Special Report: Blackstone has received a major vote of confidence after attracting a $6.8m investment from a major Korean cathode material maker at a substantial premium.

EcoPro BM, a subsidiary of EcoPro – the world’s second largest and Korea’s largest nickel-rich cathode materials manufacturer, has signed a binding agreement to acquire 40 million Blackstone Minerals (ASX:BSX) shares at an issue price of 17c each.

This represents a meaty 62 per cent premium over the company’s last traded price, highlighting the value that EcoPro is placing on Blackstone.

Blackstone will exercise its binding option to purchase AMR Nickel’s 90 per cent interest in the Ta Khoa nickel-platinum group elements (PGE) project while EcoPro will appoint a director to the board of Blackstone.

The agreement also outlines an alliance structure where the two companies will jointly work together to develop a downstream nickel processing facility in northern Vietnam that could potentially process nickel concentrate from Ta Khoa.

This neatly fulfils the non-binding memorandum of understanding that the two companies had reached in December to investigate the development of a downstream facility.

Processing nickel concentrate into finished or advanced downstream products would also allow the company to avoid the Vietnamese government’s 20 per cent tariff on concentrates, which was introduced to incentivise mining companies to build downstream facilities.

Additionally, a more advanced product could potentially allow the joint venture to receive a premium to the LME nickel price.

“We are pleased to announce this investment of $6.8m at a premium which strengthens our alliance with EcoPro,” Blackstone managing director Scott Williamson said.

“Our Ta Khoa Nickel-PGE project has the potential to deliver the critical raw materials required for EcoPro’s cathode manufacturing to meet the demand from the imminent electric vehicle (EV) revolution.”

EcoPro vice president of strategic planning division Sangwook Parks said the decision to invest in Blackstone was based on the need to secure “stable and competitive metal materials in the fast-growing secondary battery and cathode active material business”.

Blackstone is looking to deliver a maiden resource and scoping study for Ta Khoa in the third quarter of 2020.

This will be focused initially on the disseminated sulphide (DSS) zone at Ban Phuc and the potential restart of the existing concentrator through focused exploration on both massive sulphide veins and DSS deposits.

Ta Khoa is about 160km west of Hanoi and includes the Ban Phuc nickel mine and its attached 450,000-tonne-a-year concentrator that was built to Australian standards, a fully permitted tailings facility and a modern 250-person camp.

Ban Phuc was operated as a mechanised underground nickel mine from 2013 to 2016 and generated $US213m ($311.3m) in revenue during this period of falling nickel prices.

Recent drilling has intersected massive sulphide mineralisation within the broader disseminated nickel sulphide mineralisation at the King Cobra discovery, which the company believes could be a “highly economic” starter pit.

This story was developed in collaboration with Blackstone Minerals, a Stockhead advertiser at the time of publishing.
This story does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.