LG Energy Solution and POSCO to pick $15m stake in EV battery material supplier Queensland Pacific Metals.
Queensland Pacific Metals Ltd (ASX:QPM) (“QPM” or “the Company”) announce that it has entered into a binding agreement with LG Energy Solution (“LGES”) and POSCO GEM 1ST FUND regarding an equity investment in QPM. QPM has also entered into binding offtake agreements for nickel and cobalt offtake from the TECH Project with LGES and POSCO.
Equity Investment
LGES and POSCO GEM 1ST FUND have agreed to invest US$15m in QPM by way of a subscription of ordinary shares. The issue price will be A$0.1364 per share, which represents a premium of 16.8% to the 1 month VWAP of QPM shares.
LGES will invest US$10.5m (99,235,889 QPM shares) and POSCO GEM 1ST FUND will invest US$4.5m (42,529,667 shares). Post completion of the transaction, the ownership interest of LGES and POSCO GEM 1ST FUND in QPM will be 7.5% and 3.2%, respectively. LGES and POSCO GEM 1ST FUND will be subject to a 12 month escrow on their shares.
As part of their investment consideration, extensive due diligence was carried out by LGES and POSCO GEM 1ST FUND on QPM and the TECH Project. This included a technical review of the TECH Project by RPM Global.
The equity investment by LGES and POSCO GEM 1ST FUND is conditional upon QPM shareholder approval. A notice of meeting for an Extraordinary General Meeting will be sent out shortly. The funds received from the equity investment will be used to advance the TECH Project, including bringing forward detailed design work which will facilitate earlier placement of long-lead time plant and equipment.
Offtake Agreement
QPM has entered into offtake agreements with both LGES and POSCO for the supply of nickel and cobalt from the TECH Project. Initially, 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.
This certification process is expected to take 9 to 12 months and once completed, all sales will be in the form of nickel sulfate and cobalt sulfate.
The offtake agreements are conditional upon the equity investment by LGES and POSCO GEM 1ST FUND being approved by QPM shareholders and upon the TECH Project achieving commercial production.
LG Energy Solution and POSCO to pick $15m stake in EV battery material supplier Queensland Pacific Metals
The execution of the offtake agreements is a major milestone for QPM and the TECH Project. LGES and POSCO are both highly credible and bankable counterparties, which will significantly assist QPM’s ability to fund the TECH Project.
Their combined offtake quantities will account for the majority of production at the TECH Project, giving QPM the baseload customers it needs to underpin development. Harp Capital of Toronto acted as advisor to QPM on the transaction
QPM Managing Director Stephen Grocott commented,
“We warmly welcome LG Energy Solution and POSCO as shareholders to Queensland Pacific Metals and look forward to the day where the TECH Project becomes a significant supplier of nickel and cobalt to each company. 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. We have developed excellent relationships with LG Energy Solution and POSCO and look forward to building on these for years to come.”
LGES Global SCM Center Leader Dongsoo Kim commented,
“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. And our proactive investments in the supply chain such as this will ultimately play a role in further satisfying our customers.”
POSCO Head of LiB Materials Business Office Seokmo Chung commented,
“We are delighted to co-invest with LG Energy Solution in Queensland Pacific Metals. We look forward to building our relationship with QPM and assess other business opportunities that may arise between QPM and POSCO.”
Highlights:
- US$15m combined equity investment from LG Energy Solution and POSCO GEM 1ST FUND
- Shares will be issued at a price of A$0.1364, a premium of 16.8% to the 1 month VWAP of QPM shares
- Binding offtake agreements signed for the sale of 10,000t contained nickel and 1,000t contained cobalt with LG Energy Solution and POSCO
- The commercial transaction is the culmination of extensive negotiation and due diligence undertaken on QPM and the TECH Project by LG Energy Solution and POSCO
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Investment and Offtake Agreements Executed with LG Energy Solution and POSCO, June 8, 2021
