Townsville Battery Manufacturing Plant Feasibility Study Submitted to Queensland Government

Magnis Energy is pleased to announce that Imperium3 Townsville has finalised the feasibility study for a lithium-ion battery cell manufacturing facility

Magnis Energy Technologies Limited (“Magnis” or the “Company) (ASX:MNS) is pleased to announce that Imperium3 Townsville [“iM3TSV”] has finalised the feasibility study [the “Study] for an 18 GWh lithium-ion battery cell manufacturing facility in Townsville, Queensland. Magnis owns one third of iM3TSV.

As announced on 5 June 2018, formal agreements to fast track the Townsville battery plant project were signed with the feasibility study to commence shortly after [ASX Release, 5 June 2018]. The project also received a $3.1 million grant from the Queensland Government [ASX Release, 27 August 2018].

Feasibility Study Outcomes

The feasibility study was primarily performed to develop the detailed engineering plan for the project and to establish financial viability to support subsequent investment decision and project funding.

A significant outcome of the study was to phase the project over 3 stages of 6 GWhs each, for a total
nominal capacity of 18 GWh. This not only reduces the upfront capital expenditure to a more manageable A$1.12B for the first stage, but also allows for project expansion to occur in line with developments in technology and the market.

Site

The site is part of Lansdown Station approximately L-10km south of the Townsville CBD with a total property area of 357 hectares [Figures 1 and 2]. It offers flat terrain and is predominantly vacant land with limited natural vegetation. Situated on the western side of the Flinders Highway, bounded to the north by Ghost Gum Road and south by Bidwilli Road, forming part of a new industrial estate planned by Townsville City Council which has a total area of approximately 2,070 hectares. Environmental assessments of the site including flora and fauna, stormwater, hydrology and flooding, geotechnical and cultural heritage found no major impediments to develop the plant at this site. Major infrastructure and utilities such as roads, electricity and gas are in close proximity to the site.

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Figures 1 and 2: Site Location

Battery

iM3TSV has selected a cylindrical 32700 form factor for our battery cells as it is better suited to high volume manufacture and offers improvements in performance and cost whilst still maintaining flexibility in the range of applications for its use.

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Figure 3 : Battery dimensions of a 32700 form factor

ENABLING FUTURE ENERGY

Manufacturing Process

iM3TSV’s manufacturing process was developed with our strategic partners and leading vendors of manufacturing equipment including Durr Megtec and Siemens. Incorporating the latest advancements in battery cell production to increase overall efficiencies and production yields. Ausenco was responsible for combining the individual vendor packages into a fully integrated production process.

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Figures 4, 5 and 6: LIB Manufacturing Plant Views of equipment and buildings

Labour

There will be approximately 1150 jobs at full operation [3 stages of 6GWhs] including 90 office staff, detailed below.

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Execution Schedule

The implementation schedule for the first stage 6 GWh production is shown below.

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Capital Cost

iM3TSV’s staged approach to developing the project has significant benefits for funding and product development. Townsville based quantity surveyors Rider Levett Bucknall [RLB] completed an independent review of capital expenditures for each stage as shown below.

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The cost for stage 1 is slightly higher than stages 2 and 3, due to the need for iM3TSV to contribute to the cost of extending some trunk infrastructure services to the site.

Financial Analysis

Project revenues and operating costs were compiled using conservative inputs which were used to create a robust financial model for the project. This model enables detailed analysis and scenario testing including product chemistries, production parameters and financing options. The table below shows the key financial metrics of a conservative base case assuming no financial incentives from government and iM3TSV achieving an 80% production yield with standard production configuration.

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iM3TSV has recently appointed National Australia Bank [‘NAB] as its financial advisor to assist in developing a project funding strategy.

Next Steps

The next phase of the project is now underway with the key milestones being::

  • Development Approvals. Over the coming months a development application will be completed and submitted to Townsville City Council for formal consideration;
  • Project Funding. iM3TSV’s project funding strategy will be executed with advice from NAB who are the exclusive financial advisor to the project; and
  • Testing and Market Development. iM3TSV will commence battery cell production testing in a commercial setting at equipment vendor facilities. iM3 battery cells will be provided to customers for independent evaluation and qualification as a precursor to procuring offtake

iM3TSV has consulted with local businesses, community groups and State and local government including:

  • Townsville City Council in pre-development application meetings;
  • Edify Energy towards supply of low-cost, renewable power to our facility;
  • Port of Townsville to develop our transport and logistics solutions;
  • James Cook University for collaboration on future education and training, innovation and research facilitation; and
  • RLB quantity surveyors to ensure rigorous cost controls and maximising the amount of local procurement in the project.

