Australian Mines backs offtake partner to hang on after share price plunge
Battery metals hopeful Australian Mines has moved to quash speculation around its relationship with Korean nickel and cobalt offtake partner SK Innovation, saying they’re committed to the project.
Australian Mines (ASX:AUZ) said SK Innovation was “fully committed” to buying 100 per cent of the cobalt sulphate and nickel sulphate produced from its proposed Sconi project in North Queensland, in a response to an article in the Australian.
The offtake deal is crucial to the future development of the $1.3 billion Sconi project.
There is speculation that SK Innovation is not keen on an expensive equity buy-in to Australian Mines, which was a crucial part of the offtake deal.
SK Innovation is supposed to buy a 19.9 per cent stake in the cobalt miner by February 20 at a price of 12c a share, for a total of $80m.
But fears that the cobalt market was oversupplied have gained momentum and pushed the explorer’s share price down almost 70 per cent over the past year, from a high of 14.7c to about 4c currently.
Australian Mines boss Benjamin Bell says the offtake agreement is still “on foot” even if SK Innovation doesn’t buy the shares at a massive premium to the current share price.
The companies have agreed to extend the period in which Australian Mines can finalise financing for the massive project to 19 September 2019 – even though the miner says it doesn’t need that much time.
“Although we appreciate the extension of the financing condition to September, given the progress we have been making on these negotiations since the Bankable Feasibility Study was released, we plan to have the entire project funding package in place during the second quarter of 2019,” Australian Mines boss Benjamin Bell said.
This extension was also designed to accommodate the North Australian Infrastructure Facility’s (NAIF) current due diligence and investigation into potentially providing financial support for Sconi.
The $5 billion government-backed NAIF initiative is designed to provide concessional finance to encourage private sector investment in infrastructure that benefits northern Australia.