Queensland Pacific Metals Ltd (ASX:QPM) has received binding commitments to raise $16 million (before costs) at a share price of $0.07 per share, which includes a $5 million strategic investment by ore supplier Société des Mines de la Tontouta (SMT) and a $1.5 million investment by General Motors Holdings, LLC (NYSE:GM) as part of an existing investment agreement.
New investors will also receive one unquoted option for every two shares subscribed for under the placement, each with an exercise price of $0.10 and a 3-year term.
The company has also launched an $8 million share purchase plan (SPP) on the same terms as the placement so QPM shareholders can participate.
Money raised will enable gas production growth at the Moranbah Project and ongoing technical workstreams required to secure debt financing at the flagship TECH Project.
In a show of confidence in QPM’s activities, demand for the raise exceeds the original amount sought.
“We are delighted to welcome SMT as a shareholder of QPM and look forward to working together to maximise the value added to our respective companies from mutually beneficial commercial opportunities," managing director and CEO Dr Stephen Grocott said.
"We also thank GM and existing and new shareholders for their support and look forward to strong support from the rest of our shareholder base in the SPP.”
SMT and GM show support
QPM unveiled its strategic partnership with New Caledonian ore supplier SMT in July this year.
The joint venture sees the two collaborate on investment opportunities that would allow SMT to participate in the value created from processing its ore into battery chemicals at the TECH Project.
As partners, both entities are on the lookout for more avenues for investment, aiming for long-term profitability and growth.
SMT's decision to invest $5 million is a major strategic move for QPM, especially for the TECH Project. This partnership further solidifies QPM's investor base, adding SMT to a distinguished list that already includes stalwarts like GM, LG Energy Solution and POSCO.
Adding another layer to this financial development, GM is amplifying its commitment by contributing $1.5 million to the placement, adhering to its previous investment agreement. This capital infusion mirrors GM's shareholding, which is marginally below 10%.
SMT general manager Arnaud Bondoux said, “Société des Mines de la Tontouta is delighted to confirm its partnership by acquiring a stake in the Australian company QPM who owns the TECH Project.
“In a fast-changing nickel market, it's important not only to secure our medium-term business vision but also to support nickel transformation projects that contribute positively to the energy transition and battery market.
“Today's investment is the first step in SMT's determination to move down in the nickel value chain, beyond its role as an ore supplier, in order to propose a new model for the valuation of New Caledonian ore.”
About Moranbah Project
QPM recently published guidance pertaining to the Moranbah Project, forecasting an uptick in production which is expected to significantly elevate EBITDA over the forthcoming 12 months. To accomplish this surge in output, QPM is poised to roll out a strategic plan that demands only a moderate capital investment. The game plan is:
- The company is set to revamp its existing well program to augment gas production. This initiative encompasses a campaign targeting nine wells, with the operation scheduled to kick off in October 2023.
- QPM has plans to set up tie-in points on the neighbouring Anglo mine site, a move that aims to harness gas that's currently being wasted through draining and flaring. While three of these tie-ins are forecasted for completion by September 2023, the subsequent three are slated for December the same year.
- Additionally, a fresh drilling program will be bankrolled by the $80 million Dyno Nobel Development Funding Facility. Drilling is projected to commence in early 2024 and the anticipation is to have the first gas by mid-2024.
- The company will also indulge in other infrastructure optimisation activities.
Furthermore, a crucial element of this due diligence involves ensuring a consistent and competitively priced gas supply over the long term. However, due to delays in cementing the acquisition of the Moranbah Project and subsequent lag in the creation of long-term development plans required by the banking consortium, there has been a misalignment in timelines between this and the TECH Project.
QPM's strategy is to synchronise both project timelines to achieve parallel delivery.
While the initial goal was to secure credit-approved term sheets from banks by the year's end, this milestone is now projected to be achieved in the first half of 2024. This extended timeline will be instrumental for QPM to firm up commercial and supply agreements with equipment and materials vendors and constructors.