Click here to connect with Magnis Energy Technologies (ASX:MNS) for an Investor Presentation.

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Featured

Magnis Energy Technologies Limited (ASX:MNS) is a vertically-integrated battery technology developer, manufacturer and near-term graphite producer. The company's flagship Nachu graphite project in Tanzania is one of the world's most advanced and shovel-ready graphite projects. The project is fully-permitted, has a bankable feasibility study (BFS), a power supply agreement and a favorable port authority agreement.


Overview

Magnis Energy Technologies Limited (ASX:MNS) is a vertically-integrated battery technology developer, manufacturer and near-term graphite producer. The company's flagship Nachu graphite project in Tanzania is one of the world's most advanced and shovel-ready graphite projects. The project is fully-permitted, has a bankable feasibility study (BFS), a power supply agreement and a favorable port authority agreement.

Magnis has demonstrated that Nachu represents a viable alternative for end-users seeking a greener and lower-cost supply chain for graphite anodes in lithium-ion batteries. The project is able to produce high-performance, high-purity graphite products without the use of any chemical or thermal purification methods.

The global graphite market is expected to reach $18.7 billion by 2022. The demand for graphite in recent years has been due to a rise in clean energy initiatives, new building materials and the demand for lithium-ion batteries. Graphite is an essential component in lithium-ion batteries and as electric vehicle sales grow, the demand for the metal could grow as well.

In addition to developing its graphite project, Magnis has been working with Charge CCCV LLC (C4V) and Boston Energy and Innovation (BEI) to develop two lithium-ion battery gigafactories in New York, USA and Townsville, Australia.

The New York factory is expected to be operational in the near term and is expected to initially produce one gigawatt hour, but can increase its capacity to 15 gigawatt hours. The factory has received $13.25 million in funding from the New York state government.

The Townsville gigafactory is planned for first production in Q3 2022. The feasibility study for the project was funded by the Queensland State Government. The report outlined an NPV of AU$2.55 billion and an IRR of 21 percent. It also suggested the adoption of a three-phased construction model to reduce capital costs and for the integration of new technology as the facility is built. Magnis and its operating partners have been engaged in discussions with various end-users to secure offtake and sales agreements. Additionally, Magnis is responsible for sourcing the anode material and technology to be used at the factories.

Company Highlights

  • One of the largest mineral resources of large flake graphite in the world: 174 million tonnes at 5.4 percent total graphitic carbon for 9.3 million tonnes contained graphite.
  • BFS released in March 2016 contained an after-tax NVP (10 percent of $1.69 billion, an IRR of 98 percent, a capital payback of 14 months and a capital cost estimate of $269 million.
  • Demonstrated ability to produce a greater than 99.95 percent purity coated spherical graphite anode product with no chemical purification processes.
  • Key environmental, mining permits and fiscal agreement in place.
  • Power contracts secured and port authority agreement nearly complete.
  • Arranging project financing and offtake and supply agreements.
  • Acquired 10 percent interest in C4V.
  • C4V has developed the first solid-state lithium-ion battery.
  • 50.8 percent interest (direct and indirect shareholding) in the New York gigafactory.
  • Recently a key member and stakeholder in delivering the feasibility study to Queensland Government for the planned Townsville battery plant (18 gigawatt hours).
MNS:AU

On 2 March 2021 the Australian Taxation Office issued Rio Tinto Limited with amended assessments related to the denial of interest deductions on an isolated borrowing used to pay an intragroup dividend in 2015. The borrowing was repaid in 2018. The ATO has today issued further assessments in relation to the same transaction levying penalties of A$352m and reducing the original interest assessment from A$47m to A$27m …

On 2 March 2021 the Australian Taxation Office (ATO) issued Rio Tinto Limited with amended assessments related to the denial of interest deductions on an isolated borrowing used to pay an intragroup dividend in 2015. The borrowing was repaid in 2018.

The ATO has today issued further assessments in relation to the same transaction levying penalties of A$352m (US$257.9m) and reducing the original interest assessment from A$47m to A$27m (US$19.8m).

