Queensland Pacific Metals Ltd (ASX:QPM) has entered into a binding asset sale agreement to acquire the Moranbah Project in northern Queensland from the Arrow Energy Group and AGL Energy (ASX:AGL) Ltd.
This transaction represents a major milestone for QPM, achieving vertical integration of the energy supply chain for its TECH Project.
Consequently, this significantly de-risks TECH Project operations by securing a long-term, economical gas supply and creating significant value from the Moranbah Project through the creation of a vertically integrated energy supply chain.
De-risking event
QPM managing director and CEO Dr Stephen Grocott said: “Vertical integration of our energy supply chain for the TECH Project is a significant de-risking event that cannot be underestimated.
“This transaction is yet another commercial arrangement that the management team of QPM has been able to orchestrate to bring us one step closer to the construction of the TECH Project and to deliver value for shareholders.”
Moranbah project overview
The Moranbah Project is about 390 kilometres south of Townsville and is the only currently producing gas field in the Northern Bowen Basin with the capacity to supply gas to North Queensland consumers.
The project has been in production since 2004 with current gas production sourced from about 100 operated wells across four petroleum leases and waste mine gas supplied from five active coal mines in the region.
It is an established coal mine waste gas project with production, 240 PJ of 2P reserves and existing infrastructure.
The Moranbah Project has the infrastructure in place to supply up to 30 PJ of gas per annum including gas processing and compression facilities connected to the NQGP for transportation through to Townsville and the TECH Project.
QPM subsidiary QPM Energy Pty Ltd's CEO David Wrench said: “The potential of the Moranbah Project and QPME’s Carbon Abatement Strategy is enormous and via our collection hubs, the Northern Bowen Basin is well positioned to become a major energy supplier to Northern Australia.
“This potential is further reinforced by the strong tailwinds we are experiencing from Australian Government reform for carbon emissions reductions and the growing global need and acceptance to utilise gas to facilitate successful energy transition.”
Strategic rationale
QPM’s TECH Project requires about 14 PJ gas per annum to achieve its stage 1 nameplate capacity of processing 1.6 million wet metric tonnes (wmt) of ore to produce approximately 16,000 tonnes of nickel and 1,800 tonnes of cobalt in the form of high-purity lithium-ion battery feeds and other valuable co-product.
As outlined in its advanced feasibility study and part of its ongoing strategy, QPM will use waste mine gas from the Northern Bowen Basin to meet a substantial portion of its energy requirements.
Accordingly, QPM has undertaken detailed work to develop a vertically integrated energy chain for the TECH Project and in November 2022, QPM formally launched QPME and the Carbon Abatement Hub Strategy to secure gas supply for the TECH Project.
Transaction summary
On completion of the transaction, QPME will pay the sellers $5 million as consideration for the Moranbah Project assets.
QPME will also receive $35 million as consideration for assuming obligations to supply gas under the Moranbah Project contracts.
In support of the acquisition, QPME and Incitec Pivot Ltd are in advanced negotiations to finalise a long-term, gas supply agreement for the Moranbah Ammonium Nitrate Plant including potential funding support to further develop the Moranbah Project.