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Queensland Pacific Metals (ASX:QPM) - CEO, Stephen Grocott (centre) - The Market Herald
CEO, Stephen Grocott (centre)
Source: Townsville Bulletin
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  • Queensland Pacific Metals (QPM) enters an investment and offtake deal with battery maker LG Energy Solution (LGES) and Korean steel producer POSCO
  • The companies to invest a combined US$15 million (roughly A$19.3 million) in QPM through a subscription of ordinary shares at 13.64 cents
  • This will result in LGES owning a 7.5 per cent stake in QPM, and POSCO will own a 3.2 per cent interest
  • In addition, the companies have committed to offtake majority of the production from QPM's TECH Project in Queensland
  • LGES will buy 7000 tonnes of nickel and 700 tonnes of cobalt per annum for up to seven years and POSCO will purchase 3000 tonnes of nickel and 300 tonnes of cobalt per annum for the same period
  • Company shares were up 15.5 per cent at 16.8 cents

Queensland Pacific Metals (QPM) has entered a binding investment deal and offtake agreement with LG Energy Solution and POSCO GEM 1ST FUND.

The investment

LG Energy Solution (LGES) is a global battery maker with 30 years of of research and development experience that has enabled it to deliver highly-advanced batteries to electric vehicles (EV), energy storage systems, and mobility and IT applications around the world.

POSCO is a leading fully-integrated steel producer in Korea and, based on annual crude steel production, is one of the largest steel producers in the world. In 2020 alone, POSCO produced about 40.6 million tons of crude steel and steel products.

These companies have agreed to invest a combined US$15 million (roughly A$19.3 million) in QPM through a subscription of ordinary shares at 13.64 cents — representing a 16.8 per cent premium to QPM's one-month volume-weighted average price.

Broken down, LGES will invest US$10.5 million (roughly A$13.5 million), or 99,235,889 shares, to own a 7.5 per cent interest in QPM. POSCO will invest US$4.5 million (roughly A$5.8 million), or 45,529,667 shares, to own a 3.2 per cent stake in QPM.

Before agreeing to invest, LGES and POSCO undertook due diligence on QPM and its Townsville Energy Chemicals Hub (TECH) Project in Queensland. QPM is focused on developing its TECH Project into a sustainable producer of critical metals for the EV and lithium-ion battery sectors.

"This is the most meaningful investment in our supply chain for LG Energy Solution since the company spun out from LG Chem. We believe the TECH Project will deliver sustainable nickel and cobalt production that is in line with LGES’ operating philosophy," LGES Global SCM Leader Dongsoo Kim said.

The investment is subject to shareholder approval and a notice of a meeting will be sent out shortly.

Offtake

In addition, the companies have signed an offtake for Queensland Pacific Metals to supply nickel and cobalt from its TECH Project.

LGES has agreed to buy 7000 tonnes of contained nickel and 700 tonnes of contained cobalt per annum for up to seven years.

POSCO will purchase 3000 tonnes of contained nickel and 300 tonnes of contained cobalt per annum for the same time period as LGES.

Initially, the nickel and cobalt will be supplied in the form of mixed hydroxide precipitate (MHP) until QPM completes a commercial production certification process for the TECH Project.

QPM Managing Director Stephen Grocott said the offtake agreements mark a major milestone for the company and its TECH Project.

"The ability for QPM to attract and establish business relationships with
companies of the calibre of LG Energy Solution and POSCO is validation for our company and what we are trying to achieve with the TECH Project," Mr Grocott said.

LGES and POSCOS' combined offtake quantities will account for the majority of production from the project.

The offtakes are conditional upon the equity investment being approved and upon the TECH Project achieving commercial production.

Company shares were up 15.5 per cent at 16.8 cents at 10:59 am AEST.

QPM by the numbers
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