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Ioneer Ltd (“ioneer" or the “Company") (ASX: INR) is pleased to announce that the Company has reached an agreement to establish a joint venture (the " Joint Venture “) with Sibanye Stillwater Limited ( “Sibanye-Stillwater" ) to develop the flagship Rhyolite Ridge Lithium-Boron Project located in Nevada, USA (the “Project" ). Under the terms of the agreement, Sibanye-Stillwater will contribute US$490 million for a 50% interest in the Joint Venture, with ioneer to maintain a 50% interest and retain operatorship. ioneer has also agreed to provide Sibanye-Stillwater with an option to participate in 50% of the North Basin 1 upon the election of Sibanye-Stillwater to contribute up to an additional US$50 million subject to certain terms and conditions.

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Australia took a stand against Facebook and Google earlier this year, and the move could have long-term implications for tech investors.

It was a ban that sent Australians wild and had the whole world watching.

Back in February, Facebook (NASDAQ:FB) stopped users in Australia from posting news in a week-long blackout, reacting to proposed legislation that would have forced the social media behemoth to pay publishers for content.

What prompted Facebook to "friend" Australia again, and what are the potential long-term implications of the squabble? Read on to learn what tech-focused investors in Australia should know about the situation.


Australia squares off against Facebook

On February 25 of this year, Australia's federal government passed the News Media and Digital Platforms Mandatory Bargaining Code. It was developed after extensive analysis by the Australian Competition and Consumer Commission, and is aimed at ensuring that news media businesses are fairly remunerated for their content.

It stipulates that digital platforms such as Facebook and Google (both named in the documentation) must pay news outlets whose content they feature — for example, if content is shared on Facebook or shows up in Google search results. The idea is that this will help to sustain journalism in Australia.

Unsurprisingly, Facebook and Google didn't react well to the code, which was first introduced in 2020.

Google didn't make any moves after it passed, but Facebook quickly made it impossible for Australian users to share news content, and pages for both local and international news organisations went blank — a major concern given the COVID-19 and wildfire concerns that were circulating at the time.

Australian Prime Minister Scott Morrison was scathing about Facebook's decision — which he ironically shared in a Facebook post — declaring the tech giant's actions "as arrogant as they were disappointing." He added, "These actions will only confirm the concerns that an increasing number of countries are expressing about the behaviour of BigTech companies who think they are bigger than governments and that the rules should not apply to them."

Despite strong feelings from both Australia and Facebook, the dispute was resolved fairly quickly, with the country agreeing to make four amendments to the legislation and Facebook restoring Australian's access to news.

Implications for Big Tech and news organisations

Both Australia and Facebook have claimed victory in the dispute, with a Facebook representative saying the company will be able to decide if news appears on the platform — meaning it won't automatically have to negotiate with any news businesses. Changes were also made to the arbitration process.

Tech experts have pointed out that larger news companies may ultimately benefit from the changes, but smaller ones could be pushed to the side. Major publishers that have struck agreements with tech giants, such as News Corp, Nine Entertainment (ASX:NEC,OTC Pink:NNMTF), Seven West Media (ASX:SWM) and Guardian Australia, may be able to increase their market share while smaller independent players lose out.

A business that is in full support of the laws is Microsoft (NASDAQ:MSFT). During the conflict, President Brad Smith came out loudly in favour of Australia's law, and advised that his company is willing to step up with search engine Bing should Google and/or Facebook pull out of the Australian market.

"In Australia, Prime Minister Scott Morrison has pushed forward with legislation two years in the making to redress the competitive imbalance between the tech sector and an independent press. The ideas are straightforward. Dominant tech properties like Facebook and Google will need to invest in transparency, including by explaining how they display news content," he said in a blog post.

"The United States should not object to a creative Australian proposal that strengthens democracy by requiring tech companies to support a free press. It should copy it instead."

Global reach and tech investor impact

Six months down the road from Australia's landmark legislation, it's tough to say what the long-term impact may be.

That said, market watchers do believe the country is part of a new precedent of forcing Big Tech into paying for journalism — something giants Facebook and Google are not used to.

Countries looking to pursue similar legislation include Canada, where Facebook agreed in May to pay 14 publishers to link to their articles on its COVID-19 and climate science pages, as well as other unspecified use cases. Canada is pursuing other avenues too. Meanwhile, in France, Google said it will pay publishers for news content after the country took up new EU copyright laws that make digital platforms liable for infringements.

For investors, the takeaway is perhaps that while companies like Facebook and Google may seem too big too fail, they too can fall subject to new regulations that can change how they do business. As nations around the world look to take back control from these mega companies, it's important to be aware of possible effects on their bottom lines.

