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Special report: Pure Minerals has announced the acquisition of fellow battery metals play Queensland Pacific Metals (QPM), which is aiming to establish a battery-grade nickel-cobalt processing plant in Townsville, Queensland.

A tie up with private company QPM gives Pure Minerals (ASX:PM1) an attractive entry point into nickel and cobalt sulphate production – value-added products in high demand from the growing electric vehicle and stationary storage sector.

QPM plans to kick off feasibility studies into building a modern plant at Townsville, producing about 25,000 tonnes of nickel sulphate and 3000 tonnes of cobalt sulphate a year using ore from the French island territories of New Caledonia.

Townsville is the ideal location – its reputation as an emerging battery manufacturing region is complemented by existing infrastructure, skilled labour, and engineering support.

It also has a long history of processing ore from New Caledonia – just 2000km east of Townsville – which hosts the world’s largest laterite ore reserves containing about 700,000 tonnes of cobalt and 7 million tonnes of nickel.

QPM’s management team worked at the former Queensland Nickel refinery in Townsville, where they established supply agreements with a number of New Caledonian mining companies.

Through this longstanding relationship, QPM has secured a binding supply agreement to purchase 600,000 tonnes per year of high-grade nickel-cobalt ore.

“It’s a unique opportunity — those contracts aren’t secured by just anyone,” Pure Minerals chairman Jeremy King says.

“These are world class mines in New Caledonia; long term, high volume, and high-grade mining operations.

“It’s a really unique opportunity for Pure Minerals investors to get exposure to that in a small cap stock.”

The company will have an enterprise value of $2.7m post acquisition, giving investors leverage.

For investors, this means less risk; the agreement removes the perils associated with finding, proving up, and developing a mining project.

“It is resource estimation, mining, geotechnical, and engineering risk — all eliminated,” Mr King said.

QPM will purchase ore from established miners with a long-term track records of exporting to Australia and other counties, such as Japan and Korea.

The proposed Townsville plant will process the nickel-cobalt feed at an average grade of about 1.60 per cent nickel and 0.17 cobalt — grades superior to a number of high-profile Australian projects.

Higher grade feed means a smaller plant is required to process the same amount of sulphate, which lowers start-up capital expenditure.

The higher grades also mean lower ore throughput which requires less chemicals, power and other consumables — reducing operating costs.

And it complements Pure Minerals’ existing focus, which is on producing high value products for the battery sector via development of its Battery Hub manganese-cobalt project in Western Australia.

All of these factors give Pure Minerals and QPM a healthy competitive advantage, says Mr King.

“Pure Minerals is excited with about this opportunity with QPM complementing our focus on the emerging battery materials market,” he said.

 

Pure Minerals is a Stockhead advertiser.

This advice has been prepared without taking into account your objectives, financial situation or needs. You should, therefore, consider the appropriateness of the advice, in light of your own objectives, financial situation or needs, before acting on the advice. If this advice relates to the acquisition, or possible acquisition, of a particular financial product, the recipient should obtain a disclosure document, a Product Disclosure Statement or an offer document (PDS) relating to the product and consider the PDS before making any decision about whether to acquire the product.