Pure Minerals says that the plant envisaged would process the 600,000 tonnes of ore to produce 25,000 tonnes of nickel sulfate and 3,000 tonnes of cobalt sulfate a year.
The plant would be located in the Northern Queensland city of Townsville, which has a long history of nickel refining as it is the location of the currently shuttered Yabulu nickel refinery, owned by self-proclaimed billionaire Clive Palmer.
“Townsville is considered a preferred location as it is well supported by existing infrastructure, skilled labour, engineering support proximity and a long history of handling New Caledonia ore,” says Pure Minerals in its release.
“Townsville’s proximity to New Caledonia is also advantageous, located approximately 2,000km from New Caledonia, which will assist in minimising the cost of ocean freight.”
The company notes that QPM was “currently receiving project facilitation support and advice from the Queensland Government’s Department of State Development, Manufacturing, Infrastructure and Planning in respect of the potential development of the proposed processing plant.”
Speaking with local media, John Downie, executive director of QPM, said that Townsville is ideal for the plant due to its location and history.
“There’s a lot of enthusiastic people who will support and encourage us and provide every opportunity to make it work in and around Townsville,” he said.
If the feasibility study confirms the viability of the plant, construction would begin in 2020, costing AU$300 million to construct and employing 400 people upon completion, with the option of a further expansion in the future.
QPM also has in its portfolio the Eden Garry nickel-cobalt project in Central Queensland, which it plans to explore “to complement the base load feed provided from New Caledonia.”
On the ASX, Pure Minerals was trading at AU$0.012 at market close on Tuesday, with no change on the previous day’s close. It did “jump” to AU$0.013 over the course of the day.
On the LME, nickel is currently valued at US$12,645 a tonne, up from US$12,230 this time last month and up from US$11,600 this time in 2017.
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Securities Disclosure: I, Scott Tibballs, hold no direct investment interest in any company mentioned in this article.