Don't forget to follow @INN_Australia for real-time updates!

Securities Disclosure: I, Ronelle Richards, hold no direct investment interest in any company mentioned in this article.

Queensland is the 16th most attractive jurisdiction in the world, sneaking in above BC and the Yukon in Canada, and just behind New Mexico in the US.

Queensland is one of the top three Australian jurisdictions for copper.

While it's well behind South Australia, a behemoth in the country for resources and production, Queensland hosts some 12 percent of all known Australian copper deposits, level with its southern neighbour New South Wales.

A premier mining jurisdiction globally, Queensland is ranked third out of all Australian jurisdictions for mining investment attractiveness, according to the Fraser Institute. Globally, it's ranked as the 16th most attractive jurisdiction, sneaking in above BC and the Yukon in Canada, and just behind New Mexico in the US.


The state is renowned for its mining prowess in Australia, and is known as one of the resource states, with a large chunk of its economic heft coming from the mining industry and its operations across the vast state.

Overall, mining accounts for 11.7 percent of Queensland's economy, with coal and liquefied natural gas being the primary focus of output. Together, coal, gas and mineral exports account for over 80 percent of Queensland's exports, according to the state government.

Having said that, copper plays a large role, and Queensland is home to the second biggest producer of copper in Australia in the form of Glencore's (LSE:GLEN,OTC Pink:GLCNF) Mount Isa mining complex in the northwest of the state. There, Glencore owns and operates the Enterprise and X41 mines.

Aside from Mount Isa, Glencore owns the nearby Ernest Henry copper mine. Combined, Glencore's Queensland operations produced 138,800 tonnes of copper in 2020 — accounting for a little over 10 percent of the company's global copper production. Glencore isn't listed on the ASX, but can be found on the LSE.

Besides the Mount Isa complex itself, there's also a handful of other operational mines in the northwestern portion of the state, although most of them are privately owned, such as the Capricorn copper project, which is a joint venture between EMR Capital and Lighthouse Minerals; it secured itself "prescribed project" status in 2017.

Other privately owned projects include Round Oak's Barbara project (in care and maintenance), Chinese-backed CuDECO's Rockland copper project (mothballed, CuDECO in liquidation) and Chinova's Osborne mine — which was originally set up by Ivanhoe Mines (TSX:IVN,OTCQX:IVPAF). There's also the Balcooma mine, which Royal Gold (NASDAQ:RGLD) has copper royalties on, and the privately owned Mount Cuthbert mine.

Many of the mentioned projects ran into trouble in 2020, with the COVID-19 pandemic limiting company operations.

All in all, Queensland has 13 operational copper mines, but as can be seen many are in private hands, making investment opportunities somewhat slim. Aside from previously mentioned Glencore operations, there's Red River Resources (ASX:RVR,OTC Pink:RRRDF), which owns the Thalanga operations near Charters Towers. Red River acquired Thalanga in 2014, and has been working to develop the legacy site back into a viable investment.

From the beginning of production in 2017, the operations have a lifespan of some 10 years, according to Red River, with further development and exploration options on the table. In its most recent quarterly report, Thalanga reported output of 3,086 tonnes of copper concentrate.

The remainder of the options on the table for investors are exploration focused, such as Copper Mountain Mining (ASX:C6C,OTC Pink:CPPMF) with interests in the Eva copper project, which is — unsurprisingly — in the northwest of the state, near the town of Cloncurry. Eva is in the development phase, with a feasibility study completed in early 2020 envisaging a 15 year mine life with an annual expected output of 106 million pounds of copper equivalent.

There's also Global Energy Metals (TSXV:GEMC,OTCQB:GBLEF), which like Glencore isn't on the ASX, but has interests in the Millenium cobalt-copper-gold project and others near Mount Isa — all in the exploration stage.

Aside from that, Strategic Energy Resources (ASX:SER) acquired exploration licences from Newcrest Mining (ASX:NCM,OTC Pink:NCMGF) in May 2021 for licences around Mount Isa, and Zenith Minerals (ASX:ZNC) is exploring the Develin Creek copper-zinc project. Zenith recently divested from another copper project, Flannagans, in June 2021 by selling its interests to a private company for $450,000.

Don't forget to follow us @INN_Australia for real-time updates!

Securities Disclosure: I, Scott Tibballs, currently hold no direct investment interest in any company mentioned in this article.

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